# Obama's Deficits have Consequences **URL:** \ **Category:** Great Debates\ **Created:** [March 25, 2009, 5:32pm UTC](https://boards.straightdope.com/t/obamas-deficits-have-consequences/490766 "2009-03-25T17:32:26Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [March 25, 2009, 5:32pm UTC](https://boards.straightdope.com/t/obamas-deficits-have-consequences/490766/1 "2009-03-25T17:32:26Z")
For those who haven’t seen it, have a look at [this chart](http://blog.heritage.org/2009/03/24/bush-deficit-vs-obama-deficit-in-pictures/). if you are someone who thought Bush’s deficits were irresponsible and unsustainable, have a REAL good look at it. Obama’s economic plan is going to DOUBLE the total debt of the United States. And what’s worse, there’s no ‘exit plan’. Not even a hint of how the budget could possibly be balanced in the future. Right now, the CBO is estimating that in the 8th year of Obama’s presidency the deficit will be 1.2 trillion dollars - and growing. And this figure already factors in raising taxes dramatically on the rich, 600 billion dollars in new revenue from carbon taxes, and does not include future bailouts including 234 billion already ‘set aside’ for another bailout round. It also includes only a $634 billion ‘down payment’ on health care. The real price will be much higher. It also does not include any cost overruns from the hundreds of billions of dollars of infrastructure spending, and it assumes that the cost of the war in Afghanistan will not go up. These deficits are not the result of the economic collapse. Not if you believe the Obama administration, anyway - because they are basing their forecast on the notion that this year the economy will only drop 1.2%, and that will be followed by multiple years of high growth. You also can’t blame it on economic stimulus - the stimulus package is only 1/10 of the total debt Obama plans to rack up, and if the Administration is right that the economy will grow at over 3% next year and over 4% in subsequent years, there is no need for additional stimulus. In addition, it adds 1.4 trillion dollars in anti-stimulative tax increases. This deficit is largely due to a laundry list of liberal spending - Doubling the size of the Department of Education, increasing anti-poverty programs by 20% (after Bush already increased them to over 3% of GDP), a 12% increase in discretionary spending this year alone. So what is the possible downside to this? _It’s already here_. Some very, very dangerous signs everyone should be worried about right now: [China Calls for New World Currency](http://www.google.com/hostednews/ap/article/ALeqM5h8KoPe1MqwkZWOTIikcwb8Tg2W3AD974D8384) > [@](#): > > Beijing has long been uneasy about relying on the dollar for the bulk of its trade and to store foreign reserves. Premier Wen Jiabao publicly appealed to Washington this month to avoid any steps in response to the crisis that might erode the value of the dollar and Beijing’s estimated $1 trillion holdings in Treasuries and other U.S. government debt. Simply put, the U.S. relies on foreign countries to continue buying American debt. But if these countries believe the U.S. is being fiscally irresponsible, and loses confidence in the long-term stability of the dollar, they will stop buying the debt. In fact… [China’s Short-Term Treasury Binge](http://blogs.wsj.com/marketbeat/2009/01/16/chinas-short-term-treasury-binge/) > [@](#): > > The U.S. Treasury’s international capital statistics showed that in November, China’s net holdings of long-term U.S. Treasury securities fell by more than $9 billion. However, the country’s short-term holdings rose by $38.2 billion. Determining the motivation here is difficult — it could simply be that China followed the rest of the crowd in jumping headlong into the safest securities possible, or more worrisome factors could be at stake. > > “When any creditor shortens the term structure of its holdings, the borrower should probably be cognizant of that, because the creditor is giving up yield to give itself the option of exiting quickly,” says Brad Setser, fellow at the Council on Foreign Relations. “That’s one way to interpret the shortening of the structure of China’s holdings.” China is moving to short-term treasuries because it has lost confidence in the long term value of the dollar. It’s willingly paying a premium to avoid long-term exposure to the U.S. debt. So who is buying long-term treasuries? Why, the