You’re #1! Good to be #1 in the fund huh? Big bonus for you this year if it keeps up!
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Paula Jameson

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Effects of the recession: By the time CBO issued its new projections on January 7, 2009 — two weeks before Inauguration Day — it had already put the 2009 deficit at well over $1 trillion. Using CBO’s August 2008 projections as a benchmark, we calculate that the changed economic outlook accounts for over $400 billion of the deficit in 2009 and slightly smaller amounts in subsequent years. Those effects persist; even in 2018, the deterioration in the economy since summer 2008 — including the extra debt-service costs — accounts for over $300 billion in extra deficits.

Financial Rescues: In October, the Bush Administration and Congress enacted a rescue package to stabilize the larger financial system by creating the Troubled Assets Relief Program (TARP). Together, TARP and the GSEs accounted for $247 billion (including extra debt-service costs) of fiscal 2009’s record deficit. They are expected to cost significant amounts again in 2010, but then fade quickly. In February 2009, the new Obama Administration and Congress enacted a $787 billion stimulus package – the American Recovery and Reinvestment Act (ARRA) – to arrest the economy’s plunge. By design, this package adds to the deficit. By our reckoning, ARRA accounts for $1 trillion in deficits over the 2009-2019 period (including the associated debt service). ARRA’s effects are highly concentrated in 2009 through 2011 and fade thereafter — delivering a boost to the economy during its most vulnerable period.

Tax Cuts / War: Just two policies dating from the Bush Administration — tax cuts and the wars in Iraq and Afghanistan — accounted for over $500 billion of the deficit in 2009 and $7.1 trillion in 2009 through 2019, including the associated debt-service costs. [6] These impacts easily dwarf the stimulus and financial rescues. Furthermore, unlike those temporary costs, these inherited policies (especially the tax cuts) do not fade away as the economy recovers.

(^^ One interesting thing to note on the war is that during the Bush administration a lot of the spending wasn’t budgeting and was instead put through as emergency spending. The new administration has added the war spending to the budget. “That is why this budget looks ahead ten years and accounts for spending that was left out under the old rules – and for the first time, that includes the full cost of fighting in Iraq and Afghanistan,” he said. “For seven years, we have been a nation at war. No longer will we hide its price.” http://www.wired.com/dangerroom/2009/02/weighing-the-ir/ )

Center On Budget and Policy Priorities / http://www.cbpp.org/cms/?fa=view&id=3036

So, I guess what I’m saying is — Obviously Obama inherited a huge deficit. So when we look at the steps he is taking in the new proposed budget, are there any good things? The CBO estimate says he will lower the deficit by $750 billion over the next 10 years. That’s a small step — it could be better. I think blaming him for submitting a $1.6 trillion deficit is a bit disingenuous, though.

As always Len <3

MLR

I’ve seen those same budget analysis machinations made by the liberal think tank known as The Center on Budget and Policy Priorities.

Lowering the budget deficits by $750B over 10 years is noble, but let’s put it into context: with respect to what benchmark? The more important area to focus on is the National Debt. Obama admits his budget will also be doubling the national debt over that same period.

His economic stimulus plan is a joke. I saw a graphic in the LA Times awhile back that showed true economic stimulus projects – infrastructure stuff with long term benefits, things like building dams, rail, highways and ports, repairing bridges, and upgrading airports and public communication systems – made up roughly $80B of that $787 “stimulus” bill. As I’ve highlighted many times before here, the rest of the money went to expanding government, and gov’t boondoggles like buying “fish sperm freezers,” buying rust undercoatings for $20,000 per government vehicle, and paying for academic studies on radioactive rabbit droppings.

Bush and Congress lost their way, no doubt, when it came to overspending during his administration. But we can’t deny that government spending is making a very significant jump over and above Bush’s pitiful performance in Obama’s budget – more so than anything George W Bush, or any other president in the history of the nation. We can both spin Obama’s spending issues however we want – but if we look at the average federal deficits as a Percentage of GDP on an administration by administration basis, this is what is certain:

Reagan: -4.1%
GHW Bush: -4.1%
Clinton: -0.1%
GW Bush: -3.2%
Obama: -10.6% in 2010 and -8.3% in 2011 (projected)

Somehow, those numbers make it hard for me to believe that Obama’s huge numbers are Bush’s fault.

Remember, Bush came into office in the middle of a recession too – and he managed to get us out of it largely thanks to those tax cuts.

Instead of blaming the Bush tax cuts for these huge deficits, let’s put the blame where it really belongs. Government’s unabated growth and its general inability to restrain itself.

You get the last word if you want it, my friend… (God, I feel like Bill O’Reilly.) LOL

GW’s -3.2% is ignoring Iraq and Afghanistan war spending. He was (unfortunately so) big on misrepresenting the budget. Once you add those “emergency spending” line items into his budget, what percentage is it? And then the question remains, why is that the most relevant measure?

All I am saying is that it is disingenuous to blame Obama for a $1.6 trillion deficit when he INHERITED at least a $1 trillion deficit.

I don’t know why you think I am blaming the tax cuts, just merely pointed out all of the factors that preceded Obama and added $1 trillion to the deficit he has since added to.

However, one thing I would be careful about is comparing government spending regardless of circumstance. Government spending during an economic expansion can lead to a crowding-out effect. Government spending during an economic contraction can actually lead to a crowding-in effect.

GDP = C + I + G + (X-M)
GDP = Consumption + Investments + Government Spending + Trade Deficit (Exports – Imports)

So during an economic expansion, consumption (consumer spending on household goods and services) increases and investment (business spending on capital goods and services) increases. That being the case, an increased government spending can lead to more inefficient spending than the market would normally dictate.

Now, the economy starts contracting. C & I are obviously going to go down. We can sit by idly and watch as GDP goes down or we can increase government spending to stabilize the economy.

It’s the bathtub effect — and an effort to smooth it.

Since you asked, if we can stipulate the war costs attributable to Bush at $800B over his 8 years in office – that would mean an extra $100B per year added to the budget deficit. The GDP in 2008 was $14 trillion. That hardly registers a blip on the numbers I provided with respect to deficits as a percentage of GDP.

I thought it was reasonable, MLR, to assume that you were trying to tie the Bush tax cuts to Obama’s deficits. “…tax cuts and the wars in Iraq and Afghanistan — accounted for over $500 billion of the deficit in 2009 and $7.1 trillion in 2009 through 2019, including the associated debt-service costs.” Yes? Was I out of line there?

Finally, I will argue that in times of economic contraction, the government should be able to stimulate and stabilize the economy by reducing the size of government and lowering taxes just as easily as ramping up deficit spending.

Williams is loaded with $$ and can do whatever he wants. He could have gone to the US, Europe or anywhere to do the operation. This is the same for rich Americans – they can get good health care in their own country now or go elsewhere if they choose.

He’s not the average Canadian (or American).