An outfit called Bankrupting America sent out this video last night before the State of the Union address. I didn’t get around to seeing it until today. As the release promises, “The video highlights 3 decades of State of the Union presidential promises on fiscal discipline.”
There’s also a fact sheet that goes with it.
I find being part of a long, ongoing tradition to be very reassuring, don’t you? See, it doesn’t matter whether they’re Democrats or Republicans — presidents are all pretty much alike. People don’t change. Makes us feel… solid, grounded.
I would say, though, that one of those presidents actually did something about it: Bill Clinton. The video doesn’t mention that. But the fact sheet dismisses it this way: “Despite two years of on-budget surpluses, deficit spending in other years added to the debt.”
Oh, the video also assumes that the only way to reduce the deficit, and the debt, is by reducing spending. Raising taxes, and simply growing the economy to increase revenues, are not considered. In case you didn’t notice that.
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In another post Bart and I had an exchange concerning energy and who should take credit for an improving energy situation. Although I acknowledge Obama’s roll in this has been moderate at best here’s an area that Obama can take full credit for (and did in the SOTU) – the creation of jobs in the auto industry. From USA Today:
Obama is right: Rebounding automakers adding jobs
By Chris Woodyard, USA TODAY
After rounds of plant closures as the economy headed into recession — and some automakers headed into bankruptcy court — a resurgent auto industry is helping lead the way out with a hiring surge of an estimated 60,000 jobs this year.
I would guess that much of Clinton’s surpluses could be tied to the internet boom and the wealth that was created during that bubble.
Who are you going to raise taxes on? The 50% of the Americans who pay them now? Or just the “rich” people? You could tax Bill Gates, Warren Buffett, Larry Ellison, and all the Walton heirs 100% and it wouldn’t make a dent in the deficit.
Spending cuts would stimulate the economy by freeing up tax dollars to be used more productively.
Spending cuts would stimulate the economy by freeing up tax dollars to be used more productively.
-Doug
That’s hillarious. So all these people put out of work as a result of the spending cuts are somehow going to magically stimulate the economy. Seriously Doug do you believe this nonsense or do you just like to make me laugh.
Does anyone else remember that Bush kept hyping electric cars in his SOTUs?
Doug, that rationale for improving the economy is just bush talk but wasn’t his policy. He spent Trillions on the wars, Medicare Part D, giving away tax cuts to his supporters and W St. The rich don’t spend when they get a tax cut, they invest and not in people. Why are businesses in the US sitting on $3T in cash? Just waiting to use it more productively? People are hired when demand is increased and with a 70%+ consumption economy, who do you think needs to spend? You and I, business or the govt?
@bud
Read what I wrote. I said cutting spending would lead to more productive spending by the private sector. Government jobs rarely have any multiplier effect. They consist of pushing paper around agencies.
Abolish the Department of Education and a bunch of government hacks will disappear without any noticeable difference.
@j
Sorry – you can’t push the Bush wars and Medicare on me. I am 100% against both. They both represent wasted tax dollars.
Government jobs rarely have any multiplier effect. They consist of pushing paper around agencies.
-Doug
Tell that to Seal Team 6, fire fighters, bridge inspectors, teachers, cops, and the many, many others who work in stressful and sometimes extremely dangerous jobs trying to make your life a bit better and safer. At least you got me to stop laughing.
I would agree with the wars, but I remember when most seniors got to retirement age it was a passport to poverty unless they had many children living near to help them. Medicare is fine but just pay for it by not excluding those who have capital gains “investment” income from paying their fair share of taxes. How about the central point of the economic argument?
“Seal Team 6, fire fighters, bridge inspectors, teachers, cops,”
bud, I find it interesting that you included teachers in with the same group as SEAL Team 6, cops and firefighters. Do they constantly go to work wondering if they’ll come home that night? Do husbands wives and mothers cry that they’ll get out of teaching and go into a safer line of work?
@Bud
Which of those jobs you listed have a multiplier effect as I stated? A fire fighter doesn’t create more jobs. They are a service dependent on the size of the surrounding community created by the private sector.
