By Bob Cesca: I’d like to get down to the bottom line when it comes to the deficit, the president’s fiscal policies and the impact of government spending during and after deep recessions.
This week I wrote a piece about Rove’s latest Crossroads GPS commercial attacking the president for so-called “job-killing debt.” The non-partisan FactCheck.org, by the way, ran an extensive debunking of many of the ridiculous lines from the spot, and made sure to note the following:
When Obama took office in January 2009, the federal deficit was already running at $1.2 trillion for the fiscal year that had begun nearly four months earlier, according to the nonpartisan Congressional Budget Office. It has risen since then, and Obama has failed to make good on a promise to cut the deficit by half. But it’s misleading to say Obama “started” spending borrowed money.
In fact, the numbers show spending actually has increased far more slowly under Obama’s budgets that it did under Bush’s, and more slowly than under any president in half a century. An analysis by the Wall Street Journal’s “MarketWatch” website on May 22 shows spending under Obama rising at an average rate of just 1.4 percent per year. Spending under Bush rose 7.3 percent per year during his first term, and 8.1 percent per year in his second term.
For the record, I’m not aware of anyone claiming that FactCheck.org has some kind of liberal bias. They don’t. Hell, Dick Cheney once pitched the website during a debate (he accidentally said “FactCheck.com” which was a porn site at the time — I checked), so it’s about as non-partisan as they come. So we can probably take this one to the bank. There’s only one bit that I will dispute, however. Technically, yes, the deficit has “risen” from the $1.2 trillion inherited from the last George W. Bush budget requests. The president added another $400 billion in 2009, spiking the deficit to its highest point. In subsequent years, the deficit has gone down.
But, holy crap, I’m digressing here.
Since I posted my “The Truth About the President and the Deficit, Part Three” column about the Rove commercial and that misleading USA Today piece, I’ve heard from conservatives who have asked with a sneer: “High government spending creates jobs? So where are the jobs if this is true?”
That’s too easy.
The Congressional Budget Office reported that the American Recovery and Reinvestment Act (ARRA, also known as “the stimulus”) signed by President Obama created upwards of 3.3 million jobs before the stimulus money began to dissipate, and before the congressional Republicans began to obstruct and sabotage any efforts by the president to pass the American Jobs Act or similar pieces of legislation. Put into perspective, the economy was hemorrhaging 800,000 jobs and month when the president was inaugurated. That’s unprecedented in modern post-Depression times. The economy was swept up in a financial collapse of epic proportions and not only did the stimulus (along with rescuing the auto industry and other measures) halt the collapse, but it rapidly began to reverse it to a point where GDP began to grow again, the Dow has doubled and unemployment is down to a less painful 8.1 percent.
But here’s a point I’ve been meaning to make.
I seriously believe that the president should have spent more, and he shouldn’t have been as aggressive with spending cuts. In other words, while I’m ballyhooing the president’s record on deficit reduction, I actually believe he should’ve been spending more and consequently increasing the deficit, given the wide variety of harrowing economic circumstances.
The big caveat, however, is that this should only last until the economy is self-sustaining and healthy. Then, and only then, should we focus on serious deficit and debt reduction because, yes, I also believe that long term and very high deficits and debt aren’t particularly good. But we need to spend big now — really big — and lock in some robust growth, and then fire away at the deficit. In the meantime, allow the Bush tax cuts for the wealthiest Americans to expire. Since this is what’s driving the largest chunk of the deficit and debt, allowing the cuts to sunset once and for all will vaporize a colossal slice of those now-famous deficit and debt charts. Keep the tax cuts for everyone earning less than $250,000, and let the rich pay more. Hell, they’re clearly not spending their tax cuts — and they never do, which is why tax cuts are a terrible way to stimulate the economy.
Many of the gripes I hear from conservatives are often made in a total vacuum. They tell me that we’re suffering from record debt and that we’re bankrupt and it’s all the president’s fault. The facts clearly dispute these claims and they’re too blinded by rah-rah sports team cheerleading for their side to see the truth and reality driving the situation. Yes, the debt is high. What’s causing it? In this order: the Bush tax cuts, the wars and the recession. I’m not making this up — it comes directly from the CBO.
So the president isn’t driving the debt. The previous president is. And the current president — the president they claim is a big spending liberal who hasn’t created any jobs — is actually trying to dismantle the programs that have contributed most to the economic and fiscal nightmare he inherited. He ended Iraq, he’s ending Afghanistan, he will allow the Bush tax cuts to expire soon and his economic policies have turned the economy around.
I get it. Yes, he’s president. Yes, the debt and deficit are high. In a vacuum and without any other information these two things can sound post hoc ergo propter hoc. Before this, therefore because of this. The president was inaugurated, then — BLAM! — high debt and deficit. But it’s simply not true. Not even close. If anything, the slow descent of the unemployment rate has been exacerbated by too little spending, rather than too much. Businesses have learned that they can increase their profits by squeezing more work out of fewer workers instead of hiring additional workers. Maybe some businesses are more cautious since the recession and don’t want to get burned again; maybe others are just gaming the system and exploiting the job market — existing employees are putting up with more work for less pay because they don’t have any other options.
That’s why corporations are sitting on a record stockpile of cash assets. Fact. $2 trillion, the biggest pile of cash since 1959. They’re bleeding their existing workers and sitting on the profits. Consequently, the government is the only player that can step in and fill the void by injecting money into the economy (Keynes 101). Yet the president is easing up on spending and allowing the influx of money to slow. Great for the deficit, not so great for his economic record in terms of unemployment and more robust growth.
Bottom line here: the Republicans have it entirely and predictably upside-down. The president isn’t spending as much as they say. The deficit is down, not up. The president rescued the economy from the brink of disaster, but he didn’t spend enough. He should be spending more. And the Republican nominee’s policies will make the deficit, the debt and the economy worse, not better. This is reality. And the Republicans are living in a shithole of lies.