Friday, July 29, 2011

How America got there

It is kind of ironic that had things turned out a little differently back in 2000 in the Florida fiasco .

" The controversy over the 2000 presidential election, which concluded with a Supreme Court decision that placed George W. Bush in the White House, featured numerous complaints of civil rights abuses on the part of the Florida state government. With the presidency riding on a breathtakingly close finish in Florida, a huge number of African-American Floridians argued either that their votes for Bush's opponent Al Gore had been improperly excluded from the state's official totals—or that they had been denied the opportunity to vote in the first place."
I might not be writing this blog. but first up a chart from The New York Times

That tells a story  and it is a story the right can attempt to deny. In short Bush screwed your economy

" With President Obama and Republican leaders calling for cutting the budget by trillions over the next 10 years, it is worth asking how we got here — from healthy surpluses at the end of the Clinton era, and the promise of future surpluses, to nine straight years of deficits, including the $1.3 trillion shortfall in 2010. The answer is largely the Bush-era tax cuts, war spending in Iraq and Afghanistan, and recessions."

This isn't rocket science. Now I happen to think a budget deficit in a recession is not a bad thing while Bush was running massive deficits the NZ Government was running massive surpluses and  the government chose not to cut taxes  but to pay back foreign debt and although it wasn't popular and eventually cost them the treasury bench's it was the right thing to do. The current recession probably wouldn't have hurt us very much except in New Zealand it has been compounded by the Christchurch earthquake that has forced us to borrow far more than we would normally have had to and instead of looking at surpluses next year it will take us until 2015.

Now this next graph is even more telling

That is just piss poor policy those tax cuts are the ones New Zealand wanted and remember we were in surplus but our government of the day said no we are paying back debt first.

"...that under Mr. Bush, tax cuts and war spending were the biggest policy drivers of the swing from projected surpluses to deficits from 2002 to 2009. Budget estimates that didn’t foresee the recessions in 2001 and in 2008 and 2009 also contributed to deficits. Mr. Obama’s policies, taken out to 2017, add to deficits, but not by nearly as much."

Now that is probably as I argue above probably not a bad thing for the Obama administration to do  recession can be blunted  by deficits.

" A few lessons can be drawn from the numbers. First, the Bush tax cuts have had a huge damaging effect. If all of them expired as scheduled at the end of 2012, future deficits would be cut by about half, to sustainable levels. Second, a healthy budget requires a healthy economy; recessions wreak havoc by reducing tax revenue. Government has to spur demand and create jobs in a deep downturn, even though doing so worsens the deficit in the short run. Third, spending cuts alone will not close the gap. The chronic revenue shortfalls from serial tax cuts are simply too deep to fill with spending cuts alone. Taxes have to go up."

" In future decades, when rising health costs with an aging population hit the budget in full force, deficits are projected to be far deeper than they are now. Effective health care reform, and a willingness to pay more taxes, will be the biggest factors in controlling those deficits."

Again the right will yell the Tea Party will   go into the usual deny everything  that is even remotely rational on the grounds that batshit insanity  is a much better way to manage the economy.

President Obama is trying to save America from destroying herself and the Republicans for reasons I can't fathom are behaving like drink addled idiots. Just a little thought for you all to ponder.

Pension funds invest  massive amounts in the American economy and they are very conservative investors  most of them have rules like only investing in places with a AAA credit rating something America has at the moment but probably won't have unless a deal is done  soon. You can't avoid earthquakes  but I have never heard of a country voting for one.

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