Tell me what value you think the federal Department of Education has? Would you say No Child Left Behind has improved the education system in any real way over the past decade? All that money could have gone to raising the pay scale for teachers to attract and retain the best of them.
@ Burl,
Yes, I remember Bush pushing electric cars in his SOTU address. Bush is considered the “Father” of the modern electric cars as noted by The Car Connection. I realize this will probably send bud into convulsions and fits of rage to give credit to Bush for anything but the harsh fact is that Bush is responsible for the rapid development of electric cars.
Just as he is responsible for the HIV initiatives in Africa which are paying off. But, as we are so often reminded, Bush is an incompetent idiot, devoid of any intelligent thought or deed, mangler of the English language, and guilty of raping and pillaging the environment. (wonder if Al Gore has a home that is 100% green like the one Bush has in Crawford)
When you have a state that takes more than it gives in Fed taxes,and if there are grants received for fire, emt & related services, and for teachers the multiplier effect definitely applies to that money. Where was the money from NCLB? That was the rub that there were standards and but no funds to help. Just the facts.
Would you say No Child Left Behind has improved the education system in any real way over the past decade?
-Doug
No. It may have even made it worse. That was a bad piece of legislation that had strong bipartisan support. For those who advocate for bipartisanship this should be a good demonstration of just how worthless that principal is in the real world. So on this we agree.
As for the fire fighter. An employed fire fighter works to provide a service to his community and in return he’s paid a salary which is spent in the community on food, clothes, haircuts, pet grooming, trips to the state museum etc. etc. The barber, pet groomer and the rest in turn spend their wages in the community. All of those expenditures serve to multiply the fire fighter’s salary in the community. Savings is subtracted out of his net salary but the remainder creates additional jobs. Can’t remember the formula but the less saved the greater the multiplier.
Since the rich save the most they have the smallest multiplier impact. Hence job creation is greatest when those in the lowest end of the pay spectrum increase their income vs the wealthier. Consequently lowering taxes on dividends, interest and capital gains makes for bad economic policy during times of high unemployment. That’s why the payroll tax cut was a good idea that is apparently working to turn the economy around. Now if we could just spend more on cops, teachers and fire fighters our economic problems would be solved.
Yes Bart I’m convulsing. Not to give Bush too much credit just yet. Toyota, a Japanese Company, pioneered the modern hybrid car long before Bush came into power. And now Nissan is producing the electric Leaf. So far Tesla is the only American car company with a 100% electric vehicle, although in only very limited production. Ford should be introducing one soon. Given the very limited number of electric or even hybrid vehicles on the road I’m not sure anyone deserves much credit yet. There just isn’t much of an electric presence just yet. However, if Mr. Bush pushed for them kudos to him.
Now back to convulsing.
All the firefighters and SEALS and teachers and evil government workers keeping their jobs helps create the demand that fuels all those private sector jobs. Or, don’t those people go to the grocery store, buy clothes and pay mortgages?
What bud said, plus the rich have a well-documented lower marginal propensity to consume.
@Bud
The fireman didn’t create a job. He took tax dollars and turned them back into the community that gave them to him. The jobs have to exist first before he can get his pay.
There’s an excellent new documentary called “Revenge of the Electric Car,” made by the people who made “Who Killed the Electric Car?” — in it, we discover that Nissan is essentially gambling their entire company on non-gas vehicles, to the point where they’re selling them in North America below cost.
The demand for a firefighting force has to exist and the public entity responds to that need. He or she has to qualify for the job physically and must have the mental skills and do the job before he can take that “tax dollar.” I really don’t know where you’re coming from as you seem to have a view that is an extreme libertarian view, avoids the dynamics and understanding of the real world or have a spirit of hostility toward public employees.
I don’t mind paying for those public services as I get a good discount from my insurance company because they’re in place and provide a proven and necessary public service. Wonder if you think we ought to have the TN rural county model where if one doesn’t pay the fire fee they aren’t covered. That county doesn’t want to “put taxes on people,” but it’s a hellva situation when your neighbor’s house is on fire and it endangers your home or property. But I guess your response would be you’re covered as you paid your fee. To hell with them if they didn’t or couldn’t pay their fire fee.
