Sunday, October 17, 2010

Barack Obama, Small Spender

Repost of something I put on Morgan Philpot's site, replying to this story:

There is a lot of myth to the "big spending Obama/big spending Democrats" meme. 
TARP was a holdover from the Bush era, and the funds we loaned out are thankfully mostly being paid back with interest.  Admittedly, it had more support from congressional Democrats than congressional Republicans.

The stimulus bill mostly went to 1) tax cuts designed to garner Republican support (which never came), and 2) shoring up state and local government budgets, so that they wouldn't have to lay off teachers, policemen, firefighters, etc., which would have caused unemployment to skyrocket and worsened the recession.  Only a small fraction was left over for infrastructure investments.  Read Paul Krugman's column, "Hey, Small Spender" for details.

Health Care Reform is a big-ticket item, but as the expensive parts don't kick in until 2014, it has absolutely nothing to do with the current deficit levels.  Also, HCR generates a lot of direct and indirect savings that will offset the costs of the program.  It will reduce Medicare costs, promote efficiency by getting medical records online, and give insurance companies less incentive to develop giant bureaucracies designed to stand between you and your doctor.  According to the CBO estimate (which Republicans consider the gold standard when the numbers work out in their favor) Health Care Reform will knock $130B off the deficit over the next decade, and $1.2T off it in the subsequent decade.

The biggest area of government spending growth hasn't been in new programs, but in expansions of the existing programs that are helping people through these rough economic times:  unemployment insurance, food stamps, Medicaid, etc.  These programs are designed to help people who are in trouble, so it's no surprise that they would go up when more people needed them.  Again, reference Krugman; see his blog from Oct. 16.

On a related note, why is Philpot criticizing Matheson for raising the ceiling on the national debt?  The national debt is a long-term problem that requires a long-term solution.  "Solving" it by just letting it hit the ceiling is like solving the problem of "my car is going the wrong direction" by slamming it into a brick wall.  Consider what would happen to the economy if the government hit a financial crisis where it had to suddenly cut millions of workers from its payroll.  [It would also require a sudden, dramatic scaling back of vital government services that people actually want, like food, water, and occupational safety, education, scientific research, oversight of industry, etc. -B]

I was a soldier training at Fort Sam Houston, TX in 1995, when Newt Gingritch and Co. shut down the government in order to try and get Clinton to agree to spending cuts in Medicare.  One day I woke up, took my weekly stroll out to the base library, and found the doors locked.  At that point, I was a hard-core Rush Limbaugh fan.  But Newt had taken away my books.  The books I was using to make myself a smarter, better-informed citizen and soldier.  I would gladly have agreed to a massive tax increase to get my books back.  :)

That anecdote represents one of the least-consequential aspects of a government shutdown, the sort of shutdown that candidate Philpot is demanding when he criticizes Matheson for raising the ceiling on the debt.

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