December 23, 2006
From the desk of Jane Galt:In which I am triumphantly vindicated
Back in July, I wrote this:
Pelosi is promising that if they take the house in the fall, Democrats will roll back the Bush tax cuts and focus on deficit reduction. Who wants to set the over-under on how long it takes them to find some pressing need that overrides deficit reduction? Or will the fact that they control only one branch hamper any attempts to pass new spending?
For Democratic economists who have been bashing Bush like a concrete pinata about the budget deficits, the answer is "ASAP".
Can we come up with an explanation for this seemingly inexplicable behaviour? Why, yes, I think I did:
Why aren't we doing anything about the budget deficit? Because no one cares that muchOh, liberals say they care, just like conservatives cared when they were out of power. But what most liberals care about is rolling back the Bush tax cuts, not cutting the budget deficit. Why do I say this? Because they supported John Kerry's plan to roll back the Bush tax cuts, and replace them with new spending on health care. Even if we rolled back all of Bush's tax cuts to those making over $200K, that would raise (according to the Kerry campaign) about $700 billion over 10 years; this would make a dent in the budget deficit, but won't close it. But given the very high marginal rates that would be required to close it (presuming we don't want to raise taxes on the poor and middle class), it makes more economic sense to look at the spending side, for example by giving up the idea that Medicare should provide prescription drugs.
But given the choice between closing the deficit and getting spending they want--on national health care, for example--most liberals would be full of reasons that the budget deficit isn't nearly as bad as we all have been thinking. Similarly, if they were in the opposition, watching all that new spending get passed, most conservatives would be happy to wax lyrical on the terrible downfall that awaits countries that spend more than they earn.
That, in short, is why we run a budget deficit; whoever is in power has bigger priorities. Perhaps that's a feature of Americans, or the American political system, but it seems to me that the only way we'll see our budget balanced is if we have the same combination of things that hit us in the nineties: a huge capital gains surge that surprises the hell out of our politicians, and a political system too gridlocked to spend the booty.
In other words, I'm not holding my breath.
When I posted that, eighteen months ago, it brought howls of outrage from people who accused me of misreading the Democrats' deep, deep committment to fiscal rectitude. Now it turns out--shockingly!--that what they really have is a deep, deep committment to holding onto power, I hope that we can avoid that sort of thing in the future.
I also want everyone to acknowlege that I am a genius, and bring me flowers and candy on Valentines, and all hold hands and dance around the maypole in May, and . . . excuse me, what are you still doing here?
Anyway, I won't say "I told you so." But you gotta know I'm thinking it.
Posted by Jane Galt at December 23, 2006 3:22 PM | TrackBack | Technorati inbound linksUmmm - 'I won't say "I told you so"'?
Oh, I get it. You wrote it rather than said it.
;)
Likewise, I'm still awaiting plaudits for my prediction that the sun would rise in the East today....
But, but . . . Democrats are Good, and . . .and Republicans are Evil!
Reducing the the deficit has to be a bipartisan effort. If one party spends their political capital on fiscal responsibility while the other uses earmarks to pander to their base and make friends on K-street while cutting taxes, guess which one is going to be more successful electorally? The more responsible party will lose and the irresponsible party will return the next election cycle for yet another round of tax cuts. Any effort to reduce budget deficit will be temporary at best. As Brad DeLong said ...Rubinomics is dead. Rubin and us spearcarriers moved heaven and earth to restore fiscal balance to the American government in order to raise the rate of economic growth. But what we turned out to have done, in the end, was to enable George W. Bush's right-wing class war: his push for greater after-tax income inequality.
As much as I'd like to eliminate the deficit, I cannot blame the Dems for this.
If one party spends their political capital on fiscal responsibility while the other uses earmarks to pander to their base and make friends on K-street while cutting taxes, guess which one is going to be more successful electorally?
Well, let me check the last electoral results here...
Yes, congratulations. Good call on the 1990s as well. The 1990s kicked off with W's father accepting tax increases and paygo. In a short period of one party Democratic government, Clinton got even more tax increases. Remember, at that time it was assumed that the Democrats had always controlled Congress and always would. Clinton got elected with a minority of the vote thanks to GOP disgust with Bush 41's breaking his "read my lips no new taxes" promise and Ross Perot's spending millions of his own money to educate Americans about the deficit.
