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Tuesday, July 26, 2011

Obama vs Bush - who is responsible for the US deficit?

The graph on the left is borrowed from the Washington Post and reportedly shows how the present US deficit and debt crisis has grown up.

The paper says that under George W Bush the deficit grew by $5.07 trillion whilst Obama has added just $1.44 trillion. However, they continue by pointing out that Obama’s major expenses were temporary as the stimulus is now over, while Bush’s were, effectively, recurring:

The Bush tax cuts didn’t just lower revenue for 10 years. It’s clear now that they lowered it indefinitely, which means this chart is understating their true cost. Similarly, the Medicare drug benefit is costing money on perpetuity, not just for two or three years. And Boehner, Ryan and others voted for these laws and, in some cases, helped to craft and pass them.

To relate this specifically to the debt-ceiling debate, we’re not raising the debt ceiling because of the new policies passed in the past two years. We’re raising the debt ceiling because of the accumulated effect of policies passed in recent decades, many of them under Republicans. It’s convenient for whichever side isn’t in power, or wasn’t recently in power, to blame the debt ceiling on the other party. But it isn’t true.

I wonder how effective the Democrats will be in getting this message out to the American people.
Peter, Peter ... the WP is a mouth piece of the Obama White House. You seem to have a penchant for focusing on biased articles that are one-sided. Even Fox news gives two sides to each story. All you have done Peter is give one side by focusing on a Washington Post article.

For example, the bar chart does not show the true cost of the Obama Health Care plan which is having a massive impact on the US economy. It is a massive costly program, so massive that American businesses are either asking for wavers from President Obama (even McDonalds asked for and got a waver) or are frightened about the impact on their future wage costs and consequently are not hiring new workers in anything like the numbers required. The Obama health care plan is the primary reasons that small businesses are not hiring; it along with other regulations have created a climate of paralysis and business uncertainty.

The level of uncertainty over costs associated with the Obama Health plan is a job creation killer - in fact it is a job killer so much so that unemployment among Americans has surged to over 9% (true figure is about 16%).

Perhaps you are not aware that the deficit has more than doubled since President Obama took office, but you would not know that looking at the WP Bush v. Obama bar chart.

As to Afghanistan – Obama supported ‘Afghanistan’; in fact the Democratic party were moaning over and over again that Bush had not put enough military assets into play in Afghanistan. The Democratic Party considered Afghanistan to be the ‘just war’ following the events of ‘911’.

I’m not a GOP supporter per se; I am for a near total withdrawal of all US troops from Iraq and Afghanistan, and from Europe, South Korea and Japan. I don’t see why American lives are put at risk in foreign countries; as they sometimes say here: “Too Much Already”. The USA can no longer afford to be the policeman to the world.

The #1 priority in the USA should be: JOB CREATION – getting Americans back to work. Obama’s health care plan is killing job creation, that is why I can’t support President Obama and was a ‘Labour Man’; a former member of the Labour Party. I believe in full employment, I can’t stand seeing such job destruction at the hands of the Obama health care plan – if it is so good, where are so many American businesses holding back on hiring and asking for Presidential wavers?
PS The Democrats had control of the House, Senate (i.e. the Legislature) and the White House - and had the opportunity to pass a longer term debt ceiling figure without any need for a single Republican vote in either house and since the WH was also in Democratic control there was no chance of a Presidential veto.

In addition, the Democrats had the power to roll back the Bush tax cuts, but decided not to; the Democrats had near-absolute power – they had both houses and the White House. Also, President Obama could have pulled out troops from Afghanistan since he is the Commander in Chief, but instead he decided to opt for a surge in Afghanistan. President Obama has rolled back Bush policies such as the Constellation moon shot project. For example, Bush started using drones – Obama has increased the use of drones in Pakistan. Bush enacted a policy to tap outgoing phone calls (with respect to the USA and the rest of the world) using ‘in-house’ court orders – Obama has not stopped this policy.

The way the WP put it, it is like whatever Bush did was set in stone when in fact that was not and this is not the case at all.

Since President Obama and the Democratic Party (which for two years had ‘control of both houses’ decided not to roll back many of Bush’s policies including the Bush tax cuts it follows Democrats now own those policies since they did not vote against them when they had the power to do so. Obama decided not to sign Bush arranged trade agreements with South Korea and Columbia (they are being renegotiated). The current President can roll back Bush policies at the stroke of a pen or when required via votes in Congress (when he had 2 years of Democratic controlled Senate and House of Representatives).

Anways/sideways, the current United States Triple A (AAA) credit rating will be, imho, ‘a goner’ even if the parties vote to lift the debt ceiling (which they probably will) absent significant cuts.

So ‘significant cuts’ are on the table regardless of the views of President Obama and the House Speaker. Absent such spending cuts in the debt ceiling vote the AAA credit rating will take a bashing – I think this is now dawning on the Democrats and the President so we will likely see significant spending cuts or President Obama is unlikely to be voted back in come November 2012 – not with such high unemployment and a bashed up credit rating. Americans don’t like it when America loses its shine and will show this at the voting booths. cw
It is certainly true that Bush piled tons of debt onto the US economy. It was an absolute disgrace.

Thank you for reminding us that tax-and-spend conservatives are every bit as common and every bit as dangerous as tax-and-spend liberals.
Sorry for the flurry of posts, but I'm probably one of a handful of Welshmen who has a very good grasp of how Congress works and can pick up on inconsistencies in arguments about the debt ceiling or 'things Congress'. By fluke or design I ended up in the USA when in fact I was making plans to move to Norway (for work) and learn Norwegian.

