Barack Obama: 'We don't have a spending problem'

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Barack Obama: 'We don't have a spending problem'

The media portrayal of the fiscal cliff standoff (and the debt-ceiling talks from which it sprang) generally portrayed President Barack Obama and the Democrats as pragmatists attempting to negotiate with intransigent Republican ideologues. But as ever, the stance of non-ideological problem-solving itself is rich with ideological content. For the latest example read Stephen Moore's Wall Street Journal interview with Speaker of the House John Boehner (R-Ohio).

What stunned House Speaker John Boehner more than anything else during his prolonged closed-door budget negotiations with Barack Obama was this revelation: "At one point several weeks ago," Mr. Boehner says, "the president said to me, 'We don't have a spending problem.' " [...]

The president's insistence that Washington doesn't have a spending problem, Mr. Boehner says, is predicated on the belief that massive federal deficits stem from what Mr. Obama called "a health-care problem." Mr. Boehner says that after he recovered from his astonishment—"They blame all of the fiscal woes on our health-care system"—he replied: "Clearly we have a health-care problem, which is about to get worse with ObamaCare. But, Mr. President, we have a very serious spending problem." He repeated this message so often, he says, that toward the end of the negotiations, the president became irritated and said: "I'm getting tired of hearing you say that."
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If this quote is accurate, it is both stunning and unsurprising. Stunning, because of this chart:

chart-should-be-pinned-to-the.jpg


Note how federal spending, adjusted for inflation, zoomed between 2001 and 2010 on such non-health-related categories as military (70.5%), "other" (64.1%), and non-defense discretionary (55.9%). Overall federal spending has exploded, from $1.77 trillion in fiscal year 2000 to $3.72 trillion in fiscal 2010. If Washington had pegged federal government growth since 2000 to the rates of inflation and population growth, we would be spending well under $3 trillion today, and talking about what to do with the surplus.

At the same time, Obama's alleged quote is unsurprising, because a vast swath of Democrats well and truly believe that spending is not a problem.

Here's Steve Benen, at Rachel Maddow's blog: "Sorry, Boehner, spending isn't the problem." Or New York magazine's Jonathan Chait: "There really isn't money to be cut everywhere....The spending cuts aren't there because they can't be found." Or Mother Jones' Kevin Drum: "We don't have a spending problem. We have an aging problem."

Combine that with the widespread belief, articulated most recently by Robert Reich, that we have no entitlements problem either, and you get a clearer picture of how federal spending could almost double in a decade in the face of progressive complaints about "austerity": It's because Democrats are in denial about the true cost of their (yes) ideological commitments. If we taxed Americans enough to cover the cost (or even 90 percent of the cost) of what Democrats consider the minimal level of government, the result would be recession. That should, but won't, give big-government apologists pause.

And yes, as we've been reminding you for years, too many Republicans (and John Boehner in particular) have for too long effectively agreed with Jonathan Chait: There's nothing we can cut!

For an alternative view, read Reason's November 2010 issue on "How to Slash Government Before it Slashes You."
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Empirical evidence argues against Obama (if he really said that :wtf:) and for the view that government spending is actually the problem.
 
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Barack Obama: 'We don't have a spending problem'
Alchoholic: 'I don't have a drinking problem.'
 
Of course they have no issues spending money, they can spend as much as they like and nobody comes knocking on their door. So he is right they have no issues spending, easy you become the most powerful nation on earth and spend. what is the problem?
 
Lol. Maybe he did say it, but I don't really believe too much that Boehner says anyway.
 
The only spending problem they have is pork, and there the Republicans are quite well represented.
 
Wow Obama spends more on Defense than George Bush did. I never knew that, I thought he actually decreased military spending.
 
Spending does indeed create bigger deficits in the short or medium term, but government spending also slows down recession and creates growth. This has been proven as recently as the European crisis where IMF forced them to cut spending and it actually slowed the economy. The IMF actually gave the wrong advice, the countries had to accept it because the IMF held them over barrle.
The fiscal cliff is also not caused by potential of spending more, but the possibility of spending cuts and tax increases because of the expiry of those measures put in place under Bush admin.

Looking at a chart of spending vs category is also misleading without looking at why that spending was done. Firstly a lot of the measures were put in place under Bush (defence, health etc) and a Republican senate unwilling to pass new laws to wind it down faster. Secondly, the GFC and recession- again under Bush's watch- required massive spending to recussitate the economy without which we would have a totally different apocalyptic scenario.

Economics at that level is not as straightforward as putting coins in a piggy bank and then buying some lollies.

I could have just said "here we go again"
 
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OzzieCapie said:
Spending does indeed create bigger deficits in the short or medium term, but government spending also slows down recession and creates growth. This has been proven as recently as the European crisis where IMF forced them to cut spending and it actually slowed the economy. The IMF actually gave the wrong advice, the countries had to accept it because the IMF held them over barrle.
The fiscal cliff is also not caused by potential of spending more, but the possibility of spending cuts and tax increases because of the expiry of those measures put in place under Bush admin.

Looking at a chart of spending vs category is also misleading without looking at why that spending was done. Firstly a lot of the measures were put in place under Bush (defence, health etc) and a Republican senate unwilling to pass new laws to wind it down faster. Secondly, the GFC and recession- again under Bush's watch- required massive spending to recussitate the economy without which we would have a totally different apocalyptic scenario.

Economics at that level is not as straightforward as putting coins in a piggy bank and then buying some lollies.

I could have just said "here we go again"
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If the combination of deficit spending and monetary stimulus were the answer, Japan would have a robust economy and not have fallen victim to two continuous "lost decades". Sometime an economy needs to take its medicine (recession) to correct imbalances.
 
BBSA said:
If the combination of deficit spending and monetary stimulus were the answer, Japan would have a robust economy and not have fallen victim to two continuous "lost decades". Sometime an economy needs to take its medicine (recession) to correct imbalances.
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+1
 
OzzieCapie said:
Spending does indeed create bigger deficits in the short or medium term, but government spending also slows down recession and creates growth. This has been proven as recently as the European crisis where IMF forced them to cut spending and it actually slowed the economy. The IMF actually gave the wrong advice, the countries had to accept it because the IMF held them over barrle.
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Empirical evidence suggest otherwise.
A recent example for the argument to reduce spending (and for fracking) is Texas.
Texas Legislature to Wrestle Over What to Do with Unexpected Budget Surplus

A recent example against increased taxation to generate revenue would be California.
California revenue declines since passage of Prop 30
 
BBSA said:
If the combination of deficit spending and monetary stimulus were the answer, Japan would have a robust economy and not have fallen victim to two continuous "lost decades". Sometime an economy needs to take its medicine (recession) to correct imbalances.
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Really? ...it could be....I can't be bothered to check through the minutiae of Japan's macro economics, but then what about the best economy in world at moment. How did Australia withstand the GFC better than others? A surplus built up in good years were turned into a deficit with massive spending programs. Some of these projects were relatively unnecessary and controversial, but people were employed, they spent and the economy kept ticking over.
 
OzzieCapie said:
Really? ...it could be....I can't be bothered to check through the minutiae of Japan's macro economics, but then what about the best economy in world at moment. How did Australia withstand the GFC better than others? A surplus built up in good years were turned into a deficit with massive spending programs. Some of these projects were relatively unnecessary and controversial, but people were employed, they spent and the economy kept ticking over.
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It all depends on the situation. Problems in the Australian economy did not cause the GFC, so to stimulate the economy with government spending is not a bad idea although cutting taxes would have been better.

America had a structural problem (spending more than they earn) and you cannot fix that by spending more.
 
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