Productive use of tax dollars, ugh?
@j
Read what I wrote. I didn’t denigrate fire fighters in any way. I said firefighters are not job creators. The private sector creates the environment that creates the need for services like firefighting. If you want more jobs, they have to be created in the private sector by people willing to risk capital. Rich people.
And without going back over everything I gave written on this blot, I can tell you I have specifically said that I have no problem with the portion of my property tax dollars that go fir police, fire, libraries. Those functions seem to spend money efficiently. I only complain about the money wasted in the public schools.
Fire fighters do not create jobs, of course–the municipality does.
I have extensive professional experience with so-called job creators. I was at the table (on a fairly measly salary) when the “job creators” bought out companies, investment bankers (like Romney) walked away with huge fees, the new job creators raided the pension fund, sold the assets and laid off all the employees. The employees got to scramble to eat (“pets or meat”)
The private sector creates the environment that creates the need for services like firefighting.
-Doug
No. What creates the environment that creates the need for firefighters is, well, fires. Seriously Doug do you even think about what you write? This is the kind of nonsense reasoning that caused me to lose respect for the libertarian movement.
Doug, Rich people may create jobs, but lately they’ve been creating them out of the country. That’s a fine thankyou to the country that gave them (or their grandfathers) upward mobility. Our country’s downward mobility continues despite 20+ years during which the taxes on the rich have been lowered again and again. If people want to blame Obama for not getting us out from under a recession that took 8 years to build (and was built on wars that went unfinanced while he further reduced taxes on the rich), then why is it so easy to scream that we need to continue to lower taxes? And I keep hearing about over regulation. People want to repeal the very regulations put in place to keep the financial markets from repeating the greed that led to the recent meltdown. Repeal environmental regulations? Shall we have another river on fire? At least we’ll be able to see what we’re breathing (but we still won’t be able to afford the insurance that will let us go to the doctor for treatment of the bronchitis we’ve developed as a result).
@Bud
Uh, if there weren’t taxpayers to pay for the firemen, there wouldn’t be firemen. Do you seriously question that simple statement?
I’m guessing that you imagine that when the first caveman invented fire, a caveman fireman jumped out from behind a rock to put it out.
@Kathryn
I never said that didn’t happen. But to lump Romney in that group is wrong.
Here’s the part I don’t get – if all these businesses that were closed were so useful and productive, why didn’t some other businessman come in and buy them first and reap all the profits for years and years? Why didn’t some compassionate soul who didn’t care about making a profit take over?
@Karen
We can bring all those jobs back to the U.S. How much extra are you willing to play for your clothes, electronics, toys, etc.? Labor costs here will increase the cost of every item made overseas.
“However, if Mr. Bush pushed for them kudos to him.
Now back to convulsing.” bud
Be careful when in full convulsion mode. You could crack some ribs.
There is no “if”, Bush did push for development of the electric car.
@ Karen – This recession took a lot longer than 8 years to build. The runup in home prices and related consumption started during the 1990’s, probably during GHWB’s tenure, or maybe under Clinton. We probably should have hit a substantial recession in 2000-2001, but somehow the Fed managed to keep us up after the double whammy of the dot-com bubble and 9/11.
If you really wanted to avoid future meltdowns (of this most recent type) you’d start by reinstating a lot of the Glass-Steagall Act, which was undone in 1999 by the Gramm–Leach–Bliley Act.
There needs to be a balance between environmental regulation and the unfettered raping of the earth. The mechanism to walk this line would be for companies to focus less on short term performance, and instead focus on long-term stewardship of investor capital. This long term focus would mean that corporations would consider the total cost of future restorations and mitigation when making production decisions. Instead, we focus on this quarter’s results, which make it palatable to sweep environmental (and other) issues under the rug to deal with at a later date, possibly by future generations or a different management team.
