Quantifying Obama’s (alleged) conversion to fiscal responsibility
This graph from economist Keith Hennessey says it all about whether President Obama is serious about fiscal responsibility (h/t: Greg Mankiw):
So, while out of one side of his mouth the president pledges to get serious about the budget, with the other side he’s proposing even more spending in the coming years than he did previously. To which Hennessey adds a very important point:
Remember that fiscal policy is not just about the budget deficit, the difference between spending and taxes. It’s also about the size of government: how much is the government spending, and therefore taking from the private sector?
On that point, let’s also note that the president wants to slash the charitable deduction write-off for families who earn more than $250,000 a year. This change is projected to reduce charitable donations by $100 billion over the next 10 years. That’s a $100 billion increase in dependency on government programs, a $100 billion bet that Washington knows these people’s needs better than the people in their communities do.
So, here’s a question: Is that a tax hike on the rich, or on the poor?
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180 comments Add your comment
Davo
February 2nd, 2010
11:47 am
Obama (Thelma) and Bernanke (Louis) are driving the economy towards the chasm; when the wheels fall off.
Ben turns to Barry,” I think if you got out and pushed we might just make it over the edge.”
“Wouldn’t that be bad?” questions the POTUS.
Ben smirks..”Nah; we got insurance with AIG and we’re all paid up. They won’t let us down. Trust me.”
Obama obligingly gets out but stops for a moment. “Hey, is that a parachute you got there”?
“No. It’s a backpack full of candy for the trip, “Ben answers, “now quit wasting time and start pushing.”
http://www.youtube.com/watch?v=-Lkvyd42vbs&feature=aso
RT
February 2nd, 2010
11:58 am
It is a tax hike on both and destruction of wealth in the U.S. The Keynesian’s again fail to realize that taxes destroy jobs (the poor need jobs) since the rich won’t donate as much, will stop investing (don’t need to pay taxes)and what could have been built, bought or invested in by the so-called rich won’t happen. This hurt the middle class also. What could have been produced and sold will not happen. So once again government intervention doesn’t create employment and results in unbuilt homes, washing machines, cars and commodities and services. It is a lose – lose proposition for all.
joan1
February 2nd, 2010
12:01 pm
Obama’s taxes on those who make more than $200,000 punish those who work to do well, those who employ others, and the like, and simply disincentivizes working for more dollars. What it is likely to do is cause those who are working and making something near that amount, reduce their hours so they can control their rate. In sum, it will drive down total overall GDP in this country, demoralize those who would work to do well, and generally decrease the standard of living all around. God save us from this administration.
Jefferson
February 2nd, 2010
12:08 pm
It’s a potential increase in revenue. You get fish where there is fish.
Jefferson
February 2nd, 2010
12:12 pm
That punish business is a tired line, don’t work and pay no income tax, now that will show them.
Ivan
February 2nd, 2010
12:15 pm
Reuters had reported yesterday that Obama will hit the middle-class with a back door tax hike. And that people making as low as $33,000 a year will pay more in taxes. Sounds like to me he’s going to hit everyone with a tax hike, Kyle.
Jefferson
February 2nd, 2010
12:20 pm
Unionize and go on strike.
Ferguson
February 2nd, 2010
12:28 pm
Since all you brilliant people have the answers; why don’t you share them with Barack or your local congressman. No matter what he does, it won’t be the right thing to do because so many of you just want him to fail. I will be glad when his term is up because he cannot win with you people. His only hope is an act of God. After he leaves office, the country will likely return to the hands of another dumb white man like Bush. I know that will make all you brilliant people happy.
Jefferson
February 2nd, 2010
12:42 pm
There again, truly amusing — to have all the answers and still unhappy…
LA
February 2nd, 2010
12:49 pm
“Quantifying Obama’s (alleged) conversion to fiscal responsibility”
Is that like his alleged conversion to Christianity by means of Revvvvvvvvvv Wright?
Cutty
February 2nd, 2010
12:53 pm
Republicans talking about deficits, HA! Paul Ryan of Wisconsin is the only one I take seriously. The rest of the conservative lot propose budget commissions to find solutions to the deficit, then vote against the same legislation they sponsor because it would make the President look good. They don’t care about no stinkin deficit. They care about getting reelected, period.
Davo- You must’ve magically forgotten who drove most of that trip to the edge. Typical republican.
LA
February 2nd, 2010
12:55 pm
“Paul Ryan of Wisconsin is the only one I take seriously.”
What about Eric Cantor, Bobby Jindal or Mitch Daniels?
Pretty conservative guys who have done pretty well.
Bobby has really helped turn Louisiana around.
@@
February 2nd, 2010
12:59 pm
We’re on the bullet train to serfdom.
That democratic socialism, the great utopia of the last few generations, is not only unachievable, but that to strive for it produces something so utterly different that few of those who wish it would be prepared to accept the consequences, many will not believe until the connection has been laid bare in all its aspects.–F.A. Hayek
There are times, Kyle, when I almost wish leftists could experience “the utopia” that exists in only in their minds. Their bodies would convulse at the sight of it.
Seeing them in such a state would almost be worth the sacrifice. Almost…
Davo
February 2nd, 2010
12:59 pm
Bernanke, debt limit, budget deficit, dollar
http://www.youtube.com/watch?v=JPs4lfWYwT0&feature=ytn%3Amptnews
2/1/10 Ron Paul’s Texas Straight Talk: Spending Freeze Not Likely
http://www.youtube.com/watch?v=CiDDz-mWaVY&feature=ytn%3Amptnews
Kyle Wingfield
February 2nd, 2010
12:59 pm
Cutty: I agree that Paul Ryan is one of the best of the lot. But most conservatives I know don’t like the budget commissions precisely because serve as a fig leaf for real action.
JDW
February 2nd, 2010
1:06 pm
There is no doubt we need a serious conversation about fiscal responsibility in this country. Problem is who is going to have it? On one side we have the Republicans who took a 200 billion surplus in 2000 and turned it into a 1 trillon plus deficit in 8 years. On the other we have Obama, who inherited the mess and doesn’t seem to have the desire to do what is needed i.e. raise revenues and cut spending. It is a simple formula folks taxes have to increase. Particularly on those that can afford to pay.
Intown Lib
February 2nd, 2010
1:08 pm
Is it a tax hike on the rich or on the poor? Answer: Neither. It is a partial elimination of a tax incentive to make donations to 501 (c)(3) non-profit corporations. You could just as easily read this as non-profits having to fend for themselves in the marketplace of worthy causes to which one can contribute rather than relying on the government dime (via tax incentives) to fund their missions. So, when viewed between your ideological blinders, you could just as easily see this as a conservative idea. But, you being you, you don’t.
Cutty
February 2nd, 2010
1:15 pm
Kyle- So why draft a bill proposing such? Seems like they’re more interested in playing politics than actually trying to solve the problem. Proposing a bill and voting against it looks petty and cynical if you ask me. Maybe they would have more credibility if they had actually funded the wars, Medicare Part D, and those tax increases they passed last decade. To say that they’ve seen the light of fiscal responsibility and it only took a year for that to happen seems disingenuous at best.
Eric Cantor, L.A.? I really don’t value the word of any republican leader who sat in the front seat of the car that Davo was talking about.
Kyle Wingfield
February 2nd, 2010
1:16 pm
Interesting point, Intown. And with whom exactly do nonprofits compete? Only with other nonprofits? Or is there a large competitor that, unlike them, has the ability to dictate its funding at their expense?
JDW
February 2nd, 2010
1:17 pm
I see in an earlier post the insane aurgument that a tax increase will cause someone making over 200K to just work less. Horse Hooey! Are your really trying to tell me that any rational person would forgo say $50,000 in income because that have to pay an extra 5% or $2500 in taxes? Wake up and smell the coffee! the only time we have balanced the budget in recent history was in the 1990’s. It was done by implementing pay as you go and raising taxes on the higher income earners. With no ill effects. The ill effects came only when Duhbya lowered those very same taxes on the way to the largest deficits in history.