I agree that Bush performed badly in his second term; not just him, but the GOP as a whole.

But take note that TARP was supported by the Democrats - i.e., Congress had to vote on it and the Democrats had control of the House of Representatives for the last two years of the Bush administration, so the Democrats voted for TARP.

It is a bid sad that most folks (Americans included) don’t understand how their Constitutional bodies work/interact. It’s all in the US Constitution; I used to carry it with me to read whenever I was in a cab or on a CTA bus or waiting in line for something. It was probably because I read the US Constitution that I aced (I think I came top of the class) in “CON LAW 1” at law school. Think about that, a former Welsh council house kid more or less just arrived in the USA beating out American citizens on their own Constitution, aka “Highest Law in the Land” (it’s also a question that often comes up in the US Citizenship test).

One has to go back to President Clinton to see the last period of good husbandry of the US economy. Bill Clinton was just brilliant as far as the US economy went. I arrived in the USA when Bill Clinton held the White House. I could not agree with everything he did, but on his watch the US had budget surpluses and paid down the national debt and there were jobs galore in the USA. Chicago (where I moved to take up a job offer on Chicago’s ‘Magnificent Mile’) was booming with jobs as was the rest of the USA.

To be fair President Clinton had the benefit of the Reagan years of fixing a big mess with the economy and lack of discipline with the Feds. Also, previous Speakers played a notable role. For example, the 56th and 59th Speakers of the House stick out in my mind. The 56th (Tip O'Neil)and 59th (Newt Gingrich) stand out in my mind even if the 59th is not exactly popular today and stands no chance of winning the GOP nomination.

It is really sad to see the USA in such a bad state – take the sunshine state of Florida; I can’t get over how bad things are there, particularly in real estate. You can go down there and pick up properties at amazing low prices. The condo market there has pretty much collapsed. Resorts stand half constructed; it is almost as bad as what we are seeing in some parts of Spain. Moving to the USA during an economic boom and seeing how things worked out for the US is a terrible thing; the USA is, absent good leadership, going down the tubes and the economic prosperity of much of Europe with it. cw
Tom> I agree, the GOP (i.e., the Republican party) lost control - there is plenty of blame that can be stuck to the modern day version of both parties with the exception, in my view, of former President Clinton (Democrat); on his watch the US economy positively boomed - it was a job creation economy, a wonderful time in recent US history.

But we are where we are. The credit agencies have just warned Congress/WH/anyone that will listen that the AAA credit rating is under threat absent cuts.

So de facto there has to be cuts. I don't believe Medicare should be cut, it is wrong imho that Medicare is considered by many in the USA as an 'entitlement' - it is not because ordinary Americans pay for their future Medicare coverage from their pay packets so it is prepaid-paid for, and once people become seniors there ability to earn a living is often very diminished so how are they going to pay for $90,000 plus operations when they are old and are no longer working? I have had to face this dilemma because my mother needed such an op (and that was just the hospital bill, the surgeon and doctor bills were separate).

Against all odds (because I did not know how the system worked here) I managed to get my mother Medicare coverage (but that only covers 80% of the medical bills and then not always 80%), but the cost of looking after her (particularly during the first five years of her residence in the USA has practically wiped me out). She got Medicare coverage about 5 years after moving to the USA. You can only imagine the stress of looking after a senior that lacked medical coverage and was on just a tiny pension from back home (UK).

Anyway, the US is where it is (‘we are where we are’) and it is time to extend the debt ceiling and make cutbacks. The Obama health care plan needs to be repealed because it is a job killer and has caused American small businesses (who don’t have the throw-weight to get a waver from the President) to stop hiring. I also want to see all US troops called back from Europe, South Korea, Japan, Africa (yes, there’s even a US African force) , Iraq, Afghanistan and from operations related to Libya.

The US can no longer afford the massive cost of keeping US forces deployed around the world, not with a national deficit of well over 10 trillion dollars.

The US is moving towards a national debt close to its GDP, and the debt will pass its GDP if cuts are not made. Mortgages etc. will go up if the credit agencies carry out their threat to degrade the US triple A credit rating, and if this happens the EU will feel the impact because US consumers will have to cut back further leading to less imports.

The USA needs to do what I have argued Wales needs to do: prioritize job creation through national focus on creating jobs from innovation driven exports. The USA can’t maintain its spending programs for ever on the back of borrowing money from China et al. It’s simply not sustainable and will lead to catastrophe, not just for the USA, but for Europe/UK/Wales too. We must focus on job creation linked to innovation linked to exports; this is the only way we will compete with China, India, and S. Korea et al. cw
Take this with a pinch of gold dust and/or nanodiamonds, but one predicted that regardless of an agreement on increasing the US debt ceiling that the USA's triple AAA credit rating is toast absent significant cuts.

Seems at least some of the credit rating agencies are saying just that. They want around 4 trillion $ in cuts, but the current highest cutback number is 'just' 3 trillion $.

If you think this does not matter, think again. The current UK AAA credit rating will likely be downgraded if the US AAA rating is downgraded...

"MEGA ECONOMIC STORM" ... something that was predicted a few years ag ...

…while the UK real estate market was still strong, I had a letter published in one of the Trinity newspapers on just this theme.
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