One issue that I’m very suprised hasn’t been addressed at all lately is how stock options are expensed by corporations. Generous option grants to senior management have been a huge contributor to the pay gap between the “1%” and the working class. I’m guessing it’s too technical an issue to get much play in the news, but it could be easily addressed and would correct a lot of the problem. In addition, it would be more friendly for existing shareholders if management wasn’t incentivized by diluting the ownership.
There are some that think the rich don’t create jobs.
Paul Krugman, however, isn’t buying this assumption:
“There’s no obvious reason why consumer demand can’t be sustained by the spending of the upper class — $200 dinners and luxury hotels create jobs, the same way that fast food dinners and Motel 6s do. In fact, the prosperity of New York City in the last decade — largely supported off of super-salaried Wall Street types — is a demonstration that you can have an economy sustained by the big spending of the few rather than the modest spending of large numbers of people.”
@silence,
Be careful, be vary careful. You could be exiled to Myrtle Beach for making truthful comments like this one.
“This recession took a lot longer than 8 years to build.”
Rick, that doesn’t sound like something Paul Krugman would make a big splash about. But let’s delve into this a bit. IF a person with Mitt Romney’s $20 million annual income DOES spend 90% on meals and luxuries then that would have the same stimulative effect of 1000 people who make $20k and also spend 90%. The problem is folks like Romney spend a far smaller percentage of their income. They just have so much money they have no need to spend it all to enjoy a fabulously luxurious lifestyle. Mitt Romeny probably spends less than half what he makes in any given year. The rest he shelters in the Cayman Islands and Switzerland. Hence one rich guys stimulative impact on the economy will be lower than the same income for the 1000 modest wage earners.
Doug
One deal I particularly recall was Wieboldt’s department store. It was profitable, but had a pension surplus and valuable real estate, including a store on Chicago’s State Street. The raiders were able to get junk bonds ( remember them?) promising to restructure, but in case of a problem, secured by the assets. In fact they just cleaned out the pension fund surplus, liquidated the assets and ran. Sure, they were within their rights and cut their deal, but no one but them was better off because of their actions.
As my guru says, in another context, just because you can do something doesn’t mean you should.
Bud, That is just mishmash with numbers. Rick people create jobs.
End of story.
@ Rick–
More small businesses create jobs, those owners are seldom rich. Some rich people create jobs. Others destroy them, and still others do neither.
@Kathryn
In order to buy something, another party has to be willing to sell. Why don’t we castigate the sellers who took the money and ran?
They were told, as I was taught back in the early 80s,that the new buyers were just going to make the companies more profitable. I didn’t represent the sellers. If I were to represent the sellers, I might (being older and wiser myself) advise them that that was not necessarily going to be the case, and to build in some protections, if they cared.
The big losers were the loyal workers and the loyal customers. It was a profitable store (whether it would have survived the retail shake-ups of the 90s and later, I do not know–it was kind of like Kohl’s). Stakeholders so seldom get a real say in what happens.
Rick people create jobs.
End of story.
-Rick
Rick, Iassume you mean rich people so I’ll respond with that sentiment in mind. This is obviously a response from someone who believe everything brother Rush Limbaugh says without giving it a bit of critical thought. Why don’t you just try and provide some sensible argument that shows how 1 guy making $20 million a year by doing nothing more than checking his stock portfolio a couple times a month creates more jobs than 1000 people going to work laboring at their craft for 40 hours a week but only earning $20k? It’s a simple question. So answer it. If not just don’t bother with some flippant comment that’s supposed to mean something.
“Why don’t you just try and provide some sensible argument that shows how 1 guy making $20 million a year by doing nothing more than checking his stock portfolio a couple times a month creates more jobs than 1000 people going to work laboring at their craft for 40 hours a week but only earning $20k?”
Using your numbers, the guy has likely invested more than two billion dollars (if he’s getting a 10% return) into the business. What happens if he cashes out? Plants close, people lose their jobs, cities fall, etc…
What if he invests another $2 billion? Will that create more jobs and more or larger plants?
Okay numbers are off… should be $200 million. Point is the same.