Mike Percy
February 2nd, 2010
1:17 pm
Cutty: You must’ve magically forgotten who drove most of that trip to the edge. Typical republican.
On blog after blog, I read about “8 years of Bush” or “8 years of Republican control”. As if Pres. Bush and the Republican party in Congress had total control over the country. These statements often reflect either ignorance or complete denial of the facts.
First, we know that Pres. Bush did not have Congressional support in the final two years of his 2nd term, as the 110th Congress was controlled by Democrats (233-202 in the House, and 49-49-2 in the Senate with Leiberman and Sanders as “independents” who mostly joined Democrats when they voted). Any bill which passed the 110th Congress had to have Democratic support, and especially had to have the support of Speaker Nancy Pelosi. Indeed, they passed two bills that Pres. Bush vetoed and who’s vetoes were subsequently overridden. (Water Resources Development Act of 2007 and Food and Energy Security Act of 2007 (the 2007 Farm Bill)).
But even when Republicans held majorities in Congress under Bush, as they did in the 107th-109th Congresses, the majorities were slim, and especially slim in the Senate (often an even split). Thus whenever a bill was approved in the Senate, it had to be done with support of something close to 20% of the Democrats in the Senate (assuming 100% Republican support, which was not at all guaranteed). In light of this, anything that passed the Congress did so with something of a bipartisan effort, since Democrats could block the Senate on any issue simply by withholding cloture votes as a bloc (or something remotely like a bloc). Instead we saw one of the most “Bushy” bills, the PATRIOT Act, passed 99-1 in the Senate and 357-66 in the House. On the other hand, another big Bush bill, the Medicare Modernization Act, passed 220-215 with 16 Democrats voting Yea in the House (and 25 Republicans voting Nay) and 54-44 in the Senate, with 11 Democrats supporting it and 9 Republicans opposed (i.e., nearly ¼ of the Democrats in the Senate voted for the bill). In perhaps the most telling vote, the Iraq war was started with strong Democratic support, according to Wikipedia: “Introduced in Congress on October 2, 2002 in conjunction with the Administration’s proposals, H.J.Res. 114 passed the House of Representatives on Thursday afternoon at 3:05 p.m. EDT on October 10, 2002 by a vote of 296-133, and passed the Senate after midnight early Friday morning at 12:50 a.m. EDT on October 11, 2002 by a vote of 77-23. It was signed into law as Pub.L. 107-243 by President Bush on October 16, 2002.” Eighty-two Democrats (40%) supported the action in the House and 29 Democrats (50%) in the Senate also supported the action. In fact, the Democrats+Jeffords(I-VT) as a bloc had a 51-49 majority in the Senate, yet they still passed the bill. Even the Bush tax cuts of 2003 could have been held up, but 2 Yeas from Democrats in the Senate counterbalanced 3 Nays by Republicans, leaving the final vote in Dick Cheney’s hands breaking the 50-50 tie.
It has been widely reported than Democrats in Congress (esp. Barney Frank) blocked attempts by the Bush administration to reform and regulate the mortgage industry in the part of Fannie Mae and Freddie Mac. Even though in the minority party, they could block items in committees and by withholding cloture, because the Senate was so evenly split.
In the end, nearly everything in the Bush years, other than executive orders and other policy matters (e.g. rules set by Cabinet Secs.) was done with some measure of Democratic support. In particular, since only Congress controls the purse strings, all the money spent under Bush was spent with Democratic votes in support. Had Democrats held their party line, the “Bush years” could have come out differently.
In other words, the Democrats were often co-conspirators in the Bush follies, the Republicans are at least striving not to be the same in Obama’s follies.
HDB
February 2nd, 2010
1:20 pm
One facet of economics that doesn’t get noticed: One must SPEND money to MAKE money!! Corporations spend money – into equipment, labor, advertising – as INVESTMENTS to make profits; government spends money – taxes on roads, bridges, military, education – as INVESTMENTS – to create commerce, educated citizens for the workforce — to make increased revenue for the nation. You only get what you pay for!!
