Choices and Deficits
It seems that the White House had a choice.
The debt was going to be there no matter what. Wall Street was failing, and in the process it was going to take out the world economy. Reboot. Start over. No credit for small businesses--no credit for any businesses. Lay-offs, or at the very least people who wouldn't get paid for the work they were doing, and money spontaneously disappearing from people's accounts. Remember? That's what we were afraid of back when the Reserve Fund broke the buck. Some of those fears have been realized. Some haven't. Why?
The government took the debt. The tax-payers bought it from Wall Street. In doing so, they may have sacrificed the social programs that Americans so urgently want.
But perhaps this was a foregone conclusion. Had the government not bought up the "toxic assets"--and if it refuses to continue doing so--spending would be lower, but the deficit might still be there. Why?
Taxes. People pay taxes on money they make--not on the money they don't get paid, or the jobs they lose. If they don't get paid and don't pay taxes, the deficit grows not through spending but through lack of tax revenue. You can't just cut spending instantly, as we saw when the White House floated the idea of cutting military healthcare; people get upset, and furthermore, lots and lots of government employees (and others who are indirectly employed by such programs) would suddenly lose their jobs.
A lot of those taxes, like it or not, come from folks on Wall Street. Not as many as between WWI and WWII, of course; back then, a 90% tax rate was no big deal for the well off. Still, were Wall Street to fall, the government would find that the floor had dropped out in terms of tax revenue.
I hate bailing out Wall Street as much as anyone else, and I loathe that people are getting bonuses for failing to do their jobs. But we must recognize that we are in a lose-lose situation with Wall Street. Even if you wanted to redistribute wealth you couldn't--not without the wealth.
So now, Obama has to fight critics of government spending. As a Democrat, I believe we are right to invest in social programs and infrastructure. Did you know every dollar invested in the University of Texas at Austin puts eighteen dollars into the Texas economy? Wisely-funded projects give people jobs and push money back into the system.
FiveThirtyEight has an excellent analysis explaining why cap-and-trade is on the back burner. When no one can afford to drive, pollution just isn't as big of a deal. On the other hand, if Americans have healthcare and public transportation, they are more efficient and productive as workers.
So, it seems the White House really had no choice.
I wonder: were McCain the winner, would he be advocating increased government spending? The New Deal worked, and for Republicans to say otherwise is revisionism.
Note: A lot of people tend to get debt and deficit confused. The difference between revenue and expenses, when negative, is a deficit--that is, in a given year we're spending more than we're taking in. The debt is the sum total our government owes to China or whoever buys the bonds.
The debt was going to be there no matter what. Wall Street was failing, and in the process it was going to take out the world economy. Reboot. Start over. No credit for small businesses--no credit for any businesses. Lay-offs, or at the very least people who wouldn't get paid for the work they were doing, and money spontaneously disappearing from people's accounts. Remember? That's what we were afraid of back when the Reserve Fund broke the buck. Some of those fears have been realized. Some haven't. Why?
The government took the debt. The tax-payers bought it from Wall Street. In doing so, they may have sacrificed the social programs that Americans so urgently want.
But perhaps this was a foregone conclusion. Had the government not bought up the "toxic assets"--and if it refuses to continue doing so--spending would be lower, but the deficit might still be there. Why?
Taxes. People pay taxes on money they make--not on the money they don't get paid, or the jobs they lose. If they don't get paid and don't pay taxes, the deficit grows not through spending but through lack of tax revenue. You can't just cut spending instantly, as we saw when the White House floated the idea of cutting military healthcare; people get upset, and furthermore, lots and lots of government employees (and others who are indirectly employed by such programs) would suddenly lose their jobs.
A lot of those taxes, like it or not, come from folks on Wall Street. Not as many as between WWI and WWII, of course; back then, a 90% tax rate was no big deal for the well off. Still, were Wall Street to fall, the government would find that the floor had dropped out in terms of tax revenue.
I hate bailing out Wall Street as much as anyone else, and I loathe that people are getting bonuses for failing to do their jobs. But we must recognize that we are in a lose-lose situation with Wall Street. Even if you wanted to redistribute wealth you couldn't--not without the wealth.
So now, Obama has to fight critics of government spending. As a Democrat, I believe we are right to invest in social programs and infrastructure. Did you know every dollar invested in the University of Texas at Austin puts eighteen dollars into the Texas economy? Wisely-funded projects give people jobs and push money back into the system.
FiveThirtyEight has an excellent analysis explaining why cap-and-trade is on the back burner. When no one can afford to drive, pollution just isn't as big of a deal. On the other hand, if Americans have healthcare and public transportation, they are more efficient and productive as workers.
So, it seems the White House really had no choice.
I wonder: were McCain the winner, would he be advocating increased government spending? The New Deal worked, and for Republicans to say otherwise is revisionism.
Note: A lot of people tend to get debt and deficit confused. The difference between revenue and expenses, when negative, is a deficit--that is, in a given year we're spending more than we're taking in. The debt is the sum total our government owes to China or whoever buys the bonds.