U.S. government: [Fed to Buy Up $300 Billion in Long Term Treasury Bonds](http://www.google.com/hostednews/ap/article/ALeqM5h8KpyRBjeJw2gfbZZF3Kt4NfKeDAD970JNOO2) This is an inflationary buy. It’s actually a monetary stimulus called ‘Quantitative Easing’ - the last trick in the monetarists stimulus bag. The fed is also buying up some $700 billion in mortgage backed securities from Fannie and Freddie. So what’s the cost to the U.S.? Why does this matter? For one thing, the loss of the dollar as the world’s reserve currency would mean the loss of the U.S.'s interest rate advantage over other countries. This will make maintaining a current account deficit very difficult, and will drive up the cost of debt service. The U.S. dollar will decline, which will make imports more expensive - devastating for the U.S., since it’s running a consumer economy with a large reliance on imports. The U.S. would have to shift to becoming more export-driven - except that a host of Obama’s plans, including carbon taxes, higher business taxes and more union power, will make exporting more expensive and less competitive. It would also drive up domestic interest rates, which would put pressure on GDP growth and make it more expensive to buy everything from houses to cars. Since the U.S. has a high debt ratio and a low savings rate, this would be a big hit to the economy. Finally, if people around the world can’t or won’t buy up the huge debt the U.S. is generating, the Fed will have to buy it up, which will cause massive inflation. An annual 1 trillion dollar buy of debt by the fed translates into about 12% inflation plus or minus whatever GDP growth there is. This essentially means the debt will be financed by anyone who has savings. Retirees, 401(k)s, public pension funds. This at a time when the baby boom is about to retire and attempt to live off these fixed assets. It would also be financed by foreign holders of the debt - hence China’s worries. The U.S. is heading for structural deficits larger than anything seen before other than during the short period of WWII. The result is unsustainable, as even the White House OMB director admits. If Obama’s spending goes ahead as planned, the U.S. will, by the end of his second term, have a debt-GDP ratio somewhere around 120-150%. That is two times higher than the EU average, and only three countries in the world today have higher debt-GDP ratios - Zimbabwe, Lebanon, and Japan. Finally, even before the economy crashed and before Obama was elected, the [Long Term Deficit](http://en.wikipedia.org/wiki/File:GAO_Slide.png) was projected to be totally out of whack because of rapidly increasing entitlement costs due to the retirement of the baby boomers - so much so that sometime between 2030 and 2040, this spending was expected to exceed total government revenue. So it’s impossible to see how this structural deficit could be corrected in the future. The bottom line is that no matter how nice it would be to have all this spending, you need to be very careful thinking through whether or not you can afford it. If the U.S. doesn’t show some serious fiscal responsibility very soon, it will become a major threat to the economic recovery, because higher taxes, higher interest rates, and inflation are right around the corner. It’s called ‘stagflation’, and it’s an economy killer. Other countries are figuring this out. [The Bank of England](http://blogs.reuters.com/uknews/2009/03/25/mervyn-kings-warning-to-the-government/) took a rare and very unusual step of warning its government that its plan for more stimulus (a plan being pushed by Obama) is not fiscally sound. And the U.K’s debt/GDP ratio is already lower than the U.S.'s. Other countries are abandoning more stimulus and turning to debt service because they’re seeing the trajectory and don’t like it. ---
**Author:** ![Hampshire](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hampshire/32/4887_2.png) [@Hampshire](https://boards.straightdope.com/u/Hampshire)\ **Post date:** [March 25, 2009, 5:38pm UTC](https://boards.straightdope.com/t/obamas-deficits-have-consequences/490766/2 "2009-03-25T17:38:05Z")
Interesting. And the other option is… ---
**Author:** ![Bryan\_Ekers](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bryan_ekers/32/183_2.png) [@Bryan\_Ekers](https://boards.straightdope.com/u/Bryan_Ekers)\ **Post date:** [March 25, 2009, 5:46pm UTC](https://boards.straightdope.com/t/obamas-deficits-have-consequences/490766/3 "2009-03-25T17:46:50Z")
Every president’s deficits have consequences. Some of them are real jerks. What’s your point? ---