First Sergeant
February 2nd, 2010
1:22 pm
joan1
February 2nd, 2010
12:01 pm
Obama’s taxes on those who make more than $200,000 punish those who work to do well, those who employ others, and the like, and simply disincentivizes working for more dollars.
Now it’s $200,000? I guess next time, it will be $150,000. Joan1, get real and stop spreading lies.
LA
February 2nd, 2010
1:24 pm
“Eric Cantor, L.A.? I really don’t value the word of any republican leader who sat in the front seat of the car that Davo was talking about.”
Was it a GM or a Toyota?
DannyX
February 2nd, 2010
1:25 pm
What real action is that Kyle?
Does this action include returning the Republicans to power? We leave all the Republicans that helped destroy the economy and bloat the deficit in office? Every single Republican Senator voted YES on Medicare Part D and many are still in office.
What Republican success model are you going to use? Reagan? He tripled the deficit, raised SS/Medicare payroll taxes, and raised taxes most years he was in office?
Now the Bush W approach was completely different. He cut taxes and obliterated the budget with big spending. He is credited for a massive unfunded socialist welfare program. Is he the role model?
What about the Georgia State budget. Care to tell us how those tax cuts helped the budget and local economy? Explain how Georgia can function without bailout money while your at it.
How about health care? Should we use the Massachusetts model that Republican Presidential contender, Mitt Romney said at the time was “stealing the issue from the Democrats.”
Do we send a message to the Democrats by electing a Liberal Republican Senator? Who voted FOR RomneyCare?
This Republican economic brilliance is all myth.
LA
February 2nd, 2010
1:26 pm
“I don’t think anyone can doubt that our outreach has produced very little in terms of any kind of a positive response from the Iranians.”
Hillary Clinton
Unfortunately she has more balls than the President.
Ouch.
LA
February 2nd, 2010
1:27 pm
From the book “Game Change.” It seems that Hillary Clinton once told her campaign staffers that she believed that Barack Obama’s mother was a “Communist.” Wonder where she got that idea?
LA
February 2nd, 2010
1:29 pm
Fantastic news for conservatives.
A new Rasmussen Reports telephone survey of likely GOP Primary voters in the state finds Rubio leading Crist 49% to 37%. Three percent (3%) prefer another candidate, and 11% are undecided.
http://www.rasmussenreports.com/public_content/politics/elections2/election_2010/election_2010_senate_elections/florida/election_2010_florida_republican_primary_for_senate
Cutty
February 2nd, 2010
1:31 pm
Percy- I stopped reading your diatribe after the first 3 paragraphs. Sure democrats voted for republican initiatives under Bush, I never said otherwise. The point is that republicans tend to claim the fiscallyresponsible banner, yet their most ambitious programs they passed weren’t fiscally responsible. They weren’t even funded. Why should I believe that they will do the right thing now? Whatever they claim about big-spending, big government democrats like Obama, they did the same thing. Increased government through the creation of Homeland Security and increased spending. Their whole platform is hollow. Why do you ask? Because no republican president in 30 years has balanced a budget. Even during those Bush years when they have majorities in both houses, and Cheney to break any ties in the Senate. Say what you want about Bush, but he couldn’t pass his agenda without complicit ‘fiscal conservatives’.
First Sergeant
February 2nd, 2010
1:34 pm
Thanks Cutty at 1:31 pm for setting Percy straight. I was about to, but you got to him first.
Sandra
February 2nd, 2010
1:35 pm
You seem to forget that Congress pushed through major tax cuts through the ‘reconciliation’ process. No democratic support there. Any one who will look at themselves in the mirror and answer honestly know that those tax cuts benefited the very well off for the most part. Where was the outrage then? Where was the outrage when Bush would not even include the wars in his annual budget numbers? Not once was that done and if you deny it, you are lying both to all of us as well as yourself. At least Obama does that and has from the beginning.
