Why We Should Stop Obsessing About the Federal Budget Deficit By Robert Reich | HuffPost | Posted: 11/18/2012 3:17 pm Excerpts: I wish President Obama and the Democrats would explain to the nation that the federal budget deficit isn't the nation's major economic problem and deficit reduction shouldn't be our major goal. Our problem is lack of good jobs and sufficient growth, and our goal must be to revive both. Deficit reduction leads us in the opposite direction - away from jobs and growth. The reason the "fiscal cliff" is dangerous (and, yes, I know - it's not really a "cliff" but more like a hill) is because it's too much deficit reduction, too quickly. It would suck too much demand out of the economy. But more jobs and growth will help reduce the deficit. With more jobs and faster growth, the deficit will shrink as a proportion of the overall economy. Recall the 1990s when the Clinton administration balanced the budget ahead of the schedule it had set with Congress because of faster job growth than anyone expected - bringing in more tax revenues than anyone had forecast. Europe offers the same lesson in reverse: Their deficits are ballooning because their austerity policies have caused their economies to sink. The best way to generate jobs and growth is for the government to spend more, not less. And for taxes to stay low - or become even lower - on the middle class. (Higher taxes on the rich won't slow the economy because the rich will keep spending anyway. After all, being rich means spending whatever you want to spend. By the same token, higher taxes won't reduce their incentive to save and invest because they're already doing as much saving and investing as they want. Remember: they're taking home a near record share of the nation's total income and have a record share of total wealth.) Why don't our politicians and media get this? Because an entire deficit-cutting political industry has grown up in recent years - starting with Ross Perot's third-party in the 1992 election, extending through Peter Peterson's Institute and other think-tanks funded by Wall Street and big business, embracing the eat-your-spinach deficit hawk crowd in the Democratic Party, and culminating in the Simpson-Bowles Commission that President Obama created in order to appease the hawks but which only legitimized them further. Most of the media have bought into the narrative that our economic problems stem from an out-of-control budget deficit. They're repeating this hokum even now, when we're staring at a fiscal cliff that illustrates just how dangerous deficit reduction can be. Deficit hawks routinely warn unless the deficit is trimmed we'll fall prey to inflation and rising interest rates. But there's no sign of inflation anywhere. The world is awash in underutilized capacity. As for interest rates, the yield on the 10-year Treasury bill is now around 1.26 percent -lower than it's been in living memory. In fact, if there was ever a time for America to borrow more in order to put our people back to work repairing our crumbling infrastructure and rebuilding our schools, it's now. Public investments that spur future job-growth and productivity shouldn't even be included in measures of government spending to begin with. They're justifiable as long as the return on those investments - a more educated and productive workforce, and a more efficient infrastructure, both generating more and better goods and services with fewer scarce resources - is higher than the cost of those investments. Finally, the biggest driver of future deficits is overstated - rising health care costs that underlie projections for Medicare and Medicaid spending. The rate of growth of health-care costs is slowing because of the Affordable Care Act and increasing pressures on health providers to hold down costs. Yet projections of future budget deficits haven't yet factored in this slowdown. So can we please stop obsessing about future budget deficits? They're distracting our attention from what we should be obsessing about - jobs and growth. http://www.huffingtonpost.com/robert-reich/why-we-should-stop-obsess_b_2155489.html ...... As Europe gets really into the austerity program they are beginning to realize that cutting vital programs doesnt help them get out of the financial doldrums as anticipated, and citizens are beginning to feel desperate as their lives sink lower into abject poverty by the cuts to the poor and middle class rather than on the wealthy. That is because the concept is wrong. If we go down that old path of making the middle class bail out the wealthy, it will end in the same manner. We need money now to create jobs, (because the Bush Tax Cuts never created any jobs) and the BTCs are coming to an end. With a tax on the wealthy we will create jobs, promote a lively economy, fix our decaying infrastructure, highways, bridges, tunnels, schools...and bounce us back to a robust economy thru increased revenues coming into the government for jobs and growth...instead of filtering those revenues upward to the wealthy. And of course dropping all those loopholes that the wealthy get, and the lower tax rates adjustment will add greatly to the revenue base that we need to create to get out of the Bush Mess. We dont need curtailing Social Security, Medicare, and Medicaid on the middle class and poor to get the needed revenue. We need to tax the wealthy for pay-back in part for the Bush Tax Cuts, and the extra loopholes, incentives in their tax rates that now have the wealthiest Americans paying a lower tax rate than an average worker. These extra 'gifts' to the wealthy never did anything for the average American, but did so much for the wealthy and brings into focus who really are the 'freeloaders'...Romney's 47%ers...or the wealthy?