**Author:** ![Mighty\_Mouse](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mighty_mouse/32/7776_2.png) [@Mighty\_Mouse](https://boards.straightdope.com/u/Mighty_Mouse)\ **Post date:** [March 25, 2009, 5:49pm UTC](https://boards.straightdope.com/t/obamas-deficits-have-consequences/490766/4 "2009-03-25T17:49:35Z")
> [@Sam\_Stone](#): > > For one thing, the loss of the dollar as the world’s reserve currency would mean the loss of the U.S.'s interest rate advantage over other countries. This will make maintaining a current account deficit very difficult, and will drive up the cost of debt service. The U.S. dollar will decline, which will make imports more expensive - devastating for the U.S., since it’s running a consumer economy with a large reliance on imports. The U.S. would have to shift to becoming more export-driven - except that a host of Obama’s plans, including carbon taxes, higher business taxes and more union power, will make exporting more expensive and less competitive. But the collapse in real wages will offset that. That is what people don’t realize. We are coming to a point where Americans will only be able to consume the true value of what they produce. Until now between borrowing from foreigners and an artificially high dollar (sustained by the Chinese warehousing greenbacks) we have been living way way way beyond our real means. Being able to import stuff cheap has been shielding us. The asset bubbles only hid the true extent and nature of the borrowing. Rising stock prices and housing values did not produce any income, because they did not produce any goods or services. Right now an average car only costs something like one third of the average family’s annual household income. It might be something like two thirds in a few years. Which would be bad enough, but there is no way to stop the vicious cycle without taking even more painful measures. Once our real incomes are hammered by the falling dollar, we will demand even more dollars. The government will respond by handing out more free money (stimulus) and there will be even more inflation, causing the value of the dollar to fall even more, making our consumption goods even more expensive. Eventually we will have factories in Detroit building cars and beating the Chinese on the basis of our lower wage costs. But the workers will not be able to buy the cars. The same way the Chinese auto workers can’t buy the cars they are producing now. Housing values are going to go the other way. When you spend all you income on a car, clothing and food, you are going to be willing to live in a much smaller house. So we will bid down the prices of houses. Setting off another round of bank failures, followed by more free money to stave off financial collapse. ---
**Author:** ![Sinaijon](https://avatars.discourse-cdn.com/v4/letter/s/dc4da7/32.png) [@Sinaijon](https://boards.straightdope.com/u/Sinaijon)\ **Post date:** [March 25, 2009, 5:57pm UTC](https://boards.straightdope.com/t/obamas-deficits-have-consequences/490766/5 "2009-03-25T17:57:07Z")
> [@Hampshire](#): > > And the other option is… Decrease gov’t spending. Live within the country’s means. ---
**Author:** ![Captain\_Carrot](https://avatars.discourse-cdn.com/v4/letter/c/f0a364/32.png) [@Captain\_Carrot](https://boards.straightdope.com/u/Captain_Carrot)\ **Post date:** [March 25, 2009, 6:00pm UTC](https://boards.straightdope.com/t/obamas-deficits-have-consequences/490766/6 "2009-03-25T18:00:37Z")
> [@Sinaijon](#): > > Decrease gov’t spending. Live within the country’s means. Which is a really stupid thing to attempt when the economy is bad and getting worse. ---
**Author:** ![Hentor\_the\_Barbarian](https://avatars.discourse-cdn.com/v4/letter/h/8edcca/32.png) [@Hentor\_the\_Barbarian](https://boards.straightdope.com/u/Hentor_the_Barbarian)\ **Post date:** [March 25, 2009, 6:03pm UTC](https://boards.straightdope.com/t/obamas-deficits-have-consequences/490766/7 "2009-03-25T18:03:35Z")
> [@Sinaijon](#): > > Decrease gov’t spending. Live within the country’s means. Or a spending freeze! That’s the ticket. Neo-Hooverism. The sad thing is that initially, Republicans were asking if the stimulus was really stimulative. That at least resembles a reasonable question. Now they’re just reduced to saying that it represents x number of dollars per day since Jesus Christ, or would reach y height if it was literally stacked up. I agree with David Brooks’ concerns about the Republican party and their intellectual deficit. ---