Where was your outrage when the burden of the Bush wars were being being carried pnly by our men and women in uniform? We were told to ‘go shopping’ for heavens sake.
Forgive me if I seem to have a longer memory than you critics. I don’t want of expect forgiveness if I think you are all a bunch of whiners and complainers with not a single original thought that hasn’t been given to you by Rush, Beck, or Bootz.
HDB
February 2nd, 2010
1:37 pm
@ Sandra….you’re right on point!!!
Cutty
February 2nd, 2010
1:41 pm
No problem Sergeant. People tend to have a very selective memory when it comes to spending.
HDB
February 2nd, 2010
1:43 pm
Cutty —- KUDOS!!! You’re also on point!!!
Churchill's MOM
February 2nd, 2010
1:46 pm
Wing boy, I have reread this 3 times (your last blog)& except for the last sentence, it looks like a defence of the Bush tax cuts, if I am wrong I am sorry. I do love the last sentence, you are in a position to actually do something about our socialist Senators by simply following their votes, you missed the boat on Johnny’s $34 Billion Housing GIVEAWAY.. Tell your wife that it is a very bad idea to wear a dress and try to eat in an elementary school chair.
“What you’ll see is that tax revenues started rising in 2004 — i.e., after the most significant Bush tax cuts, in 2003 — and continued until the housing market collapsed. And in spite of the two wars, the deficit was falling at roughly the same pace as it did after the Clinton tax increases of 1993.
The budget was balanced five years after Clinton raised taxes. Had it not been for the housing collapse, which had nothing to do with fiscal policy, the budget would have been balanced five years after Bush cut them. Could he have cut the deficit faster by keeping spending growth in check? Of course — and the Republicans are still paying the price for their profligacy. But this was always a spending problem, not a tax problem.”
Mike Percy
February 2nd, 2010
1:50 pm
Cutty & 1st Sarge: you seem to think I’m in favor of the Bush/Republican agenda. I wasn’t, am not, didn’t vote for Bush, complained loudly about the drug plan, the farm bill, the little stimulus, etc.
My point was simply that anyone claiming that Republicans drove the country for 8 years is being disingenuous at best, ignoring the plain fact that almost everything done during that time had Democratic support. That’s what “co-conspirators” means–both parties were in the wrong.
I think what happened during the Bush years was bad and point out that if Democrats thought Bush & Republicans were evil and “driving the country to the brink” then they could have stood together and prevented any and all such actions from taking place. They didn’t.
I think that what Obama is proposing is worse and point out that the Republicans at least learned the lesson from the Democrats so as to not go down as co-conspirators.
P.S. You call that a “tirade”?
Keep up the good fight!
February 2nd, 2010
1:51 pm
Nice to take a graph and twist the numbers without an assessment of the underlying data. Have the numbers been adjusted for the reduced size of the economy? Spending the same amount after the Republicans broke the economy would still be an increase. How much of the budget is a reflection of the wars that Bush left? Has the graph taken those numbers out? How about a real meaningful assessment of these complicated issues instead of an oversimplification….and how about the Republicans join in support cutting deficits instead of supporting the banks and Wall Street.
Mike Percy
February 2nd, 2010
1:54 pm
Cutty & 1st Sarge: I also complained loudly about Bush’s amnesty plan, TARP, the Fannie/Freddie bailouts, and the bailouts for the automakers. I was hardly a shill for the Republican party, and think that I’ve been pretty consistent in my criticism of profligate spending by Congress no matter which party is doing it.
JohnD
February 2nd, 2010
2:03 pm
Hey y’all — Kyle does not care that every GOP President since Nixon ran huge budget deficits and were fiscally irresponsible.
Ya see, Kyle is a partisan hack. Its not important that the GOP has NEVER shown fiscal restraint when they are in power. All that is important is that when the other party is in power, you accuse them of fiscal irresponsibility and oppose everything they do –even if you agree with it. That worked real well for Newt and Republican Revolution of ‘95 against Clinton, just liked it work for that scatter-brained Pelosi, et. al., against Bush in 2006. In other words, it just retains the status quo — now there is a conservative virtue.
