Obama budget

[ken]

www.washingtontimes.com/news/2014/apr/9/obama-budget-defeated-413-2/

Makes one wonder what was in his budget if his own party voted against it.  Makes one wonder if he even knows how to draft a budget.

[Flitzerbiest]

Our governmental budgetary process is broken. It hasn't "worked" the way its supposed to for years. SSDD.

[ken]

for me, a balanced budget should be a must.

[Flitzerbiest]

Ok, here's a longer version of my opinion, since I know that you are on the edge of your seat:

No, Obama doesn't know how to write a budget. Neither did any other President in recent memory. This is not, fundamentally what a POTUS does. The government is too large (fact of size, not statement of value) for even the most hands on, technocratic executive to micromanage. The President is responsible for budgetary principles and tosses in some pet projects. This is also, you'll recognize, what congressmen do. They all rely on bureaucrats to do the math, and that will never, ever change--nor should it.

To understand Obama on budget is to understand to whom he listens, which is essentially the "stimulus hawks" who believe that the economy is still foundering for lack of liquidity. You'll find Obama's Council of Economic Advisors here, and you are already familiar with his choices (administration #1 and #2) Treasury secretary. The stimulus hawk position is most consistently popularized by economics Nobel laureate Paul Krugman, who for years has been forecasting all shades of apocalypse if cash is not injected into the economy. I won't go over the economic argument here, but there is some merit to it theoretically, and countries that engaged in stimulus tended to emerge from the 2008 fiscal crisis in better shape than those that practiced austerity.

The tried and true ways to put money into the economy are a) decrease interest rates, and b) deficit spend. Option "a" has been off the table for Obama's entire administration--interest rates are essentially zero and can't be cut. This left option "b"--which was used heavily in 2009, and has been scaled back dramatically since then. Deficits are continuing to fall.

The stimulus hawks believe that we tightened the belt too quickly, causing the economy to bog down. Again, there is some reason to accept the point. On the other hand, the doomsday scenarios laid out in the press by Krugman et al. haven't really panned out. In my opinion, a slowly growing economy is bad, but so is an exploding deficit. The slow economy is the disease that kills the patient fastest. I accept that deficit spending is good in a recession, but I also accept that paying down surpluses (prior to paying taxes--i.e. increasing money supply) in an expansion is vital.

[Flitzerbiest]

Incidentally, since both "a" and "b" have been relatively unavailable to the POTUS, we've been staying out of recession largely on the basis of a relatively new "c"--quantitative easing by the Fed. This is pretty much uncharted territory, and we don't know exactly how it will play out. It certainly seems to be a tough habit to break once you start. Deficit spending is effective, predictable and has a better understood set of repercussions. The winning formula is to deficit spend in the slow times and pay off surpluses in the expansion. This would be parallel to a family taking out a loan to get through a bad economy, then paying it off when times are good. Unfortunately, when times are good, politicians generally want to buy ponies more than they want to pay bills. Tax cuts which are unsustainable over the long term are one of the favorite ponies.

[ken]

Some good points... some I don't agree with (deficit spending).

I think there is an option "d". One example is the Keystone Pipline... more jobs, doesn't require more deficit spending, reduced gasoline prices, promoting more income taxes to help fund the oversized government.

Perhaps, IMO, a "bonus" method for ideas from within on how to do things better and a lesser cost. In Rockwell Collins, if an employee had an idea to save monies, he would receive a bonus of a certain percentage of a yearly savings. (Who knows, that might even be a whistle blower bonus). Requires no additional spending yet reduces deficit.

Don't fall off of your chair

[Flitzerbiest]

Apr 16, 2014 6:16:35 GMT -6 ken said:

Some good points... some I don't agree with (deficit spending).

I think there is an option "d". One example is the Keystone Pipline... more jobs, doesn't require more deficit spending, reduced gasoline prices, promoting more income taxes to help fund the oversized government.

Perhaps, IMO, a "bonus" method for ideas from within on how to do things better and a lesser cost. In Rockwell Collins, if an employee had an idea to save monies, he would receive a bonus of a certain percentage of a yearly savings. (Who knows, that might even be a whistle blower bonus). Requires no additional spending yet reduces deficit.

Don't fall off of your chair

The Keystone pipeline optimistically will generate 50,000 temporary jobs and probably less than 100 which are permanent. I am certainly not anti-pipeline, but advocating Keystone and efficiency incentives as economic panacea while dismissing the benefits of fiscal intervention is Fox-fed schtick.

We lost 8 million jobs in the Great Recession, and though we are out of recession in terms of GDP growth, job creation has been way to slow to spark economic recovery. Two major reasons why job growth has been slow are:

1. Continued tight credit--banks are still reluctant to lend, which constricts the supply of capital for investment, job creation
2. Public sector hiring freezes. I know that Big Guv'mint is the monster under conservative beds, but public and private sector job markets work in tandem. Police, fire, schools, highway construction, even bureaucracies are all dependent on private sector supply, and when governments can't hire, businesses also suffer to a degree. Both the public and private sector job markets were decimated in 2008, but since then, we have been trying to grow public sector jobs in the absence of public sector spending. It doesn't work, and until we restore balance the public sector will not grow robustly.

[Flitzerbiest]

BTW Ken, the deficit is still falling--faster than even the most optimistic predictions--and is now well below the deficit Obama inherited in 2008:

money.cnn.com/2014/04/14/news/economy/deficits-lower-cbo/index.html?source=yahoo_hosted