**Author:** ![Richard\_Parker](https://avatars.discourse-cdn.com/v4/letter/r/35a633/32.png) [@Richard\_Parker](https://boards.straightdope.com/u/Richard_Parker)\ **Post date:** [March 25, 2009, 6:08pm UTC](https://boards.straightdope.com/t/obamas-deficits-have-consequences/490766/8 "2009-03-25T18:08:49Z")
It isn’t fair to accuse Sam of Hooverism. He is saying that plans to spend money years from now have nothing to do with stimulus. That might not be true, but it is different from advocating we not spend any money now. Sam’s argument makes sense if you reject the premise that health care, education, and energy are long-term problems for our economy that the government must solve. If you don’t reject that premise, then you have to admit we face the choice of spending money to solve those problems and reaping the consequences of that spending, or we don’t spend the money and reap the consequences of failing to fix those things. In other words, this is really just an argument about whether Obama’s policies are necessary for the economy and will work in the long-term. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [March 25, 2009, 6:19pm UTC](https://boards.straightdope.com/t/obamas-deficits-have-consequences/490766/9 "2009-03-25T18:19:46Z")
See, this is the bait-and-switch the liberals are pulling now. ALL spending is a ‘stimulus’, therefore cutting any of it is ‘stupid’. Any discussion of curtailing spending five years from now is a ‘Hooverian spending freeze’. The fact is, the spending we’re talking about now is NOT stimulative. We’re talking about things like 634 billion dollars for new health care spending - which won’t come on line until well after the economy has recovered, if you believe Obama. That is not stimulative. In fact, it’s anti-stimulative, because it causes people TODAY to limit spending in anticipation of higher taxes in the future. This is a case where eliminating this spending would actually stimulate the economy. For example, the government could drop the plan to double the size of the Department of Education, which probably isn’t stimulative in the first place and won’t happen until the economy is recovered anyway. In exchange, it could promise a tax cut of 600 billion dollars, which would stimulate spending NOW. So stop playing these “all spending is stimulus” games. This is a ten year projection, and by the Administration’s own reckoning, the economy will be growing again next year. All spending after that point may simply contribute to the next bubble, financed with debt. For the sake of this discussion, let’s stipulate that the 800 billion dollar stimulus package is not part of the debate. There’s no way in hell that you’re going to convince me that, for example, paying out 5 billion dollars for ‘community organization’ in 2018 has anything to do with a fiscal stimulus to get the U.S. out of a recession that is projected to end in 2010 or 2011 at the latest. The budget is chock full of crap like that. All that kind of spending does is weaken the dollar TODAY and cause people to hang on to their money even more TODAY. It’s anti-stimulative. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [March 25, 2009, 6:28pm UTC](https://boards.straightdope.com/t/obamas-deficits-have-consequences/490766/10 "2009-03-25T18:28:02Z")
> [@Richard\_Parker](#): > > It isn’t fair to accuse Sam of Hooverism. He is saying that plans to spend money years from now have nothing to do with stimulus. That might not be true, but it is different from advocating we not spend any money now. > > Sam’s argument makes sense if you reject the premise that health care, education, and energy are long-term problems for our economy that the government must solve. > > In other words, this is really just an argument about whether Obama’s policies are necessary for the economy and will work in the long-term. Almost. It’s an argument about whether the benefit of these programs is so great that it warrants borrowing huge amounts of money. The argument that federal health care spending is a ‘good thing’ is much easier to make than the argument that it’s such a good thing that it’s worth borrowing your children’s money to pay for it, at a time when there’s a real risk that the money won’t even be available to borrow, and the grim reality of the explosion in entitlement spending means your children are already inheriting a fiscal meltdown. ---