How any thinking person could be a republican, democrat or tea-bagger is beyond me.
Jake
February 2nd, 2010
2:04 pm
Capital gains should be taxed as regular income, the war expenses should end by bringing home the troops now, not sending more in, and we should demand a balanced budget amendment to the Constitution. None of this will happen because most of you are like RT above and think an increase in taxes will result in an end to investment. What are they going to do RT, pay 1/3 to Uncle Sam and make 2/3 for themselves or bury the money in the back yard and make nothing?
Kyle Wingfield
February 2nd, 2010
2:04 pm
Keep up: As is quite apparent from even a cursory glance at the graph, we are talking about spending as a percentage of GDP.
Churchill's MOM
February 2nd, 2010
2:06 pm
Mike Percy 1:50 pm
George Bush actually VETOED the Farm bill 3 times but our Socialist Senator Saxby Chambliis worked with Reed & Pelosi to over ride W’s veto. Wing Boy’s preciser wrote several good column before the veto but gave Saxby a pass in the election because he was a RINO. If Jim had done the right thing Allen Buckley a real CONSERVATIVE would be our Senator now rather than Saxby and what ever lobbyist owns him this week.
Mike Percy
February 2nd, 2010
2:08 pm
Sandra: “You seem to forget that Congress pushed through major tax cuts through the ‘reconciliation’ process. No democratic support there.”
I pointed out already that there was *some* Democratic support: “Even the Bush tax cuts of 2003 could have been held up, but 2 Yeas from Democrats in the Senate counterbalanced 3 Nays by Republicans, leaving the final vote in Dick Cheney’s hands breaking the 50-50 tie.”
If either of those Democrats had voted nay, then the Bush tax cuts would not have passed. Of course, it is also fair to say that if one one more Republican had noted nay, then it also would not have passed. But you claimed it was done with “No democratic support”, I’m just pointing out it was done with support of 4% of Ds in the Senate and 3% of Ds in the House.
DannyX
February 2nd, 2010
2:09 pm
Not so Fantastic news for conservatives.
Gallup reports that Obama got NO bump for his State of the Union address.
However, he got a very nice bump after his performance against the Republicans the other day. He is now at 51% approval up from 47. (51 approve, 42 disapprove.)
Republicans still have the momentum, but if they don’t come up with something other than their scorched earth campaign, huge gains will be out of the question.
LA
February 2nd, 2010
2:09 pm
“How any thinking person could be a republican, democrat or tea-bagger is beyond me.”
Better than being communist.
Mike Percy
February 2nd, 2010
2:09 pm
Churchill’s MOM: Bush vetoed the farm bill. I believe I said that…
“Any bill which passed the 110th Congress had to have Democratic support, and especially had to have the support of Speaker Nancy Pelosi. Indeed, they passed two bills that Pres. Bush vetoed and who’s vetoes were subsequently overridden. (Water Resources Development Act of 2007 and Food and Energy Security Act of 2007 (the 2007 Farm Bill)).”
But your point about Saxby supporting it is noted, and is something I complained about in several letters I sent to him at the time.
LA
February 2nd, 2010
2:10 pm
“However, he got a very nice bump after his performance against the Republicans the other day. ”
What were the total numbers in viewership?
“huge gains will be out of the question.”
Eh, the American people have had enough of democrats. Even democrats are jumping ship.
Jefferson
February 2nd, 2010
2:15 pm
D’s are in power, R’s are sore losers… for the time being.
Jefferson
February 2nd, 2010
2:15 pm
Amusing…
redneckbluedog
February 2nd, 2010
2:15 pm
All the president did was make Fox News and other sensationalistic media look very, very small (not hard to do). I don’t think he won over any votes because the GOP is beholden to this aforementioned media (as well as health care and oil companies). The GOP was out of ideas after they ran the economy in the ground in 2008, and they really don’t have anything new to offer, except attacking this president. I’m sensing a center-left shift in American sentiment, thanks to President Obama’s cool demeanor, responsible policies, and classy politics.