What happens now? Will divided government save us as W suddenly finds his veto pen and uses it? Will the deficit become a make or break issue for 2008 presidential candidates? Most unlikely is a GOP take over of Congress in 2008. Will another President Clinton veto spending and tax bills passed by a Democratic Congress? Will a presidential candidate without strong ties to the party's traditional constituencies (Obama, Giuliani, Rice?) be able to come through in the primaries with a strong platform of fiscal responsibility?
I predict a fairly serious recession over the next couple of years. The Fed is going to have to raise interest rates to punitive levels in order to save the dollar from becoming useful only for wallpaper. As the Euro rises to $3, it will be the French and Germans who say "I told you so."
Hrm. You seem to have missed the fact that Pelosi and the House Democrats are still planning to reintroduce paygo, which puts them well ahead of the Republicans on any measuer of fiscal responsibility.
The parties aren't the problem, the voters are. If the voters mostly cared about fiscal responsibility, or following the constitution, or whatever, both parties would find it consistent with their ideals to be fiscally responsible, to never ignore the constitution in favor of political expedience, etc. But since most voters don't care about that stuff, the politicians also don't.
So long as you win more votes by running big deficits than by either raising taxes or cutting spending, that's what politicans are going to do. They're responding to the incentives we give them.
A) I'll believe it when I see it, and b) Paygo doesn't stop them from running a budget deficit; it just forces them to pretend that they've found magic new sources of revenue. It particularly will not stop them from enacting expensive new health care plans, pretending that they cost much, much less than they actually will. See, oh, EVERY SINGLE MEDICARE BILL EVER ENACTED.
Also, Paygo won't do a damn thing for four years. Promising to reduce the budget deficit later is what every politician does, even though later never materialises. If saying "but we'll reduce the budget deficit in four years" is an adequate defense for Democrats, it was an adequate defense for George Bush a year ago, when the economists championing this response were screaming that Bush had us on the fast track to hell.
I understand perfectly that the Democrats hate Bush's tax cuts, and want to spend more money on things like health care. That's a perfectly legitimate position. The pretense that this is motivated by budgetary concerns, isn't. Since I've taken quite a bit of shit from commentators over the last few years for pointing this out, you can forgive me if I engage in a bit of well-earned schadenfreude while watching the desperate scramble for a rational fig leaf, the inevitable realisation that everyone can see what they're trying to hide just fine, and the slow, shameful writhe under the public gaze.
Zubon said,
Well, let me check the last electoral results here...
I should have said "guess which one is going to be more successful electorally in the long term"
I agree with albatross that voters are the problem, not the parties.
Quote:
I also want everyone to acknowlege that I am a genius, and bring me flowers and candy on Valentines, and all hold hands and dance around the maypole in May, and . . . excuse me, what are you still doing here?
Oh you... :)
Hrm. You seem to have missed the fact that Pelosi and the House Democrats are still planning to reintroduce paygo, which puts them well ahead of the Republicans on any measuer of fiscal responsibility.
So the Democrats will promise to match any spending increases with equal tax increases? I guess it would be fiscally responsible for the government to spend 100% of GDP, as long as taxes were 100% of GDP.
Wake me up when anyone proposes a federal TABOR.
Okay, so Nancy Pelosi is breaking her word because, ummm...Brad DeLong and Paul Krugman says she should?
Wow. If you're thinking "I told you so," I'm thinking "you're a moron."
That's not saying Pelosi won't increase spending, of course - just saying that Krugman and DeLong aren't evidence of that, and anyone with an IQ in the double digits should be able to know the difference.
Thank goodness our gracious hostesses IQ is out of the double digits...unlike some of the commenters.
Am I missing something, or isn't Brad DeLong's post just a repost of Krugman's column without any editorial comment?
If he has come out in support of Krugman's argument, that should be pointed out, but it sounds like "Democratic economists" is really "Democratic economist."
We'll see what Congress does, especially if Democrats take the Presidency and hold the Senate in 2008. Then Jane will have ample opportunity for "I told you so." As of now, though, unless Paul Krugman really does run the world, it seems premature.
Congradulations on your call.