**Author:** ![Richard\_Parker](https://avatars.discourse-cdn.com/v4/letter/r/35a633/32.png) [@Richard\_Parker](https://boards.straightdope.com/u/Richard_Parker)\ **Post date:** [March 25, 2009, 6:30pm UTC](https://boards.straightdope.com/t/obamas-deficits-have-consequences/490766/11 "2009-03-25T18:30:08Z")
> [@Sam\_Stone](#): > > Almost. It’s an argument about whether the benefit of these programs is so great that it warrants borrowing huge amounts of money. The argument that federal health care spending is a ‘good thing’ is much easier to make than the argument that it’s such a good thing that it’s worth borrowing your children’s money to pay for it, at a time when there’s a real risk that the money won’t even be available to borrow, and the grim reality of the explosion in entitlement spending means your children are already inheriting a fiscal meltdown. It is not merely a cost-benefit question. My point is that because health care is intimately related to the health of the economy, the costs are actually in flux depending on your assessment of the benefits of the policy. ---
**Author:** ![Sinaijon](https://avatars.discourse-cdn.com/v4/letter/s/dc4da7/32.png) [@Sinaijon](https://boards.straightdope.com/u/Sinaijon)\ **Post date:** [March 25, 2009, 6:34pm UTC](https://boards.straightdope.com/t/obamas-deficits-have-consequences/490766/12 "2009-03-25T18:34:27Z")
> [@Hentor\_the\_Barbarian](#): > > Or a spending freeze! That’s the ticket. Neo-Hooverism. > > The sad thing is that initially, Republicans were asking if the stimulus was really stimulative. That at least resembles a reasonable question. > > Now they’re just reduced to saying that it represents x number of dollars per day since Jesus Christ, or would reach y height if it was literally stacked up. I agree with David Brooks’ concerns about the Republican party and their intellectual deficit. None of which has anything even remotely to do with my point. You can reduce spending quite easily, AND increase stimulative spending, AND live within the countries means. It simply means reprioritizing the outgoing money. But as Sam pointed out, suddenly every dollar spent by the US gov is ‘stimulus’. It’s \*\*all \*\*sacred now. ---
**Author:** ![Sinaijon](https://avatars.discourse-cdn.com/v4/letter/s/dc4da7/32.png) [@Sinaijon](https://boards.straightdope.com/u/Sinaijon)\ **Post date:** [March 25, 2009, 6:37pm UTC](https://boards.straightdope.com/t/obamas-deficits-have-consequences/490766/13 "2009-03-25T18:37:36Z")
> [@Richard\_Parker](#): > > then you have to admit we face the choice of spending money to solve those problems and reaping the consequences of that spending, or we don’t spend the money and reap the consequences of failing to fix those things. That’s a false dichotomy. You can spend money to solve those problems without an obscene amount of borrowing. If they are a high priority, then make them a high priority in the budget, and cut the lower priorities out. ---
**Author:** ![Ruminator](https://avatars.discourse-cdn.com/v4/letter/r/b9bd4f/32.png) [@Ruminator](https://boards.straightdope.com/u/Ruminator)\ **Post date:** [March 25, 2009, 6:43pm UTC](https://boards.straightdope.com/t/obamas-deficits-have-consequences/490766/14 "2009-03-25T18:43:19Z")
> [@Richard\_Parker](#): > > Sam’s argument makes sense if you reject the premise that health care, education, and energy are long-term problems for our economy that the government must solve. If you don’t reject that premise, then you have to admit we face the choice of spending money to solve those problems and reaping the consequences of that spending, or we don’t spend the money and reap the consequences of failing to fix those things. Health care, education, energy are important and money should be spent on them but the key is to spend REAL money (real wealth / real productivity outputs) instead of FAKE money. Inflating the monetary system with 1 trillion dollars is not “spending money” on the problem. That just creates a new pricing bubble a few years down the road and lets the politicians say they’re “doing something” for the time being. Here’s where Americans are in denial: requiring the use of real wealth (wealth tied directly to real American productivity) would require a painful cutback in toys, consumerism, and lower priority govt