The Obama Administration

Automatic Stabilizers: There When Congress Isn't

Flickr/JMazzolaa
As we approach sequestration today the dominant narrative continues to be that the huge run-up in the deficit since the Great Recession has been our greatest political—perhaps even a moral—failure. But it isn’t a failure. This is exactly how the system was designed to work if the economy ever saw a downturn on the scale of the 2008 financial crisis. The deficit is collapsing through the same planned process. As the economy recovers, it is falling quickly, down to 7 percent in 2012, and an estimated 5.3 percent in 2013. These are our "automatic stabilizers" at play. Though it sounds vaguely hydrologic or like a bad steampunk creation, it’s straightforward: The economy will naturally suffer from periods of slack demand in which there isn't enough purchasing power in the economy to produce goods and employ all of our resources, including people. Automatic stabilizers then kick into motion in to counteract this. One important automatic stabilizer is the tax code, which has people pay less...

Dear White House, You'll Regret This

Olivier Douliery/AP Images
The latest dust-up in the descent of Bob Woodward from fearless investigative reporter to manipulative media celebrity began with his contention in a Washington Post column that President Obama, by asking for revenue increases as part of a deal to defer the sequester, was “moving the goal posts” from the 2011 budget deal (in which Obama got thoroughly hosed by the Republicans). When the White House pushed back and an unnamed “senior official” told Politico that Woodward would “regret” those comments, someone, presumably Woodward, leaked an e-mail between himself and White House top economic strategist Gene Sperling. Since then, the political class has been abuzz with chatter about Woodward’s modus operandi, the ethics of burning a source, his longstanding strategy of trading access for friendly treatment, and so on. But far more revealing (and appalling) is the content of the e-mails . Here's what Sperling told Woodward: The idea that the sequester was to force both sides to go back...

Falling into Woodward's Den of Iniquity

Flickr/Miguel Ariel Contreras Drake-McLaughlin
When I got to my computer this morning and saw how many people were blathering about Bob Woodward, a wave of despair washed over me. First, because this is the kind of stupid argument from which we thought we could get something of a reprieve once the campaign ended, and second, because Bob Woodward himself, and the deference with which he is treated, just make me depressed. It's not that Woodward isn't a good reporter, of a sort. But Watergate was pretty much the last time his reporting enhanced public understanding in a meaningful way. Woodward's modus operandi since then has been to approach powerful people and convince them to tell their side of major events through him. Knowing that if they don't, someone else will and they might come out looking bad, many of them give him their spin in great detail, which his books then pass on to a wide readership. They aren't so much a record of events as a record of events as the people who talked to Bob Woodward would like us to see them...

The U.S. Budget, By the Numbers

AP Photo/Ed Andrieski
AP Photo/Ron Edmonds I n the argument over the "sequester," the across-the-board cuts to both domestic and military programs that are about to take effect, everyone in official Washington seems to agree that the government's budget is bloated. Despite the economists telling us that this is still a terrible time for austerity (just look how well it has worked out for Europe), the argument between Republicans and Democrats seems to be whether we need to just slash the budget mercilessly, or slash the budget somewhat less and raise some taxes. But is the federal budget really so big? Let's take a look at some graphs. If you look just at raw dollars, it's true that the size of government has increased steadily in recent decades (there are a lot of reasons why that's the case). It's also true that spending went up at the beginning of the Obama administration, but it's important to understand why and how. The answer to why is simple: the Great Recession. When a recession hits, government...

The Five Most Terrifying Things about the Sequester

AP Photo/J. Scott Applewhite
The latest fiscal showdown concerns the “sequester”—across the board cuts to (almost entirely) discretionary spending that will total just over $1 trillion in the next decade, and which are set to take effect on March 1. What should those who have better things to do with their life than follow fiscal policy debates know about the sequester? 1. The sequester will hurt job-growth As we pointed out during the debates raging in the run-up to the “fiscal cliff," the sequester was the second-most damaging component of the austerity bundle set to take effect on January 1, 2013. The worst component was the non-renewal of the payroll tax cut, which is already dragging substantially on the economy . All told, if the sequester kicks in the economy will likely end the year with roughly 500-600,000 fewer jobs than if it were repealed. These are jobs the economy desperately needs . To be clear, the sequester alone won’t drive the U.S. economy back into outright recession, but it surely will make...