So after losing for years to the republican promise of something for nothing the democrats now see they can play the same game.
Lots of luck to the rest of us.
Will the republicans now switch back to their traditional role as the responsible party?
Um, it's rather well-known that DeLong posts entire articles (which is illegal under copyright law, by the way) when he wants to agree with them. If he disagrees with the article, he invariably tags it with some hysterically overwrought description ("the stupidest person in the world," "why oh why can't we have a better press corps," etc.).
Anyway, Jane Galt is right in her answer to lizardbreath's complete naivety. Pelosi nominally supports paygo, but only as an excuse to get rid of Bush's tax cuts. But you'd have to be insane to think that she'd pass up the opportunity to pass national health care or any other liberal money sink because she's a budget hawk.
JD, what secret signal does Brad DeLong use when he posts an article for discussion without expressing an opinion? Does he try to throw his readers off the scent with a bogus "So-and-so wonders why we X"?
Prediction: the recession in auto manufacturing and housing sales is about to spread to construction (both residential and commercial) and thence on to the consumer. Sometime in late 2007 or early 2008 it will be admitted that a recession started in either Q4 of '06 or Q1 of '07. The Fed will, thus, be in a box by August of '07 - cut rates to stimulate the economy and trash the dollar, or raise rates to defend the dollar and trash the economy.
Either way there will be deficits, as tax receipts drop off & unemployment increases.
Brittain33 -- I don't like having to repeat myself. I already said that when DeLong disagrees with something, he is never short for expressions of hysterical denunciation. Hence, when such hysterical expressions are absent, that's a sign of agreement.
Drat. Hit "return" too early.
There will be deficits no matter which party controls the Congress.
And with that, Merry Christmas...
JD, sorry to trouble you, but there are states other than agreement and disagreement. People post things for discussion only because they're newsworthy; Instapundit does it all the time.
I'll cut and paste the part from my original post to help with your understanding.
what secret signal does [he] use when he posts an article for discussion without expressing an opinion?
In another case, maybe you'd have a point, but it's rather stupid to keep pretending that DeLong didn't express an opinion, given his update to the post.
> We'll see what Congress does, especially if Democrats take the Presidency and hold the Senate in 2008.
Why do we have to wait until after 08 to find out that the Dems didn't mean "balanced budget".
Surely they'd love to force Bush to veto a balanced budget....
--Even if we rolled back all of Bush's tax cuts to those making over $200K, ---
and conveniently, Congress' salary is less.....
Surprise, surprise! The Hypocrats are hypocritical!
And so are you: you voted for them.
Jane, Jane...
Patting your backside is best left for others to do. And, preferably, the word 'Democrats', should not be included in any conversation that occurs at the same time. 'Party' can be left in, naturally. So if we are going to be getting fiscal, let's hear nothing of 'Pelosi' or her deficit in debit.
;-)
Some thoughts:
1. Maybe we should wait just a few more days before declaring Democrats as guilty of fiscal irresponsibility as the Republicans. Perhaps, we could even wait until they convene? Pass laws?
2. Krugman is advocating for not making things better but also for not making them worse. This is notably superior to the Republican policy of the last six years. The failure of anyone to be perfect does not make everyone equally guilty, as Jane seems to imply.
Now that I am done pontificating, I might as well admit my ignorance. In her comment, Jane repeatedly talks about Paygo not doing anything for four years. Why is that? What is the significance of the four years (the expiration of the Bush tax cuts?).
Tom G
> 2. Krugman is advocating for not making things better but also for not making them worse. This is notably superior to the Republican policy of the last six years. The failure of anyone to be perfect does not make everyone equally guilty, as Jane seems to imply.
Shouldn't we wait to see if the Dems actually improve things before giving them credit for doing so?
BTW - You do realize that your option of Krugman's position is just that, an opinion, right?
Ok guys you are right. How can Democrats even think about not cleaning up the fiscal mess Bush and the Republicans have made?! Outrageous!!
> How can Democrats even think about not cleaning up the fiscal mess Bush and the Republicans have made?! Outrageous!!
Since said "cleaning up" was their argument for electing them instead of Repubs ....
Maybe this is like those "didn't intend to keep" campaign promises that Clinton made.