services. Americans have no concept of cutting back on products they’ve become accustomed (aka “The American Way Of Life”). Therefore, the only way to maintain the illusion of a rising standard of living **and** spend money on health care, etc is to let the politicians inflate the currency. To rechannel **actual domestic productivity outputs** from toys into health care & education would be way too much reality for citizens to handle. Americans **will** see a reduction in standard-of-living. They can either go about it **voluntarily** in a measured and controlled manner so they can prioritize their productivity outputs towards health care and other social initiatives. Or they can let it happen **involuntarily** – the currency crashes, USA credit rating is destroyed – the other countries stop loaning money to the USA to sell their exports. At that point, the USA neither has money for toys nor health care. > [@Richard\_Parker](#): > > In other words, this is really just an argument about whether Obama’s policies are necessary for the economy and will work in the long-term. That is not the correct way to frame the argument. ---
**Author:** ![Richard\_Parker](https://avatars.discourse-cdn.com/v4/letter/r/35a633/32.png) [@Richard\_Parker](https://boards.straightdope.com/u/Richard_Parker)\ **Post date:** [March 25, 2009, 6:53pm UTC](https://boards.straightdope.com/t/obamas-deficits-have-consequences/490766/15 "2009-03-25T18:53:22Z")
> [@Sinaijon](#): > > . . . and cut the lower priorities out. But this isn’t an abstract decision in which Obama gets to ignore political reality and write a budget based purely on rational priorities. This is politics. Obama is faced with the choice of using deficit spending to solve some problems or not doing so. There will be some trivial cuts in other areas, but cutting Social Security payments and the Pentagon Budget just isn’t politically viable. Obama will turn out to be a great leader indeed if he can reform entitlements and reduce spending on lower priorities while championing energy and health care reform. But if he cannot do both, it isn’t sufficient to argue he shouldn’t spend money on health care, education, and energy by pointing to the problems of deficits. You must also weigh the benefits–including those accrued to the economy–of health care, education, and energy reform. > [@Ruminator](#): > > Health care, education, energy are important and money should be spent on them but the key is to spend REAL money (real wealth / real productivity outputs) instead of FAKE money. Inflating the monetary system with 1 trillion dollars is not “spending money” on the problem. That just creates a new pricing bubble a few years down the road and lets the politicians say they’re “doing something” for the time being. Deficit spending has costs. I’m not denying that. But “has costs” doesn’t automatically mean “has costs that outweigh its benefits.” If I were convinced that deficit spending would lead to the total crash of the US economy, then obviously you’d have a strong point. Is that your argument? ---
**Author:** ![Freddy\_the\_Pig](https://avatars.discourse-cdn.com/v4/letter/f/a587f6/32.png) [@Freddy\_the\_Pig](https://boards.straightdope.com/u/Freddy_the_Pig)\ **Post date:** [March 25, 2009, 7:11pm UTC](https://boards.straightdope.com/t/obamas-deficits-have-consequences/490766/16 "2009-03-25T19:11:26Z")
> [@Hentor\_the\_Barbarian](#): > > Or a spending freeze! That’s the ticket. Neo-Hooverism. Government spending under Hoover rose from $3.320 billion in fiscal 1930 to $4.659 billion in fiscal 1932, an increase of 40% in just two years, at a time of falling prices. Whatever else a spending freeze may be, it isn’t Hooverism, neo or otherwise. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [March 25, 2009, 7:42pm UTC](https://boards.straightdope.com/t/obamas-deficits-have-consequences/490766/17 "2009-03-25T19:42:54Z")