Auto-FAIL !! [video=youtube;JCp7U1f8lv8]http://www.youtube.com/watch?v=JCp7U1f8lv8[/video] boot that commie 1!!
You do realize that by removing the limit, this effectively gives the federal reserve the power to own EVERYTHING?
"Bush deficits are unpatriotic"~Democrat deficit king Barack Obama. http://www.whitehousedossier.com/2012/01/13/obama-called-smaller-bush-debt-rise-unpatriotic/
Why sure...it's only ANOTHER $TRILLION+ DEFICIT,SAME AS EVERY YEAR UNDER OBAMANOMICS. Has Reich made arrangements to repay the MILLION$ he helped ENRON defraud so many Americans out of ,yet?
1) Cheney was a piece of (*)(*)(*)(*). 2) Cheney was wrong 3) Why would a liberal EVER use Cheney for any bit of wisdom.
While you can't ignore how much debt you are in, the nature of such a large scale budget means having a deficit isn't going to destroy you. As stated above, having a strong economy will make it easier to stay out of debt. Honestly, the only real 'big business' company that doesn't carry any debt that I can think of is the WWE (wrestling). Otherwise, nearly every large scale corporation has debt and a deficit.
But you forgot to point out that during the Clinton administration, one main reason they were able to balance the budget pretty quickly was because his administration benefitted from both the explosion of the internet and all the dot com start ups. Always nice for a president to have a new industry explode under a his tenure. In addition to that, the Republicans swept in to office during his last years under the promise of a "contract with America" to actually balance that budget. Clinton got that message loud and clear and actually worked with the Republicans after that to get it done. They also forced him to finally reform Welfare as he had promised 4 years earlier during his campaign...and that was also a good thing.
Obama, the current President, says the deficits of Bush were irresponsible and unpatriotic for driving up the national debt by $4 trillion. Obama the lying (*)(*)(*)(*) bag has added more to the national debt in four years than Bush did in eight years. http://www.youtube.com/watch?v=zUPZJDBJI84 Boom, your post just got owned.
Here is the problem, why don't you show me where the cost controls are in the ACA? HC will get cheaper at first as more people will be paying into a system they already use, but there is nothing to control the absolute lack of price integrity that is in our HC system! Now I will say i think the FED is a bigger concern then our budget today!
and inflation will take care of the deficit my grandma worked for 50 cents an hour when she was young, imagine back then thinking they would ever be able to pay off a billion+ deficit .
No large scale long-term viable corporation has a sustained deficit. Debt is only carried when such a debt can support a NPVR greater than 1. A business with continuous deficits is a hobby.
"...because it's too much deficit reduction, too quickly. It would suck too much demand out of the economy." Uhhh.... yes. Exactly. It is what needs to be done. People don't want to hear the truth.. and that is that the economy NEEDS to contract. The economy is begging to retract so it can restructure. The only reason it hasn't is because the government continues to print, borrow, and spend which keeps it artificially afloat. Imagine it in your own personal situation. If you are in a lot of debt, you have to live BELOW YOUR MEANS in order to pay it off. You have to sacrifice if you want to get into the black. You have to UNDER-CONSUME and save if you want to get out of debt. This is what has to happen in the country, as well. We have to under-consume and save.
