Thursday, February 2, 2012

Obama: "It's Not My Fault"


You state, "by any measure" the economy does very well when the Dems are running the show, but provide no evidence that that is the case. You paste one graph that shows GDP per capita in 2008 dollars, which if my math is right is one measure, not any, and organizes it by the party of the Presidency ignoring the House and Senate. Plus, it classifies Clinton as a Democrat, when both Rachel Maddow and I agree Clinton is one of the more successful Republican presidents of our generation. The graph does not show growth, so we can't easily determine if the growth during a Republican administration is better, worse or equal to other administrations. Finally, you ignore the Great Depression, which if my history is correct, was a Democratic president and Congress.

Your second graph is equally flawed, and irrelevant to boot. The graph shows total debt outstanding relative to current year GDP. What it suggests, and what I believe you are trying to suggest is deficits only became significant since Reagan. This is simply not true. Look at the CBO's Budget and Economic Outlook: Fiscal Years 2012 to 2022, Chapter One, page 3, figure 1-1, which shows Deficits or Surpluses Since 1946. Clearly, without question, deficits under Reagan, as a percent of GDP grew substantially particularly relative to the post War period. But the post war period was far from deficit free. Secondly, Reagan was widely criticized for his deficits, and still is by many. (And before I forget, please don't mistake me for a Republican). Next, let's say the estimates for the numerator are correct. According to classic Keynesian theory the reason for the robust growth during the Regan era were the large debts, which would imply GDP without the deficits would be lower and then it's not exactly clear what the trajectory of the Total debt to GDP ratio would be. Then we come to fiscal 2009, when deficits as a percent of GDP increased to 10%, greater than the any period, by far, since the end of WWII. If you are really trying to argue the last three/four years of government spending is normal or an inevitable consequence of prior administrations, then you are on very shaky ground.

(As an aside, don't you think "Things are bad but it's not my fault, so re-elect me," is a relatively weak argument?)

Reagan was a spendthrift, so was Bush I. Clinton finally restored Republican principles to Washington. Bush II was a spendthrift and Obama was either powerless to change anything or spent like a drunken sailor. Fine. Now what? My goal in bringing up the CBO automatic stabilizer report was to point out spending levels are elevated, and elevated not because of stimulus and not because of automatic stabilizers. They are elevated because Congress approved a bloated budget and the President signed it. Just like Reagan and the Bushes. 

We both know spending is elevated. But if we think it is a natural consequences of the economy then that could suggest one path to reduce spending and if current spending were a function of conscious decision to spend more money, then that could suggest a different path. 



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