Jeez, and right on cue… [Stocks slide after weak government debt auction](http://finance.yahoo.com/news/Stocks-slide-after-weak-apf-14744876.html) > [@](#): > > Stocks lost ground Wednesday after a weak auction of U.S. government debt stirred worries about how easily Washington will be able to raise money to fund its economic rescue program. > > Investors gave an unexpectedly cool response to a $24 billion auction of 5-year Treasury notes Wednesday, just a day after a $40 billion auction of 2-year notes suggested strong demand. Treasury prices also declined following the auction. > > The government is running up record deficits in order to fund an array of plans to provide stimulus to the economy and support to the ailing financial system. Any suggestion that demand for U.S. government debt is weakening would be negative for stocks. [EU presidency: US stimulus is ‘the road to hell’](http://finance.yahoo.com/news/EU-presidency-US-economic-apf-14737788.html) > [@](#): > > he head of the European Union slammed President Barack Obama’s plan to spend nearly $2 trillion to push the U.S. economy out of recession as “the road to hell” that EU governments must avoid. > > The blunt comments by Czech Prime Minister Mirek Topolanek to the European Parliament on Wednesday highlighted simmering European differences with Washington ahead of a key summit next week on fixing the world economy. > > It was the strongest pushback yet from a European leader as the 27-nation bloc bristles from U.S. criticism that it is not spending enough to stimulate demand. And remember the Bank of England’s rare comment that stimulus spending is getting out of hand? Well… [U.K Bond Auction Falls Short For the First Time in Seven Years](http://www.bloomberg.com/apps/news?pid=20601087&sid=aQGG.mWeZ4eU&refer=worldwide) > [@](#): > > The U.K. failed to find enough buyers for 1.75 billion pounds ($2.55 billion) of bonds for the first time in almost seven years as debt investors repudiated Prime Minister Gordon Brown’s plan to stem the worst economic crisis in three decades. > > Gilts slumped after the London-based Debt Management Office, which manages bond auctions on behalf of the Treasury, said investors bid for 1.63 billion pounds of the 40-year securities. The last time the U.K. government was unable to attract enough investors was in 2002 when it tried to sell 30- year inflation-protected bonds. The yield on the 4.25 percent gilt due 2049 rose 10 basis points to 4.55 percent. Oh, and for those of you who are claiming that this spending is necessary for a ‘stimulus’… Senate Democrats are planning to remove the 400 billion in middle class tax cuts from the budget to help pay for all this future spending. In other words, they’re planning to remove an ACTUAL stimulus in order to pay for more government spending years down the road. It seems it’s really not so much about stimulus as it is about spending more and controlling more. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [March 25, 2009, 7:47pm UTC](https://boards.straightdope.com/t/obamas-deficits-have-consequences/490766/18 "2009-03-25T19:47:17Z")
> [@Sam\_Stone](#): > > if you are someone who thought Bush’s deficits were irresponsible and unsustainable, have a REAL good look at it. The difference is that Obama’s deficits, unlike W’s, are **unavoidable.** ---
**Author:** ![RitterSport](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/rittersport/32/6326_2.png) [@RitterSport](https://boards.straightdope.com/u/RitterSport)\ **Post date:** [March 25, 2009, 8:09pm UTC](https://boards.straightdope.com/t/obamas-deficits-have-consequences/490766/19 "2009-03-25T20:09:11Z")
> [@BrainGlutton](#): > > The difference is that Obama’s deficits, unlike W’s, are **unavoidable.** True dat. There was just no reason to run a deficit during the Bush years, which were supposedly a boom time (turned out to have been hot air, but we didn’t know that at the time). You’re supposed to run surpluses in the good times and deficits in the bad times. Now, when your answer to both “Economy is doing well” and your answer to “Economy is doing poorly” is “Time for a tax cut”, then you must really think that deficits don’t matter. ---
**Author:** ![Sinaijon](https://avatars.discourse-cdn.com/v4/letter/s/dc4da7/32.png) [@Sinaijon](https://boards.straightdope.com/u/Sinaijon)\ **Post date:** [March 25, 2009, 8:16pm UTC](https://boards.straightdope.com/t/obamas-deficits-have-consequences/490766/20 "2009-03-25T20:16:58Z")
> [@RitterSport](#): > > Now, when your answer to both “Economy is doing well” and your answer to “Economy is doing poorly” is “Time for a tax cut”, then you must really think that deficits don’t matter. Hmm, and if your answer to both “Economy is doing well” and your answer to “Economy is doing poorly” is “Time for more government spending”, then you must really think that deficits don’t matter either. [Next page](https://boards.straightdope.com/t/obamas-deficits-have-consequences/490766.md?page=2)