Maybe next time the Dems will tell us which of their promises are sincere.
Dems only lost the House 12 years ago, you'd think that they'd remember that being in charge has some negative consequences, like people expecting them to deliver something more than photo-ops.
Andy,
It was amusing to read your comment about Democrats not keeping their campaign promises, not being sincere and delivering little but photo ops. Almost makes me nostalgic for those good honest years between 2000 and 2006 when they were out of power. If only we could turn the clock back...
Anyway, if Democrats do absolutely nothing about the defict, it would still make them better than Republicans in terms of fiscal discipline (it is hard to do worse - they would have to like triple the existing deficit considering we had a surplus in late 90s). But really, whats the point of wasting political capital of balancing the budget if the other party is going to come to power and have yet another round of tax cuts? Why not just admit it you are pissed Democrats refuse to play your game.
> But really, whats the point of wasting political capital of balancing the budget if the other party is going to come to power and have yet another round of tax cuts?
Because most people believe that taxes are a necessary evil, something to be minimized to the extent possible.
It's one thing to argue that income should match expenses. It's quite another to argue, as MS does, that lowering taxes is, in and of itself, a bad thing. Feel free to campaign on that.
And then there's the whole campaign promise thing. If you're going to argue that you're more fiscally responsible, you should try being so instead of "nuancing" your way into more of the same.
> (it is hard to do worse - they would have to like triple the existing deficit
I don't know how hard it is, but the Dems seem to have done it. Take Kerry's proposals. Yes, he proposed raising tax rates (letting the Bush cuts expire and then some), but the beyond-Repub spending proposals were even larger than the revenue projections (which were optimistic to say the least).
The Dems control Congress. Feel free to embarrass Bush by proposing less spending than he wants.
What? You actually won't do better?
Obviously you have closed yoiur eyes on a lot of malfeasance,not to mention theft , corruption, and getting the U.S. into an untenable situation.Anything the dems do would HAVE to be better than the last six years.
It's one thing to argue that income should match expenses. It's quite another to argue, as MS does, that lowering taxes is, in and of itself, a bad thing. Feel free to campaign on that.
I'm arguing that lowering taxes is a bad thing IF not matched with a similar decrease in spending. But that is exactly what Repubs have done and what they will probably do again in 2008 or when they come to power next time.
It is like a turn based game where Repubs get to cut taxes and be irresponsible while Dems are stuck with balancing the books. Guess which job is politically easier? It is a losing game and I dont blame Dems for not wanting to play it.
And yes, obviously Dems have their own priorities in terms of what they want to get done. I will reserve my judgement on them because we dont really know what will actually happen at this point.
> Obviously you have closed yoiur eyes on a lot of malfeasance,not to mention theft , corruption,
Murtha's side-biz and Reid's "bridge to my land" sure are comforting.
> Anything the dems do would HAVE to be better than the last six years.
We'll know soon enough.
> > But really, whats the point of wasting political capital of balancing the budget if the other party is going to come to power and have yet another round of tax cuts?
Why would the Repubs come to power if the Dems do a good/better job?
Aren't the Dems planning to win in 08, 10, 12, and beyond?
Actually, I'd argue that spending increases are more pernicious than tax cuts. Ultimately, offsetting tax hikes are politically more palatable, due to the dispersion of consequences, than offsetting spending cuts.
--I will reserve my judgement on them because we dont really know what will actually happen at this point.--
Ummm, history may be a guide, and Pelosi's wish list.
Dems weren't out of power in 2000 - Jumpin' Jim.
Didn't he want $180 bill for special ed, the pubbies offered $150 bill and it wasn't enough?
And they always had the power to stop the budget any time they wanted, they did it to W's judges.
But they chose not to.
I've already seen Delong try and defend this post, and he just doesn't make the connection between something looking good on paper, to him anyway, and what the Dems are actually going to do.
He treats paygo as a bullet proof plan that the Dems are going to follow to the letter, but he refuses to recognize that it is riddled with loopholes, and is not self-enforcing.
What we're going to see, is the Dems bandy about with the term pay-as-you-go about because it sounds good in a news bite, but they're just going to spend, spend, spend.
No sequestrations, lots of "emergency" measures, lots of reclassifying where exactly certain spending will fit, so as to exploit the numerous and large loopholes. Etc. etc.
Andy writes "Shouldn't we wait to see if the Dems actually improve things before giving them credit for doing so?
BTW - You do realize that your option of Krugman's position is just that, an opinion, right?"
I agree with your first point - Jane seems to be the one rushing to judgement here. Her opinion may prove right, but it staggers me that she feels vindicated at this point.
Your second comment is incorrect. My comment is an accurate representation of what Krugman wrote. He wrote "[Democrats] should refrain from actions that make the deficit worse." He also wrote in the same piece "[Paygo] would basically prevent Congress from passing budgets that increase the deficit. I'm for pay-as-you-go." Please provide your alternate interpretation.
Tom G.
> My comment is an accurate representation of what Krugman wrote.
I didn't say that you misrepresented Krugman. I said that your opinion on it was just that, an opinion. I'll quote your statement.
> Krugman is advocating for not making things better but also for not making them worse. This is notably superior to the Republican policy of the last six years.
We'll see whether it actually is "notably superior". At this point, it's at most a plan, albeit a plan that is not the sort of "fiscal responsibility" that Dems promised before the election.
Disagree with my assertion that the Dems' post-election position is different than their pre-election position? Cite a before election statement consistent with "But really, whats the point of wasting political capital of balancing the budget if the other party is going to come to power and have yet another round of tax cuts?"
Andy,
Thanks - I guess I misread you.
I don't understand your "We'll see whether it actually is 'notably superior.'" Are you doubting whether Democrats will accomplish Krugman's more limited target? Or are you doubting whether Paygo is superior to say large tax cuts, and new entitlements?
My understanding of the Democrats pre-election plan was that they would implement pay as you go. My current understanding is that they will do this. Can you cite an example of a specific promise on the deficit that has been abandoned?
Frankly, after the last six years, I would be happy with a year where we did not further cut taxes, or add a new entitlement program.
Tom
> Can you cite an example of a specific promise on the deficit that has been abandoned?
The Dem sympathizers above certainly seem to believe that the deficit is not an issue that a Dem majority should address. Some of them even went so far as to stay that working on it "is a losing game".
Since statements aren't legislation and we'll have legislation soon enough, I'll wait.
> Frankly, after the last six years, I would be happy with a year where we did not further cut taxes, or add a new entitlement program.
Dems are promising new entitlement programs and expansions. Maybe they won't follow through or maybe Bush will veto, but how likely is either one?
> Or are you doubting whether Paygo is superior to say large tax cuts, and new entitlements?
It depends on your goal. At best, paygo (forecasts to cover new spending, whether or not it actually does) delays the day that the bill comes due. Odds are that we won't do anything useful during that delay, so that's "worse, but later". Bringing things to a head sooner might well be preferable.
Andy,
I think you are misunderstanding what I am saying, perhaps intentionally.
Obviously given everything else equal, a smaller budget deficit is preferable. However, I believe, we will not actually be able to reduce the deficit in the long term until both parties are committed to the task. If only one party undertakes the effort while the other gets to irresponsibly cut taxes for political gain then in the long run we will not accomplish much anyway. So, like Paul Krugman said, while reducing the deficit is something that we should do in the long run, it is probably not the best option given the current political climate.
As for the misleading campaign charge, as I said before, as long as Democrats dont exacerbate the currect fiscal situation they are still much better vis-a-vis Republicans.
This is a problem that both parties should take seriously. I think a constitutional balanced budget amendment would be best actually. Right now political incentives for either party to be fiscally irresponsible are simply too great, unfortunately.
MS:
I disagree with this: "we will not actually be able to reduce the deficit in the long term until both parties are committed to the task".
The fact is that voters a) like to get benefits but b) don't want to pay for them. As such, there are natural constituency for both increased spending as well as tax cuts. By and large, Dems appeal to people more interested in a) whereas Reps appeal to people more interested in b).
Defecit reduction has no significant natural constituency. The only way we might see defecit reduction is when the two parties have sufficient power to cause gridlock. With government stalled, the country can grow its way out of (or at least reduce) the defecit. See the '90s for an example.