The Sequestering of Barack Obama

AP Photo/Susan Walsh
AP Photo/Susan Walsh President Barack Obama urges Congress to come up with a plan to avert the automatic spending cuts set to kick in on March 1, 2013 last week. P resident Obama has miscalculated both the tactical politics of the sequester and the depressive economic impact of budget cuts on the rest of his presidency. The sequester will cut economic growth in half this year. But it’s now clear, one way or another, that we will get cuts in the $85 billion range that the sequester mandates this fiscal year. All that remains are the details. Obama’s miscalculation began in his fist term, with his embrace of the premise that substantial deficit cutting was both politically expected and economically necessary, and his appointment of the 2010 Bowles-Simpson Commission as the expression of that mistaken philosophy. Although the Commission’s plan was never carried out, its prestige and Obama’s parentage of it locked the president into a deflationary deficit reduction path. This past week,...

Trading The Blame Game for The Bully Pulpit

Flickr/Neon Tommy
The White House apparently believes the best way to strengthen its hand in the upcoming “sequester” showdown with Republicans is to tell Americans how awful the spending cuts will be and blame Republicans for them. It won’t work. These tactical messages are getting in the way of the larger truth, which the president must hammer home: The Republicans’ austerity and trickle-down economics are dangerous, bald-faced lies. Yes, the pending spending cuts will hurt. But even if some Americans begin to feel the pain when the cuts go into effect Friday, most won’t feel it for weeks or months, if ever. Half are cuts in the military, which will have a huge impact on jobs (the military is America’s only major jobs program), but the cuts will be felt mainly in states with large numbers of military contractors, and then only as those contractors shed employees. The other half are cuts in domestic discretionary spending, which will largely affect lower-income Americans. There will be sharp...

Threat versus "Threat"

The second entry in our series on how to fix the Pentagon budget

flickr/zennie62
AP Photo This is the second in a three-part Prospect series on what an ideal military budget might look like. Read Part One here . Read Part Three on what's keeping us from a more perfect military budget here. A bout a year ago, Army General Martin Dempsey went to Capitol Hill trying to defend $55 billion in annual budget cuts by sequestration. With a straight face, the Joint Chiefs of Staff chairman testified to a panel of the House Appropriations Committee: “In my personal military judgment, formed over 38 years, we are living in the most dangerous time in my lifetime right now ." It's the kind of thing that makes a person alternately question the judgment and the honesty of our military leaders. It's obvious nonsense , just another ludicrous statement in the campaign mounted by the military, industry, and Congress in their effort to fight sequestration. That said, Dempsey raises a good question: Do we live in a dangerous world? Are there threats out there that might be the sort of...

Protecting the Homeland? So Last Century

What exactly does our military do these days?

Robert F. Bukaty
AP Photo This is the first in a three-part series on how to fix the military's budget. Read Part Two on the real threats that our military should be protecting our country from here . Read Part Three on what's keeping us from a more perfect military budget here. A s March 1 inches closer and the rhetoric about sequestration gets hotter, now seems like the time to ask what an ideal Pentagon budget would look like. The ever-so-scary talking points about how defense sequestration will be "devastating" and will "hollow out" our forces are patently ridiculous on their own terms, but in their hyperbole they highlight how little effort is made to justify spending hikes or maintaining the enormous status quo—and the efforts that do get made aren't very credible. Sequestration would cut $55 billion per year from the Pentagon's annual trough, which is more than any country but five (China, Russia, the UK, France, and Japan) spend on their militaries, yet it's only about 7 percent of our...

Fix the Economy, Not the Deficit

AP Photo/Charles Dharapak
AP Photo/Charles Dharapak President Obama discuses the sequester last week surounded by emergency responders, whom the White House says could be affected if state and local governments lose federal money as a result of budget cuts. I t’s hard to be happy about the prospect of the sequester—the huge, automatics cuts to domestic spending set to take place if lawmakers can't reach a long-term budget deal—going into effect at the end of the week. Not only will it will mean substantial cuts to important programs; it will be a further drag on an already weak economy, shaving 0.6 percentage points off our growth rate. The end of the payroll tax cut, which expired on January 1, has already pushed it down to around 2.0, but the sequester cuts will depress it below the rate needed to keep pace with those entering the labor market. As a result, we are likely to see a modest increase in unemployment over the course of the year if the cuts are left in place. Of course, it could be worse. Half of...

