For U.S., a Sea of Perilous Red Ink, Years in the Making

[babylonsister]

For U.S., a Sea of Perilous Red Ink, Years in the Making

By DAVID LEONHARDT
Published: June 9, 2009


There are two basic truths about the enormous deficits that the federal government will run in the coming years.

The first is that President Obama’s agenda, ambitious as it may be, is responsible for only a sliver of the deficits, despite what many of his Republican critics are saying. The second is that Mr. Obama does not have a realistic plan for eliminating the deficit, despite what his advisers have suggested.

The New York Times analyzed Congressional Budget Office reports going back almost a decade, with the aim of understanding how the federal government came to be far deeper in debt than it has been since the years just after World War II. This debt will constrain the country’s choices for years and could end up doing serious economic damage if foreign lenders become unwilling to finance it.

Mr. Obama — responding to recent signs of skittishness among those lenders — met with 40 members of Congress at the White House on Tuesday and called for the re-enactment of pay-as-you-go rules, requiring Congress to pay for any new programs it passes.

The story of today’s deficits starts in January 2001, as President Bill Clinton was leaving office. The Congressional Budget Office estimated then that the government would run an average annual surplus of more than $800 billion a year from 2009 to 2012. Today, the government is expected to run a $1.2 trillion annual deficit in those years.

You can think of that roughly $2 trillion swing as coming from four broad categories: the business cycle, President George W. Bush’s policies, policies from the Bush years that are scheduled to expire but that Mr. Obama has chosen to extend, and new policies proposed by Mr. Obama.

more...

http://www.nytimes.com/2009/06/10/business/economy/10leonhardt.htm

[Beacool]

1. I would have put on bold these portions of the article.

The second is that Mr. Obama does not have a realistic plan for eliminating the deficit, despite what his advisers have suggested.

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This debt will constrain the country’s choices for years and could end up doing serious economic damage if foreign lenders become unwilling to finance it.

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When challenged about the deficit, Mr. Obama and his advisers generally start talking about health care. “There is no way you can put the nation on a sound fiscal course without wringing inefficiencies out of health care,” Peter Orszag, the White House budget director, told me.

Outside economists agree. The Medicare budget really is the linchpin of deficit reduction. But there are two problems with leaving the discussion there.

First, even if a health overhaul does pass, it may not include the tough measures needed to bring down spending. Ultimately, the only way to do so is to take money from doctors, drug makers and insurers, and it isn’t clear whether Mr. Obama and Congress have the stomach for that fight. So far, they have focused on ideas like preventive care that would do little to cut costs.

Second, even serious health care reform won’t be enough. Obama advisers acknowledge as much. They say that changes to the system would probably have a big effect on health spending starting in five or 10 years. The national debt, however, will grow dangerously large much sooner.

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What, then, will happen?

“Things will get worse gradually,” Mr. Auerbach predicts, “unless they get worse quickly.” Either a solution will be put off, or foreign lenders, spooked by the rising debt, will send interest rates higher and create a crisis.

The solution, though, is no mystery. It will involve some combination of tax increases and spending cuts. And it won’t be limited to pay-as-you-go rules, tax increases on somebody else, or a crackdown on waste, fraud and abuse. Your taxes will probably go up, and some government programs you favor will become less generous.


It's past the time to play the blame game. We all know that the Bush administration caused most of these problems, but they are long gone. The question now is whether this administration will make the tough choices that need to be made and whether we will accept that our glory days as a nation are probably in the past.

:(

[Kaleva]

4. tough choices probably won't be made

until the situation is so critical that there is no way to avoid it.

Members of FDR's cabinet were talking about how war with Japan would likely begin with a sneak attack on Pearl Harbor close to a year before the attack actually took place but little was done to prepare for it. Pundits and experts have warned for years that the US was ripe for a terroist attack and our airport safety measures was woefully lacking. Nothing was done though until after 9/11.

[babylonsister]

5. I didn't because I don't think this reporter has the ability

to read into the future, nor do I. How does he know what shape we'll be in 3 years from now?

[Beacool]

7. Of course he's no mind reader.

But many economists predict a very tough road ahead. Politicians may not like to talk about raising taxes, but does anyone doubt that taxes will go up and not just for the wealthy? Does anyone realistically think that we are going to be able to finance as many social programs as we would like?

;(

[babylonsister]

9. I'm sure taxes are going to go up. That's

how we traditionally get out of messes like this. But I think that stimulus needs to be pushed, hard. If people aren't working, they sure aren't going to be paying their taxes.

And Obama et al. have predicted a very tough road ahead. Anyone who's paying attention is aware of that.

I just want the 'credit' for this mess to be given to the appropriate party.

[Rosa Luxemburg]

2. It's strange how 'they' didn't talk about Bush's deficit whilst he was in office?

suddenly there is a deficit? Most were not aware of it in Bush's era

[CrispyQ]

10. Their hypocrisy is stunning, isn't it?

I wonder if they are so fucking dumb they don't see it or such fucking assholes they don't care.

[Rosa Luxemburg]

3. It's strange how 'they' didn't talk about Bush's deficit whilst he was in office?

suddenly there is a deficit? Most were not aware of it in Bush's era

[Kaleva]

6. Actually, it was talked about quite a bit

Fiscal conservatives were not happy with the deficit spending of the Bush Administration.

[Beacool]

8. Exactly!!

Besides, how is it constructive to keep beating a dead horse? The issue is how are we going to get out of this disastrous economic situation now, not what happened in the past.

[Rosa Luxemburg]

11. obviously but one has to remind people how it got there in the first place

how do you propose we get out of this disastrous economic situation?