Conceivably the problem might become so bad that even politicians would be compelled to demonstrate leadership, but if you look at the rest of the world (deficit & debt as a % of GDP), we're nowhere near that point. (Note: that's a good thing)
A constitutional balanced budget ammendment would be a good idea, but I'd want a TABOR ammendment to go with it, though.
> Obviously given everything else equal, a smaller budget deficit is preferable.
Except, as I tried to point out, that's not "obviously true". It certainly isn't necessarily true, and it may not even be true.
I'll try again. If it is going to take catastrophic conditions to break us out of the deficit pattern, we might be better off having said catastrophe sooner rather than later. Why? Because we won't have had as much time to deteriorate during deficit times.
> If only one party undertakes the effort while the other gets to irresponsibly cut taxes for political gain then in the long run we will not accomplish much anyway.
That's only if you believe that the voters will go back and forth between the responsible party and the irresponsible one. Again, I'm not sure that that's true.
> as long as Democrats dont exacerbate the currect fiscal situation they are still much better vis-a-vis Republicans.
What is it about Dem policy proposals that suggests that that's true? Yes, they say that they'll do certain things in the abstract, but their concrete proposals make the abstract goals impossible.
Are you betting that Bush will fend off their excesses? If so, what is it about the last six years that suggests that he will?
Andy,
You remain remarkably unspecific in your claims.
"Dems are promising new entitlement programs and expansions"
Who is promising which new entitlements?
And where did you get your definition of Paygo?
"At best, paygo (forecasts to cover new spending, whether or not it actually does) delays the day that the bill comes due ... so that's "worse, but later".
See for example: http://en.wikipedia.org/wiki/PAYGO
Paygo requires actions that increase the deficit be offset by actions the decrease it. Paygo worked quite well in 1990s. At worst, not at best, one could manipulate with unrealistic assumptions about future years.
Tom
> And where did you get your definition of Paygo?
By watching Congress.
It's understandable that they'd spend based on forecasts, but they don't go back and reduce when the forecasts aren't satisfied. (However, they do spend unexpected extra revenue.) They don't reduce the next year's spending to cover the unexpected previous year's deficit.
At best, they adjust the starting point of the next set of forecasts to match recent experience, so the cycle repeats.
What worked in the 90s is not a definition, but a structural conflict, a conflict that I don't see in 06.
You disagree and think that Pelosi will be a fiscal Gingrich.
Fair enough - we'll know soon.
Except, as I tried to point out, that's not "obviously true". It certainly isn't necessarily true, and it may not even be true.
I'll try again. If it is going to take catastrophic conditions to break us out of the deficit pattern, we might be better off having said catastrophe sooner rather than later. Why? Because we won't have had as much time to deteriorate during deficit times.
Lets see if I understand this right - deficits are bad because they will lead to a catastrophe, except they are good because they will bring the said catastrophe sooner which is better. This assumes of course that a catastrophe is inevitable. I guess that makes sense although I'm not quite that pessimistic.
> as long as Democrats dont exacerbate the currect fiscal situation they are still much better vis-a-vis Republicans
That's only if you believe that the voters will go back and forth between the responsible party and the irresponsible one. Again, I'm not sure that that's true.
Deficits alone are not a big factor in determining which party will win elections. Taxes matter more (thus the incentive to cut taxes is greater than for a balanced budget) but still not the determining factor. Other issues - foreign policy, war on terror, "values", etc - matter a lot. Historically though, Democrats and Republicans have alternated power with no one party clearly dominating
> as long as Democrats dont exacerbate the currect fiscal situation they are still much better vis-a-vis Republicans.
What is it about Dem policy proposals that suggests that that's true?
To be honest, I dont know and I am not that familiar with their policy proposals to predict what they will do to the budget. Therefore I am reserving my judgement until I actually see what happens. Most of my comments were based Paul Krugmans's and Brad DeLong's comments which did not seem fiscally reckless to me. If Dems prove to be just as irrespobsible as Republicans have been in the last 6 years then I will be disappointed to say the least.
Also, not all spending is the same. Repubs and Dems have different spending priorities. Therefore while Bush was willing to give Repubs a free pass, that may not be the case with Dems.
> Historically though, Democrats and Republicans have alternated power with no one party clearly dominating
That's true of the presidency, but not of Congress.