What We'll Be Talking about in 2016

AP Photo/Mark Hirsch
Yes, pundits of all stripes are already starting to handicap the presidential fields for 2016. Yes, that’s a long time from now … although we are under three years to the Iowa Caucuses, and probably just about two years from the first debates, so it’s not all that long. More to the point: as long as the candidates are running—and they are—there’s no reason to pretend the contest hasn’t started yet. While the identity of the next Democratic and Republican nominees is important, what’s even more important is what they intend to do if elected. Indeed: the nomination process is important because it’s how parties sort out their differences and make decisions about who they are, and what kinds of public policy they support. Moreover, the nomination process is the best chance for groups and individuals within the party to have a chance of affecting what the party will do if it wins. In general elections with huge electorates, there’s not much one person can do that makes any difference. In...

Republican Rationality on Medicaid

Rick Scott, who surprised everyone and did the right thing. (Flickr/Gage Skidmore)
Florida governor Rick Scott, with his skeletal frame, shiny bald pate, nine-figure fortune possibly obtained at least partially through Medicare fraud, and love of humiliating poor people, resembles nothing so much as a comic-book villain. So it was something of a surprise when he announced yesterday that he is reversing his previous position and will allow poor Floridians to receive Medicaid coverage as provided for in the Affordable Care Act. It isn't hard to explain why: the federal government is paying 100 percent of the cost of new enrollees in the first few years, and nearly all the cost thereafter, meaning for a small investment on the state's part it gets a healthier, happier, more productive citizenry. Only a truly despicable politician would turn it down, preferring to see their constituents go without health insurance than get it from the government, as I've argued (OK, "raged" is more like it) before. After the Supreme Court said it its Obamacare decision that states could...

Still More BS

AP Photo/Alex Brandon
We all do things that we regret. President Obama must surely regret that he ever listened to the extreme deficit hawks back in early 2010, when he appointed the Bowles-Simpson Commission, the fiscal zombie that just won’t die. The commission is long defunct. The recommendations of its majority report never became law (because that required a super-majority). But the dreams and schemes of B-S have become the gold standard of deflationists everywhere. The test of budgetary soundness is: does it meet the recommendations of Bowles and Simpson? On Tuesday, the depressive duo were at it again, calling for additional deficit reductions of $2.4 trillion over a decade. This is almost a trillion dollars beyond what President Obama and Congress are considering. This clarion call was issued under the aegis of the corporate group, “Fix the Debt,” a bunch of millionaires and billionaires urging regular people to tighten their belts for the greater good. Quite apart from the impact of particular...

Senate Tested, Iran Approved?

AP Photo/J. Scott Applewhite, File
It’s become difficult to keep track of the all the ridiculous charges that have been thrown at Secretary of Defense nominee Chuck Hagel over the past few months, but surely one of the most absurd is the idea that the government of Iran “ endorsed ” his nomination. That this had become the latest claim to make the journey from goofy right-wing bleat to conservative political “fact” became evident during the Senate Armed Services Committee debate over Hagel’s nomination last week. Texas Republican Senator Ted Cruz, doing his best impersonation of what he thinks a very serious person sounds like, gravely intoned that, with Hagel’s nomination came “something that was truly extraordinary, which is the government of Iran formally and publicly praising the nomination of a defense secretary. I would suggest to you that to my knowledge, that is unprecedented to see a foreign nation like Iran publicly celebrating a nomination.” When Senator Bill Nelson responded that Cruz had “gone over the...

White House Reporters versus the Obama Administration

White House reporters getting the story.
At some point in every presidency, the White House press corps begins to complain about how they're being treated. Sometimes these complaints are legitimate and necessary, the Fourth Estate demanding that the public be adequately informed of what its government is up to. At other times, it's little more than a bunch of overpaid prima donnas whining that the White House staff isn't treating them with the deference they feel they deserve and doing their jobs for them. So let's say you're one of those reporters, and your frustration has been mounting. How can you make sure everyone understands that your gripe is of the first kind and not the second? Well for starters, you might not want to rise up to express your outrage over the fact that you didn't get to watch the President play golf with Tiger Woods. But that's just what happened over the last couple of days. It seems that when Barack Obama hit the links with Woods over the weekend, White House reporters weren't allowed to follow...

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