Obama to recenter on deficit reduction?

30ashopper · #1 11-13-2009, 11:52 AM

Quote:

President Barack Obama plans to announce in next year's State of the Union address that he wants to focus extensively on cutting the federal deficit in 2010 – and will downplay other new domestic spending beyond jobs programs, according to top aides involved in the planning.

The president's plan, which the officials said was under discussion before this month’s Democratic election setbacks, represents both a practical and a political calculation by this White House.

On the practical side, Obama has spent more money on new programs in nine months than Bill Clinton did in eight years, pushing the annual deficit to $1.4 trillion. This leaves little room for big spending initiatives.

On the political side, Obama can help moderate Democrats avoid some tough votes in an election year and, perhaps more importantly, calm the nerves of independent voters who are voicing big concerns with the big spending and deficits. Even if Obama succeeds - and that’s a big if - it will be tough for many Democrats to sell themselves as deeply concerned about spending after voting for the stimulus, the bailouts, the health care legislation and a plan to address global warming, four enormous government programs.

“Democrats have to reassure voters we are not being reckless,” said a Democratic official involved in the planning. “The White House knows this and that's why we'll be hearing a lot about reducing the deficit early next year. Democrats owned this issue for the past four years and cannot afford to cede it to Republicans now."

After spending binge, White House says it will focus on deficits - Mike Allen and Jim VandeHei - POLITICO.com

The whole article is pretty good. Personally I'll believe it when I see it

but the meer fact that they admit this as an issue is welcome news. The possibility of the current cap-and-trade bill getting "backburnered" is good to hear as well.

After a year of pure recklessness, it seems like reality is starting to sink in at the White House. Congress on the other hand, meh, probably not so much. They've been living in a dream world for decades.

TooFarTampa · #2 11-13-2009, 01:30 PM

Pure recklessnes? Hmm. You can argue whether the simulus was structured properly, but most of those economists in the know agree that a stimulus was necessary, do they not? Also, tax receipts are WAY down - not sure by how much - which has been a big factor in the ballooning of the deficit. It's a natural function of the deep recession. I'm disappointed that the Politico story didn't really address this, but it is a good story nevertheless, and not at all surprising.

Several months ago the CBO's Peter Orzsag said that in 2010, Social Security will be next on the list. It has to be done. But the political fight will be ugly.

Winnie · #3 11-13-2009, 03:19 PM

I don't know that it is ture that "most of those economists in the know" agreed that a government stimulus was necessary. I think many politicians have implied that . This is from an article before the plan passed. For Many Economists, Stimulus Falls Flat - CBS News

Quote:

Don Boudreaux , the chairman of the economics department at George Mason University and contributor to CafeHayek.com , pointed out in an interview this week that economists still agree on many topics, such as the benefits of free trade and the harmful effects of price controls.

"Keynesianism was in fact not a good theory," Boudreaux says, referring to the theories of the late economist John Maynard Keynes that encourage government spending. "In the profession, Keynesianism was almost dead until the past few months. It was never dead in the popular mind. It's a flat Earth kind of theory. People look out and see the Earth looks flat, so it must be flat. By and large, macroeconomists rejected at least the standard Keynesian line. Now it's back and that's a real mystery."

I'm betting the bill that ultimately passed wasn't what many economists in favor of a government stimulus plan were expecting.

30ashopper · #4 11-13-2009, 04:11 PM

Quote:

Originally Posted by TooFarTampa

Pure recklessnes? Hmm. You can argue whether the simulus was structured properly, but most of those economists in the know agree that a stimulus was necessary, do they not? Also, tax receipts are WAY down - not sure by how much - which has been a big factor in the ballooning of the deficit. It's a natural function of the deep recession. I'm disappointed that the Politico story didn't really address this, but it is a good story nevertheless, and not at all surprising.

Several months ago the CBO's Peter Orzsag said that in 2010, Social Security will be next on the list. It has to be done. But the political fight will be ugly.

When any government falls short 1.4 trillion (That's close the annual revenue from the income tax), even during a downturn, you know there's a serious problem. Next years deficit is predicted to be equal or larger, even though the economy might recover some. This is proof to me that our current federal spending levels are totally unsustainable.

30ashopper · #5 11-13-2009, 04:29 PM

Quote:

Higher deficits mean more borrowing. More borrowing means more debt service. As deficits continue to rise, the federal government will have to direct more and more of its revenues to paying the interest on the accumulated debt. In September, that came to over $17 billion — just for the interest, not for principle reduction. Investors Business Daily warns that Obama’s spending spree will eventually force Washington to spend 40% of its revenues on debt service.

This has a couple good links in it:

Hot Air » Blog Archive » October deficit bigger than expected

That's pretty scary, for just the month of September, the federal government payed out 17 billion in interest payments. I wonder what percentage of that went to foriegn governments and investors?

surf fishin · #6 11-13-2009, 04:42 PM

Quote:

Originally Posted by 30ashopper

This has a couple good links in it:

Hot Air » Blog Archive » October deficit bigger than expected

That's pretty scary, for just the month of September, the federal government payed out 17 billion in interest payments. I wonder what percentage of that went to foriegn governments and investors?

I'm still trying to figure out how giving someone a raise with stimulus money = a job saved.