Before the Repubs took the House in the mid 90s, the Dems had held it for decades. Apart from a couple of years during Reagan's term, the same is true of the Senate.
The Repubs held congress for around 10 years. Even switching every ten years is alternating fast enough for the purposes of this argument.
I suggested that the 90s surplus was due to a structural conflict. Other folks credit Clinton alone. Who is going to play that role this time?
Andy,
Your observation that Paygo does not work comes from watching Congress. When in particular did you see it fail as badly as what we have seen over the last six years? My potentially faulty memory has paygo in place and basically working before Gingrich came to power.
Still interested in who and what you were thinking of when you wrote "Dems are promising new entitlement programs and expansions"
Tom
Tom G seems to believe that the term "paygo" has some sort of power. I'm pretty sure that it's just a word and that there aren't any "paygo" police that ensure that it's only applied correctly or that stops congress from spending more than govt takes in. If I'm wrong, please point out the mechanism constraining US govt budget decisions. (An ordinary law can't do it.)
The 90s cash-flow surplus occurred because the US govt spent less than it took in during that time. Period. Full stop. (Of course, we're all ignoring the fact that the govt was incurring obligations so the budget was actually in deficit even then, but let's not quibble.)
Depending on who you believe, that surplus occurred because of a structural conflict, Clinton, or because the cold war ended and the savings and loan crisis was paid off faster than the spenders could get ramped up.
The relevant question is "will that happen now, and if so why?" Paygo isn't an answer to that question - it is one way to label its happening.
What is it about Bush, the new Congress, and/or the world situation that leads anyone to believe that the US govt will have a cash-flow surplus anytime soon?
> My potentially faulty memory has paygo in place and basically working before Gingrich came to power.
Clinton was first elected in 92. Gingrich became speaker (and the Repubs took the house for the first time in 40 years) in 94.
If you want to argue that Clinton had nothing to do with the cash-flow surplus, that it was actually created during Bush I, feel free. However, if it happened during Clinton, it basically happened during Gingrich.
One advantage of crediting Bush I is that he had a Dem congress, including many of the folks now back in power. Then BushII merely has to play the role of BushI, Pelosi has to play the role of the House leadership of the time, and you have to find something analogous to the savings and loan crisis and the cold war to end before spending ramps up.
However, the surplus occurred during the Clinton years. Bush is no Clinton and Pelosi is no Gingrich, and we're still looking for some appropriate world events.
> As for the misleading campaign charge, as I said before, as long as Democrats dont exacerbate the currect fiscal situation they are still much better vis-a-vis Republicans.
What is the current situation? Is it the current budget or the current budget trend?
If the Dems keep to the current spending in absolute dollars, then we can grow and inflate our way out. If the Dems keep to the current spending in inflation-adjusted dollars, we have to grow our way out. If the Dems just continue the trend of throwing money, they're just like the current Repubs. (Unless someone wants to argue that the Repubs had run out of new ways to spend money.)
Andy,
I don't know what to make of this comment: "Tom G seems to believe that the term "paygo" has some sort of power."
No I believe the word describes a type of budget rule that the US Congress operated under in the past. I believe that rule had a benign impact.
I did not choose a time frame to maximize credit for an individual but to give my honest memory of when the rule was in place. I am happy to give credit to Bush senior, a serious type of Republican, that our country has much missed over the last six years.
Tom
> I did not choose a time frame to maximize credit for an individual but to give my honest memory of when the rule was in place.
As I wrote above, I'm pretty sure that "paygo" is just a word and that there aren't any "paygo" police that ensure that it's only applied correctly or that stops congress from spending more than govt takes in. If I'm wrong, please point out the mechanism constraining US govt budget decisions during "paygo" or at any other time. (An ordinary law can't do it.)
Tom seems to think that "paygo" is important, but now we find that he doesn't know when it was in place and what effects it had. (For example, was it in place during the surplus years? Was it in place during any years when the deficit increased.) Hmm.
Paygo is a slogan/label. It doesn't actually do anything. Either they spend less than they bring in or they don't. Or, if you'd like a "soft landing", either the difference between what they spend and bring in decreases or it doesn't.
Comments are Closed.