COSMIC THINKING: THE NEXT 15 YEARS
As you know, I love this kind of stuff. I think you will too. Under two minutes. (Thanks, Tom Stolze!)
Marc B.: “Last week’s post on ‘two pernicious misconceptions’ (you wrote, ‘there is a lot of misinformation out there’) brought up a couple points that struck me as ‘misinformation’ on your part. First, you implied that Bush was the cause of the global economy on the brink of catastrophe. (‘Bush handed Obama a $1.5 trillion deficit and a global economy on the brink of catastrophe.’) The blame for the global economy, and even the US recession, cannot be solely placed on one political party…both political parties had a hand in the US downturn, but on a global scale, the blame is very widespread, including governments, central banks, banks, bank regulators, bank regulations, individual best interest, and the list goes on and on.”
☞ No question, the world is too complex to suggest that Bush alone could all its problems. But he chose to invade Iraq; he chose to slash taxes on the rich. In combination, that greatly weakened our national balance sheet. He and his administration were at the helm as the real estate bubble inflated and inflated and inflated — and if someone like you or me could see it (and I was hardly alone in writing about it over and over and over), surely the Bush folks could have spotted it, too, and worked to avoid or at least minimize the worst damage. In any event, my point was that where Clinton handed Bush a surplus (and might have had something to do with the success of his eight ears in office), Bush handed Obama a $1.5 trillion deficit that should not be blamed on Obama (who hadn’t yet even been elected when the fiscal year began), even if you think it’s unfair to blame it on Bush. Still, you raise a fair point. Just because a president may get a daily briefing report titled “Bin Laden Determined to Strike in US” or reports of a massive economy-threatening real estate bubble doesn’t necessarily mean he or she can be blamed for ignoring them. Only with hindsight, perhaps, can we really know which of the thousands of reports and briefings a president gets should have been given special focus, and presidents do not operate (or vacation) with the benefit of hindsight.
One last piece of this is the Republican misinformation that (essentially) “it was all Barney Frank’s fault.” In the back of Barney Frank’s forthcoming memoir — praised by Bush Treasury Secretary Hank Paulson and Elizabeth Warren alike — there’s an appendix that just totally blows all that out of the water.
Back to Mark B. — whose comments, I want to be clear, are thoughtful and appreciated, even if my response to them is . . . energetic.
“The second part of potential ‘misinformation’ is your discussion of the $1.5T deficit in 2009 under Bush — regardless of the cause (some/much due to his prior policies), the US was in recession at the time (NBER dates the recession start in December 2007). You state, when explaining the high debt that Obama has racked up, ‘there’s at least a reason: pulling out of a nose-dive toward depression requires massive deficit spending.’ If you find it OK for Obama to have the high deficit because the US was heading toward depression, then Bush’s 2009 deficit must be given the same free pass—admittedly it may have been much his fault, but once the country is in that position, based on your own argument, Bush is allowed the same free pass that you are giving Obama.”
☞ Ummm . . . no. I think no president who serves for eight years is absolved of some responsibility for how he’s attempted to manage the economy and national balance sheet. But again, let’s say Bush did the best anyone could. He had to slash tax revenues from the wealthy. He had to spend trillions on those wars. He had to starve the regulatory agencies and the IRS. My main point in all this, however much or little you may blame Bush, is that it’s nuts to blame Obama for the debt it took to pull out of the nose-dive. Yet Republicans unfailingly do.
It was under Reagan, Bush, and Bush — Republicans! — that the gradual decline in our National Debt, from 122% of GDP in 1946 down to 30% when Reagan took office, was reversed and sent soaring back upward. And it was under Democrats that the upward trend was reversed — first Clinton and now Obama. Both of whom saw massive job creation on their watches despite the Republican insistence that taxing the best off kills jobs.
Joel Grow: “Another way to look at it . . . in just 20 years of Supply-Side under Reagan/Bush/Bush, they ran up 75% of the debt for our entire 233-year history. George W. ran up over 50% of our 233-year debt all on his own — and with a GOP Congress for 6 of his 8 years. Where were the deficit hawks then?”
☞ Where indeed? We need moderate, sensible folks willing to compromise and make smart decisions that invest in the future. Deficits to fight unnecessary wars or fund ineffective programs or make unnecessary tax cuts are bad. Deficits to fund investments in our kids’ health, education, and civic development, or to fund R&D or to fund infrastructure for the next 100 years are in our best interest, so long as in most years the overall Debt grows slower than the economy as a whole, as it did from 1946-1980, did under Bill Clinton, and now finally has begun to do again under Barack Obama.
Quote of the Day
It was never my thinking that made me my money. It was my sitting.~Jesse Livermore
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