courseofhistory
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- Aug 7, 2012
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- #1
Obama submitted a budget. If you understand the economy a little you will realize that many things which are in effect when the president takes over will continue to have an effect on things for years to come.
Cutting things enough to make a difference will put the country into recession. Obama found that out the hard way (which btw isn't the same as lying about how fast you ran a marathon--one is simple and straightforward--the other, the economy is very, very complicated. So I will cut Obama some slack on what could be done. The same goes for Mitt Romney. I don't think he will be able to do what he thinks/says he can do.
However, Obama's actions so far have actually put many things into motion that will ultimately reduce the debt--front loaded vs. the Bush backloaded debt and more.
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Cutting things enough to make a difference will put the country into recession. Obama found that out the hard way (which btw isn't the same as lying about how fast you ran a marathon--one is simple and straightforward--the other, the economy is very, very complicated. So I will cut Obama some slack on what could be done. The same goes for Mitt Romney. I don't think he will be able to do what he thinks/says he can do.
However, Obama's actions so far have actually put many things into motion that will ultimately reduce the debt--front loaded vs. the Bush backloaded debt and more.
In two instances, this made Obamas policies look more costly. First, both Democrats and Republicans tend to think the scheduled expiration of the Bush tax cuts is a quirky budget technicality, and their full extension should be assumed. In that case, voting for their extension looks costless, and they cannot be blamed for the resulting increase in deficits. I consider that a dodge, and so I added Obamas decision to extend the Bush tax cuts for two years at a total cost of $620 billion to his total. If Obama follows through on his promise to extend all the cuts for income under $250,000 in 2013, it will add trillions more to the deficit.
The other judgment call was when to end the analysis. After 10 years? After the first term? We chose 2017, the end of a hypothetical second term. Those are the years Obama might be blamed for, so they seemed like the ones to watch. But Obamas spending is frontloaded, and his savings are backloaded. The stimulus bill, for instance, is mostly finished. But the Budget Control Act is expected to save $2.1 trillion over the next 10 years. The health-care law is expected to save more than a trillion dollars in its second decade. If our numbers were extended further, the analysis would have reflected more of Obamas planned deficit reduction.
Theres also the issue of who deserves credit for what. In this analysis, anything Obama signed is attributed to Obama. But reality is more complicated. The $2.1 trillion debt-ceiling deal wouldnt have happened without the Republicans. But a larger deficit-reduction deal one including tax increases and spending cuts might have. In total, the policies Obama has signed into law can be expected to add almost a trillion dollars to deficits. But behind that total are policies that point in very different directions. The stimulus, for instance, cost more than $800 billion. So did the 2010 tax deal, which included more than $600 billion to extend the Bush tax cuts for two years, and hundreds of billions more in unemployment insurance and the payroll tax cut. Obamas first budget increased domestic discretionary spending by quite a bit, but more recent legislation has cut it substantially. On the other hand, the Budget Control Act the legislation that resolved Augusts debt-ceiling standoff saves more than $1 trillion. And the health-care reform law saves more than $100 billion.
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