Writing for CNN, Peter Hamby reports that Team Romney will move to deficit and debt as its theme for this week. Part of that includes a set of talking points on how President Obama has added trillions to the debt, and will add trillions more if he isn’t removed from office. To wit:
President Obama has racked up more than $5.5 trillion in debt over the past four years, putting our national debt above $16 trillion—and in a second term he’ll let it climb to $20 trillion.
He also broke his promise to cut the deficit in half by the end of his first term, instead presiding over four straight trillion-dollar deficits.
The most bizarre thing about the deficit and the campaign is the fact that the risk of a fiscal cliff—which everyone agrees will crash the economy—is being used to justify a slightly smaller fiscal cliff. There are several players here, so the arguments are worth sorting out. Herewith, some Cliffs Notes:
Regardless of what happens on Election Day, at the beginning of next year more than $600 billion in tax increases and spending cuts automatically go into effect. That’s equivalent to about 5 percent of the entire U.S. economy—more than the projected growth of the whole gross domestic product next year.
The problem is, if we fall off this fiscal cliff, we plunge into recession. That’s because the cliff withdraws too much demand from the economy too quickly, at a time when unemployment is still likely to be high.
The Congressional Budget Office projects real economic growth will drop at an annual rate of 2.9 percent in the first half of 2013, and unemployment will rise to 9.1 percent by the end of next year.
When Oregon voted on the nation’s first ballot initiative in 1904, the idea—as high-school civics teachers have told students ever since—was to take power away from the industries that ran the state legislature through bribes and corruption and return it to the people. In those days, corporate interests dominated and corrupted state politics all across the United States. Mining and railroad companies loomed particularly large, buying off entire legislative chambers and putting lawmakers on their payroll.
Prime Minister Benjamin Netanyahu of Israel addresses the 67th session of the United Nations General Assembly at U.N. headquarters Thursday, September 27, 2012.
Last week, the Federal Reserve announced a third round of quantitative easing, or what is referred to as QE3. This is an open-ended purchase of $40 billion a month, along with a commitment to keep rates low until “a considerable time after the economic recovery strengthens.” Many economic commentators are saying that this is a serious change in economic policy. In order to understand why this is so important to our economy now, it might be helpful to go back to an academic debate about Japan in the 1990s.
When Wisconsin Congressman Paul Ryan and other hard-line conservatives talk about cutting the government’s budget, their primary rationale is that individuals can make better decisions with their own money than the government can. As Ryan himself said to an audience at Georgetown University, “We put our trust in people, not in government. Our budget incorporates subsidiarity by returning power to individuals, to families and to communities.” It sounds reasonable—of course we want individuals to have power, and of course we want communities to take care of their neediest members. And since conservatives have done a fine job of portraying the government as full of heartless, inept bureaucrats, allowing people to make their own decisions sounds better than the alternative.
At the moment, the hot issue of the 2012 presidential campaign is Medicare, with the Obama and Romney campaigns trading charges and counter-charges over the health-insurance program for the elderly. Since we at the Prospect love clarifying the muddy and making the complex understandable, we thought we'd unpack the arguments the two sides are making and provide some context so we can all grasp this a bit better. We'll start with the campaigns' claims.
Does Mitt Romney actually want to "end Medicare as we know it"?
That's the charge Democrats are now making; here's a video the Obama campaign just released:
If you’ve been following the news, chances are you have heard of “sequestration” by now. Everyone in national security—from the Pentagon to Congress to industry to the think tanks—seems to agree that the spending cuts would be a menace that deserves to be squelched. But is it?
If you missed it, Mitt Romney gave a long interview to CNN Money in which he explained his plans for dealing with taxes, cutting the budget, and juicing the economy. The interview is boilerplate Romney—vague declarations about policies he won’t detail—but he does comment on the recent analysis from the nonpartisan Tax Policy Center (TPC). In short, the Center found that Romney’s goal—across-the-board tax cuts that don’t affect revenue—is impossible without raising taxes on most Americans. Romney calls this a “garbage conclusion”:
This is something that other people have mentioned, and Jamelle brings up in his extremely helpful post about Paul Ryan, but it really needs to be emphasized: Paul Ryan is not a "deficit hawk." No matter how many times the news media tell us, it doesn't make it true. As I've said before, you can't call yourself a deficit hawk if the only programs you want to cut are the ones you don't like anyway. Show me someone who's willing to cut programs he favors (Ryan isn't), and would actually take potentially painful measures to balance the budget (Ryan wouldn't), and that's a deficit hawk. Ryan, on the other hand, is a conservative ideologue who couches what Newt Gingrich appropriately called "right-wing social engineering" in a lot of talk about making tough choices. But I've never actually seen Paul Ryan make a "tough" choice, at least one that was tough for him. There's nothing "tough" about a conservative Republican who tells you he wants to slash Medicare and Medicaid, increase defense spending, and cut taxes for the wealthy. That's like Homer Simpson telling you he's making the tough choice to skip the salad and eat three dozen donuts instead.
But oh boy, have the media ever bought into the idea of Ryan as the courageous budget-cutter...
Something happened today that, chances are, you know little about yet care about very deeply. It helps pay for the lovely farmers market you frequent every weekend. It’s behind all those corn-syrupy soft drinks you’ve been taught to avoid. It’s the reason you started hiking to that one artisanal shop for grass-fed beef after you read The Omnivore’s Dilemma. It helps feed America’s hungry, because it authorizes the federal food-stamp program, which feeds 46 million people. It’s the farm bill, usually the concern of only the corn, wheat, cotton, peanut, and soy-bean lobby, but it really should be called the food bill, and it has to be reauthorized every five years.
Pennsylvania Governor Tom Corbett's first stab at a budget for this year left the education community shaking. The Republican had balanced the budget in part through deep cuts not only to the state's colleges and universities but also to school districts. That's terrifying news for a state where some districts are already considering ending kindergarten to balance budgets.
Miraculously, thanks to unexpectedly high tax collections, the state's schools have been spared the chopping block. But Corbett's other proposal, major funding cuts for human services, still looks alive and kicking.
When the Supreme Court handed down the Citizens United decision, many people predicted that big corporations would start buying elections, now that they were allowed to spend as much money as they wanted on campaigns. While that certainly might happen in the future, it hasn't happened so far, probably because they're worried about the PR backlash that could result from too much partisan activity. Instead, the ones donating millions have been extremely rich individuals, most of whom are Republicans. But that doesn't mean corporations don't have clever ways of playing the political game. To wit:
Barack Obama did a bunch of big things in his first term—passed health care reform and ended the war in Iraq, most notably. If he wants to do something big domestically in his second term (especially since he seems to have lost any inclination to do anything about climate change), one natural area to try would be tax reform. It might actually be possible to arrive at something both Democrats and Republicans could live with, if we put aside Republicans' desire to make sure he never accomplishes anything, ever (which will continue into his second term). Republicans already have their own tax plan, which lays out some goodies they'll give people (especially wealthy people, you'll be shocked to learn) while conveniently avoiding any specificity on how the goodies will be paid for.
Some analyses have been done on the Republicans' plan, and they don't look too good:
