All Democrat Senators Voted Against Raising Debt Ceiling

The year was 2006. The President was George W Bush. The debt ceiling was being approached. And every Democrat Senator voted against raising the debt ceiling.

Let’s see.
Joe Biden
Barack Obama
Hillary Clinton
Harry Reid
Barbara Boxer
Chuck Schumer
And the rest of the Democrats

I guess they all wanted the US to default on its debt. I guess they all wanted senior citizens to lose their Social Security checks. I guess they all wanted Medicare and Medicaid recipients to lose their healthcare.

To hear the Democrats talk now, that’s exactly what the Democrats wanted to do back in 2006.

HT Gateway Pundit
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Cross-Post

44 Comments

  1. “I guess they all wanted the US to default on its debt.”

    Meanwhile, back in reality, Republicans in Congress are actually threatening to cause a default, as opposed to casting a symbolic vote.

    John Hitchcock says he loves America, but then he holds a gun to its head and says, validate my anti-tax theology or the economy gets it. When confronted with the moral implications of his actions, he fishes deeper into his GOP theology, which tells him, against the better advice of Wall St. and, well, anybody who isn’t a radical rightwinger, that there won’t be a default, that it won’t be so bad, that soldier pay will continue to go out, and if it means no SS or Medicare then GOOD.

    I just can’t believe anybody trusted you guys again in 2010, but you’ve kind of settled the matter, haven’t you?

  2. Exactly, Henry.

    This is classic propaganda, where a vote is pulled out of context to make a point that really does not exist.

    I think that we will find that this kind of scandalous behavior ties in with the tip of the iceberg which is now being revealed by the Rupert Murdoch scandal that will certainly involve the Murdoch owned FNN, WSJ, and Dow-Jones. Here is the way FNN reported this scandal:

    “Fox News finally addressed their parent company’s hacking scandal head on this morning, with Fox and Friends launching a comically sycophantic and pathetically inaccurate defense of News Corp. Host Steve Doocy and guest Robert Dilenschneider, a media consultant, agreed News Corp. Chairman Rupert Murdoch has done “all the right things” and argued that the scandal is way overblown. “For some reason, the public, the media, keep going over this, again, and again, and again” the guest said. “It’s too much,” he added, “We should move on.” Doocy agreed, scolding the media for not devoting its time to covering more important issues. (His show later featured a segment on actress Mila Kunis and a performance by second-tier boy band Lifehouse, popular in 2001.)

    But their defense of News Corp. really got embarrassing when Dilenschneider and Doocy engaged in some stunning subject/object slight of hand, comparing News Corp. to companies that have been hacked, while failing to note it was News Corp. that did the hacking in this case. “We know it’s a hacking scandal, shouldn’t we get beyond it and deal with the issue of hacking? We have a serious hacking problem in this country,” Dilenschneider reminded us. Listing several companies like CitiGroup that “have been hacked into,” Dilenschneider asked, “Are they getting the same kind of attention for hacking that took place less than a year ago that News Corp is getting today?” “Right,” Doocy said, before noting the Pentagon was also recently hacked. “

    Right, we need to move on. And then they divert from their being the hackers, that is the perps, to the victims of hacking, CitiGroup and the Pentagon.

    Hilarious, isn’t it, how they squirm and downplay the issue in which their parent company is directly implicated.

    Can you imagine, so-called professional journalists hacking into private spaces in order to get the story? Sorry, this does not pass muster, as Murdoch himself, caught red-handed, is apologizing while letting go two of his top executives. The whole episode totally stinks to high heaven!

    And yes, Hitchcock, this ties into your right wing propaganda here posted, because this stuff has become part of your culture, a culture which is tearing us apart on a daily basis. The outright hatred for the opposition is downright staggering, to the point where any ‘means’ is acceptable to ‘reach’ your political ends!!!

  3. as opposed to casting a symbolic vote.

    How come Perry didn’t ask for a citation on this? Where’s the proof that this was “symbolic?”

    And yes, Hitchcock, this ties into your right wing propaganda here posted, because this stuff has become part of your culture, a culture which is tearing us apart on a daily basis. The outright hatred for the opposition is downright staggering, to the point where any ‘means’ is acceptable to ‘reach’ your political ends!!!

    Uh huh. Except that you morons moan and groan about silliness like targets on a campaign poster, yet we still continually see garbage like this every single day, and it’s never, ever called out by you or your brain-dead minions in the MSM.

  4. Mr Whistler called it “casting a symbolic vote,” while Perry wrote:

    This is classic propaganda, where a vote is pulled out of context to make a point that really does not exist.

    Oh, so Senator Barack Obama (D-IL) was just joshin’ us when he said, in 2006:

    The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Increasing America’s debt weakens us domestically and internationally. Leadership means that “the buck stops here.”1 Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.

    In fact, I’d say that Senator Obama was exactly right in what he said in 2006:

    • it was a sign of a failure of leadership;
    • it was a sign that the government can’t pay its own bills;
    • it was a sign that we depend now on foreign countries to finance our Government’s reckless fiscal policies;
    • it was shifting the burden of bad choices today onto the backs of our children and grandchildren; and
    • it showed we had a debt problem and a failure of leadership.

    We Republicans agree: we did spend too much, way too much, and President Bush and the Republicans who controlled the 107th, 108th and 109th Congresses did not show any fiscal discipline at all; at least drunken sailors quit spending when they ran out of money!

    But if the Republicans spent like drunken sailors, the Democrats spent like strung out coke heads and junkies, making the Republicans of the 107th, 108th and 109th Congresses look sober and responsible in comparison, and that’s a hard thing to do!

    So, I have to ask: was Senator Obama lying in 2006? And if he wasn’t lying then, why aren’t his words true now, even more so?

    ________________________

    1. Don’t worry: this sign is not on President Obama’s desk! And even if it was, he wouldn’t mean it. [back]
  5. The correct answer, Dana, is that his words were true then AND true now. However, playing chicken with default was not anybody’s intent then, nor should it be now.

    Simple enough?

  6. “So, I have to ask: was Senator Obama lying in 2006? And if he wasn’t lying then, why aren’t his words true now, even more so?”

    No, Obama was absolutely right with that statement. However, the spending and tax cuts by Bush and his Republican cohorts, as you forthrightly acknowledged (thankyouverymuch), created problems for Obama when he took office, requiring him to put the off-budget wars and Part D on-budget, pay for the Bush-Obama TARP and the Obama stimulus (a good portion of which were tax cuts for the poor and middle), and yes, the ACA, which simultaneously cuts spending on health care and insures most Americans. Too bad the Repubs blocked the public option at least, or at best the single payer, both of which would have saved money on health care, not to mention streamlining administration, and the latter would have taken back the insurance company profits, saving more money. But no, ideology won out one more time over fiscal prudence and the nation’s health.

    The thing is, Dana, in your haste to blame everything on Obama regarding the debt, which Bush doubled in his eight years and Obama has increased by only about 27% so far, you right wing ideologues refuse to acknowledge these facts. How honest is that, I ask you?

    When will you start dealing with all the facts? And by the way, have I left out any important facts?

  7. Dana, note this chart, because it contains a factor that I have not mentioned before, that the Great Recession that Obama inherited from you Repubs also involved a dip in revenues, which also contributed to the large deficit. You also ought to read this reference from the Business Insider which produced said chart.

  8. Perry gets laughable:

    The thing is, Dana, in your haste to blame everything on Obama regarding the debt, which Bush doubled in his eight years and Obama has increased by only about 27% so far, you right wing ideologues refuse to acknowledge these facts. How honest is that, I ask you?

    If the debt rose 100% in President Bush’s eight years, and 27% in President Obama’s two, then it’s on the same course as President Bush’s! :)

    However, you’re comparing apples and oranges, Perry. Using a source I know you won’t challenge, the national debt rose from $5,807,463,412,200.06 on 30 September 2001 (end of FY2001) to $9,007,653,372,262.48 on 30 September 2007, the end of FY2007, the last budget passed by a Republican Congress, for an increase of $3,200,189,960,062.42. Two years of a Democratic Congress increased the national debt to $11,909,829,003,511.75, an increase of $2,902,175,631,249.27, only $298,014,328,813.15 less in two years than during President Bush’s first six years, and it should be pointed out that most of the FY2009 budget was not passed until after President Obama had already been inaugurated.

    But, if we attribute the entire thing to President Bush, an increase of $6,102,365,591,311.69 over eight years, to a national debt of $11,909,829,003,511.75 at the end of FY2009, it should be noted that we are currently bumping up on the statutory debt limit of $14,294,000,000,000, already an increase of $2,384,170,996,488.25 in less than two fiscal years.

    If we take all of the eight fiscal years under President Bush, even including the parts of FY2009 which were not appropriated until Barack Obama was President, we have an average increase in the national debt of 762,795,698,913.96 every year; with less than two fiscal years under President Obama, and an increase of , under President Obama the debt is increasing at a rate of $1,300,456,907,175.41 per year.1 At that rate, President Obama would rack up $5,201,827,628,701.64 in debt in four years, not that much less than was accumulated in eight years under President Bush.

    You asked:

    When will you start dealing with all the facts?

    I just did, Perry, and they don’t look so hot for your side, do they?
    ______________________

    1. This assumes 12 months in FY2010 and 10 months in FY2011, [back]
  9. Of course, if we don’t increase the debt limit, and slash spending to the bone to balance the budget, the national debt will stop increasing, and start to get paid down as T-Bills come due. That would solve the debt crisis right there.

  10. Of course, we can’t expect the Obama Administration to be able to do math, when the President doesn’t know when his own birthday is!


    Obama’s Senior Moment: ‘I’ll be turning 50 in a week.’


    July 15, 2011 3:38 PM

    Actually he’ll be turning 50 in three weeks. His birthday is August 4, two days after the debt ceiling deadline. Senior moment?

    He messed up Malia’s birthday, too, calling her 13 when she was at the time 12 and still days away from becoming a teenager.

    Maybe he needs to look at that long form birth certificate it took so long to produce again? :)

    Hat tip to Gretchen for the link. :)

  11. Of course, if we don’t increase the debt limit, and slash spending to the bone to balance the budget, the national debt will stop increasing, and start to get paid down as T-Bills come due. That would solve the debt crisis right there.

    And lead to a drop in GDP of 5%-10% annualised for the quarter you default in. To give some perspective – your entire financial crisis and economic woes so far have reduced GDP by 4% or so.

  12. Dana Pico says:
    17 July 2011 at 17:04

    Of course, we can’t expect the Obama Administration to be able to do math, when the President doesn’t know when his own birthday is!

    Obama’s Senior Moment: ‘I’ll be turning 50 in a week.’

    July 15, 2011 3:38 PM

    Actually he’ll be turning 50 in three weeks. His birthday is August 4, two days after the debt ceiling deadline. Senior moment?

    Well, that’s what happens when the Manchurian Candidate forgets his facts.

  13. “I just did, Perry, and they don’t look so hot for your side, do they?”

    Yes you did, Dana, and you proved my point. Now that IS laughable! :)

    Using your figures, the debt under Bush’s eight years climbed $6.1 trillion to $11.9 trillion, pretty close to the 100% which I quoted (I said Bush doubled the debt). On the other hand, Obama has taken us from $11.9 trillion to $14.3 trillion so far, an increase of 20% in his 2.5 years in office(I said 27%, so I erred).

    If Obama continues spending at this rate, assuming he has a second term, he will have increased the debt by 64%, considerably less than Bush.

    So you are also going to have to swallow that fact, Dana. I’ll bet you are surprised!

    Now let’s take another look at that chart:

    If Obama had allowed the Bush tax cuts on the >$250K earners to expire, the revenue part of the curve would be increased, further, thus reducing the Obama debt increase. So that’s one more reason why you Repubs did not want them to expire – it would have made Obama look even better. Yet it would have helped the economy by reducing the debt.

    This chart is indicative of the increase in revenue if the Bush tax cuts on the >$250K earners had been permitted to expire last December as scheduled:

    It’s just remarkable how the rich have been favored by Bush. Imagine where we would be if these tax cuts were never imposed. I doubt that we would have a debt crisis today. In fact, I’ve read that if we went back to the Clinton tax structure, we would wipe out the debt in ten years without any cut in spending.

  14. It’s just remarkable how the rich have been favored by Bush. Imagine where we would be if these tax cuts were never imposed.

    *Squawk* Class warfare! *whistle* Envy of producers! *squawk* *Polly wanna cracker*

  15. In fact, I’ve read that if we went back to the Clinton tax structure, we would wipe out the debt in ten years without any cut in spending.

    It would but that would be SSSSSSSSSocialism! Free association, yoke of oppression, beating your head against a wall, etc etc, you know the drill. Keep in mind that all of this talk is coming from the party that brought us Medicare Part D so hey, anything is possible. Remember a few years back when AIG execs were claiming that it would be socialism if their salaries weren’t paid for by J.Q. Taxpayer? The word no longer has any meaning.

  16. The year was 2006. The President was George W Bush. The debt ceiling was being approached.

    Why was the debt ceiling being approached? I was lead to believe that tax cuts increased government revenues!

  17. Perry wrote:

    In fact, I’ve read that if we went back to the Clinton tax structure, we would wipe out the debt in ten years without any cut in spending.

    Then you’ve read incorrectly. In the highest revenue collecting year of the Clinton Administration, FY2000, we saw tax revenues of 20.6% of GDP, while FY1997, 1998 and 1999 saw tax revenues of 1902, 19.9 and 19.8% of GDP. But President Obama’s spending plans, such as they were, always called for total federal spending in the 22.6 to 23.6% of GDP range. Looking between low (20.6% revenues to 22.6% spending) to high (19.2% revenues to 23.6% spending), and an estimated 2011 GDP of $14.7 trillion, you are looking at deficits anywhere from $294 billion to $647 billion. You would be adding to the debt, every year, not reducing it.

    The income tax rates during the Clinton years would produce more tax revenue, but we put that question to the people in the 2000 election: should we reduce tax rates? Governor Bush wanted to reduce them by a lot, and Vice President Gore wanted to reduce them as well, just not as much; 98% of the American people voted for candidates who promised to reduce taxes.

    Four years later, the voters gave majority approval to President Bush and his policies, including his tax policies. And in 2008, the American people voted for Barack Obama, who promised, you guessed it, a tax cut, and included on his campaign website an “Obama Tax Cut Calculator,” where he tried to show the voters that they’d have lower taxes under him than under his opponent, John McCain. Amusingly enough, our good friend Henry Whistler was pimping it:


    What’s your Obama tax cut?


    Thursday, August 28th, 2008 @ 3:21 PM

    Mine is $480.98. Next year when I’m married and have a dependent, I’ll get $970.76. What’s your Obama tax cut?1

    According to the calculator, John McCain would actually tax me $456.11 more than Obama. I played with the numbers some more, and found that even if I made $75K a year, Obama would still mean a tax cut $353 bigger than McCain’s. At $100K it disappears. Married, I would get a tax break at $200K+ a year. At $500K a year, married, the tax break finally disappears.

    If every voter who says they’re concerned about taxes could punch their numbers in this calculator, Obama would win 50 states.

    Watch the Republicans spend the next two and a half months making sure they keep their constituencies deceived.

    ______________________________

    1. The internal link is retained here for reference purposes, but the link is no longer active. [back]
  18. Perry wrote:

    If Obama had allowed the Bush tax cuts on the >$250K earners to expire, the revenue part of the curve would be increased, further, thus reducing the Obama debt increase. So that’s one more reason why you Repubs did not want them to expire – it would have made Obama look even better. Yet it would have helped the economy by reducing the debt.

    You don’t understand at all. We don’t want more revenue, because the government will just spend it. We want to cut spending, cut spending drastically; that’s how we want to balance the budget.

  19. Then go make your case to who receives the checks; the pharmaceutical industry, the aerospace industry, the energy industry, the ag industry, the health industry, etc. I’m sure their armies of lobbyists will be more than happy to hear your pleas.

  20. Mike wrote:

    Then go make your case to who receives the checks; the pharmaceutical industry, the aerospace industry, the energy industry, the ag industry, the health industry, etc. I’m sure their armies of lobbyists will be more than happy to hear your pleas.

    Yup, absolutely, I’m with you 100%. I don’t think that anybody should get a government check for anything other than wages and salaries earned, retirement earned and paid into, or goods or services contractually provided, period. People should not get grants, for anything, and corporations should not get subsidies or grants, for anything.

  21. “Then you’ve read incorrectly. In the highest revenue collecting year of the Clinton Administration, FY2000, we saw tax revenues of 20.6% of GDP, while FY1997, 1998 and 1999 saw tax revenues of 1902, 19.9 and 19.8% of GDP. But President Obama’s spending plans, such as they were, always called for total federal spending in the 22.6 to 23.6% of GDP range. Looking between low (20.6% revenues to 22.6% spending) to high (19.2% revenues to 23.6% spending), and an estimated 2011 GDP of $14.7 trillion, you are looking at deficits anywhere from $294 billion to $647 billion. You would be adding to the debt, every year, not reducing it.”

    So your conclusion, from your calculations, is that if we increase revenues (taxes), then the deficit increases. Dana, forget your math, logic indicates that this cannot be true. My point was, if we reimposed the Clinton tax rates, and kept spending constant, then the debt would be paid off in ten years.

    “Restoring the Clinton-era tax rates for the wealthiest Americans will raise an estimated $1 trillion in additional revenue and go a long way toward balancing the deficit-plagued budget, which most agree is a strain on the economy.48″

    You can find this discussion here, p17. Footnote 48 is this: 48 2/2/09 Bloomberg News, Obama Offers 3.8 Trillion Budget With Focus On Job. I was unable to pull it up.

    Here is a variation on this idea:

    “Gingrich’s last budget before he resigned as Speaker had total unified expenditures — meaning including Social Security and Medicare — of $1.7 trillion. Adjusted for inflation, that would be $2.3 trillion today. As the Office of Management and Budget is estimating tax receipts of $2.5 trillion this fiscal year, we would produce a $200 billion surplus.”

    The point is, not only to share the burden to reduce our debt, it also makes fiscal sense to increase taxes at least to the Clinton level. Why not?

  22. We don’t want more revenue, because the government will just spend it.

    That’s your hunch, not a fact. When we had a surplus, Republicans just cut taxes and turned it into a decade of deficits.

    We want to cut spending, cut spending drastically; that’s how we want to balance the budget.

    That’s how you want to balance the budget, but you’re against all government spending, so that’s where you see the solution. Basic math, of course, dictates that the biggest gains against our deficit can be made by combining spending cuts with revenue increases.

  23. We want to cut spending, cut spending drastically; that’s how we want to balance the budget.

    Regardless of the effects it has on the actual economy? You’re prepared to beggar America to get this?

  24. I don’t think that anybody should get a government check for anything other than wages and salaries earned, retirement earned and paid into, or goods or services contractually provided, period

    Right – and this is your ideology, which you believe should be adopted regardless of how it actually affects Americans and America in the real world. So you’re not so much a “conservative” as a “fantasist”.

  25. Perry wrote:

    So your conclusion, from your calculations, is that if we increase revenues (taxes), then the deficit increases. Dana, forget your math, logic indicates that this cannot be true. My point was, if we reimposed the Clinton tax rates, and kept spending constant, then the debt would be paid off in ten years.

    You didn’t read it right, Perry. The deficit would decrease, but it would still exist, and we would still be piling on debt, not paying it off.

    The point is, not only to share the burden to reduce our debt, it also makes fiscal sense to increase taxes at least to the Clinton level. Why not?

    No, it makes more sense to cut spending, because the American people, in virtually every vote taken, have voted for lower, not higher taxes. That has been their democratic choice; it should be honored, unless, of course, you prefer tyranny.

  26. Mr Whistler engages in hyperbole:

    That’s how you want to balance the budget, but you’re against all government spending, so that’s where you see the solution. Basic math, of course, dictates that the biggest gains against our deficit can be made by combining spending cuts with revenue increases.

    No, I’m certainly not against all government spending; I’m for government having it’s proper role in our civilization. That role is to provide police and fire protection, basic transportation services (roads and bridges), the courts, a unified monetary system, and national defense. If that’s all the government did, we’d be spending a lot less!

    I am against government trying to redistribute wealth, against government paying people not to work, farmers not to produce, oil companies not to explore.

  27. The Phoenician wrote:

    I don’t think that anybody should get a government check for anything other than wages and salaries earned, retirement earned and paid into, or goods or services contractually provided, period

    Right – and this is your ideology, which you believe should be adopted regardless of how it actually affects Americans and America in the real world. So you’re not so much a “conservative” as a “fantasist”.

    Oh, and you think people should be paid for doing nothing, for providing nothing, that we should be cutting government checks for not contributing anything? Well, how silly of me, of course you do! That’s how we have bred a generation of indolence.


  28. The point is, not only to share the burden to reduce our debt, it also makes fiscal sense to increase taxes at least to the Clinton level. Why not?

    No, it makes more sense to cut spending, because the American people, in virtually every vote taken, have voted for lower, not higher taxes. That has been their democratic choice; it should be honored, unless, of course, you prefer tyranny.”

    Dana, it should be obvious to you that if we raise taxes, let’s say to the Clinton levels, that the deficit and debt will decrease. That has already been demonstrated! If it is not obvious to you, then you are not being truthful about this point.

    I think we can all agree that the Bush tax cuts favored the wealthy. That, Dana, constituted the government redistributing the wealth, upwards. How is that OK with you, but returning to the Clinton rates are not?

    Instead of being logical, instead of supporting the idea of sharing the burden in these very difficult times, you turn once more to your ideology, which is like a religion to you. And your ideology translates to passing the burden 100% to the middle and poor, by cutting necessary programs and depriving them of even more jobs. What do you think will be the outcome if your draconian wishes are actually implemented? Please don’t say that your ideas would create more jobs and produce a robust economy, because that would be totally false, and you should know that!

    Dana, you, a member of the middle class, have aligned yourself with the powerful elite who are telling us to “suck it up and cope”. In my view, you are your own worst enemy, for the sake of your ideology, again, which is just like a religion to you. Will you ever be able to break out from your absolutism cocoon? You do have the power! And for that advice, I give it to you free of charge! :)

    PS: I note that your side is not interested in the Obama plan to cut $4 trillion in ten years. Your party’s bluff has been called on that one, Dana.

  29. Oh, and you think people should be paid for doing nothing, for providing nothing, that we should be cutting government checks for not contributing anything? Well, how silly of me, of course you do! That’s how we have bred a generation of indolence.

    My, what a interesting view you have of your fellow Americans – I assume you believe people WANT to be unemployed?

    But again I note that you’re couching your argument as a moral one – “punish anyone who isn’t employed, and let those who are employed get exploited by the rich”. You know that the vast majority of reputable economists are stating that government spending is necessary in a recession, and yet you believe inflicting pain on your fellow Americans whether working, not working, or unemployed not by choice is a good thing even if it is not necessary.

    You’d rather see the “wrong” people suffer than see America do well. That speaks volumes about you, Dana.

  30. If you increase taxes on the job-producers, you decrease jobs and you decrease the number of people who pay taxes and you decrease living standards for everyone and you send more people into poverty and you continue the class-envy (which is a sin) that has always destroyed and has never created.

    The US trails only Japan (and by fractions of a percent) for the world’s highest corporate tax level. Such stupid taxation is an absolute destructive measure if you actually want, you know, jobs and upward mobility and enhanced lifestyles for the working poor and the middle class.

    But the article is actually about the very well known duplicity among Democrats, Socialists, Progressives, the mainstream media (that was a repetitive statement repeating itself, put out by the Redundant Department of Redundancy). The Left is nothing if not notoriously duplicitous in their behaviors and whinging.

  31. If you increase taxes on the job-producers, you decrease jobs and you decrease the number of people who pay taxes and you decrease living standards for everyone and you send more people into poverty and you continue the class-envy (which is a sin) that has always destroyed and has never created.

    Let’s see – the US is collecting the lowest taxes it has in sixty years, and these are skewed away from the richest to an extent that hasn’t been seen since the Gilded Age – and yet unemployment remains high.

    Once again the perpetually baffled JH spouts garbage while ignoring what is actually happening.

  32. If you increase taxes on the job-producers, you decrease jobs and you decrease the number of people who pay taxes and you decrease living standards for everyone and you send more people into poverty and you continue the class-envy (which is a sin) that has always destroyed and has never created.

    Meanwhile, back in reality:

    How the bubble destroyed the middle class
    Commentary: Sluggish growth is no mystery: No one has any money

    WASHINGTON (MarketWatch) — A lot of people say they are deeply puzzled by the slow recovery in the U.S. economy. They look at the 9+% unemployment rate and the mediocre growth in national output, and they scratch their heads and wonder: Where is the boom that inevitably follows a deep bust, such as we experienced in 2008 and 2009?

    But there is no mystery. What other result would you expect from the financial ruin of the once-great American middle class?
    [...]
    This isn’t just a sad story about a few losers. The prosperity of the middle class has been the chief engine of growth in the economy for a century or more. But now our mass market is no longer growing. How could it? The middle class doesn’t have any money.
    [...]
    If losing half your meager life savings weren’t bad enough, the middle class has also been falling behind in terms of income for decades. Families in the middle make most of their money the old-fashioned way: Working their fingers to the bone for 40 years for wages and a modest pension.

    Their wages have been flat after adjusting for inflation. In the late 1960s, the 20% of families right in the middle were earning almost their full share of the pie: they had 17.5% of total income. Their share has been falling steadily ever since. Now, that 20% is earning just 14.6% of all income. Meanwhile, the top 5% captured a growing share, going from 17% in the late 1960s to 22% today.
    [...]
    Now that the bubble has burst, homeowners are putting money INTO their homes, not taking it out. The impulse to pay down the mortgage and the credit card is reducing the amount of money we’re spending on other things. Since 2007, instead of taking $2 trillion out of their house, homeowners have put $1.3 trillion into them.

    You think that might be having an impact on consumer spending?

    Even with trillions in debt being paid off or written off, very little progress has been made in deleveraging. The debt-to-disposable income ratio has slipped from 130% at the height of the bubble to 115%, but that’s still far more than the 90% recorded in 2000 or the 80% of 1989 or the 60% of 1976. No one knows how far it needs to fall before American families are comfortable with how much they owe.

    The slow growth in the economy is no mystery: Most families don’t have any extra money to spend. It will take a long time for the middle class to rebuild its wealth, especially if we don’t find some work.

    And let’s stress another point I made before – you cannot have a current account trade deficit, the private sector paying down debt, and a balanced public budget. It’s a matter of accounting identities – the trade deficit + the net savings of the private sector MUST equal the government budget deficit.

    This means that if you go austerity – reducing the budget deficit – you directly act against the private sector paying down debt. Debt stays high. People do not buy. And the recession drags on and on and on and on…

  33. Can’t say that I understand your other point about the accounting identities, PiaToR – that’s on me; but I do very well understand you point about the declining American Middle Class – the facts are right there and indisputable, except that the Righties, as usual, will choose to ignore the facts, and will, beyond my comprehension, continue to support policies that suck wealth out of the American Middle and virtually give it to the American (corrupt and powerful) Elite.

    And middle class Righties support these policies? Yes they do! There is a word in the dictionary that describes this behavior: suicidal. So yes, I don’t get it!!!

  34. Can’t say that I understand your other point about the accounting identities, PiaToR

    It showed up when I was doing the research. As a matter of monetary flows, the sum of surpluses and deficits between the external, private and public sectors in an economy must add up to zero. There’s a wonderful graph here which demonstrates that.

    You’re running a capital account deficit – money is flowing out. This has to be matched by the private sector reducing savings, or the government running a deficit, or both. But you need the private sector to increase savings in order to get out of your recession. Therefore the government must run a deficit.

    Imagine the teabaggers get their way and the government runs a balanced budget. This means that any external deficit (money flowing out) must be met solely by the private sector running down savings (where the money comes from). This means that US civilians go further into debt until the terms of trade “adjust” due to the dollar crashing. And when I say “adjust” I mean to the point where your standard of living is such that you’re a net exporter to Chinese peasants.

  35. PiaToR, thanks for the cite on account identities, the sum of which must be zero, always. Thus, different contexts lead to a juggling of these three values. I repeat here the discourse which Randall Wray uses in his concluding remarks:

    “The reality is different: Wall Street’s excesses led to too much private sector debt that crashed the economy and reduced government tax revenues. This caused a tremendous increase of federal government deficits. {As a sovereign currency-issuer, the federal government faces no solvency constraints (readers will have to take that claim at face value for now—it is the topic for upcoming MMP blogs).} However, the downturn hurt state and local government revenue. Hence, they responded by cutting spending, laying-off workers, and searching for revenue.

    The fiscal storm that killed state budgets is the same fiscal storm that created the federal budget deficits shown in the chart above. An economy cannot lose about 8% of GDP (due to spending cuts by households, firms and local and state governments) and over 8 million jobs without negatively impacting government budgets. Tax revenue has collapsed at an historic pace. Federal, state, and local government deficits will not fall until robust recovery returns—ending the perfect fiscal storm.

    Robust recovery will reduce the overall government sector’s budget deficit as the private sector reduces its budget surplus. It is probable that our current account deficit will grow a bit when we recover. If you want to take a guess at what our “mirror image” in the graph above will look like after economic recovery, I would guess that we will return close to our long-run average: a private sector surplus of 2% of GDP, a current account deficit of 3% of GDP and a government deficit of 5% of GDP. In our simple equation it will look like this:

    Private Balance (+2) + Government Balance (-5) + Foreign Balance (+3) = 0. “

    If I understand correctly, Wray is stating that we will have a robust economy when the three account identities have the stated values. Does a foreign balance of +3 imply a trade surplus? If so, how can this possibly happen in the foreseeable future?

    PS: I see the concept here, but it will take more study for me to really grasp it in terms of economic trends. I agree, this theory speaks very strongly against austerity like the UK and our Tea Party advocates call for. Don’t their economic pundits understand this, or is the theory faulty? Logic alone tells me that austerity is contraindicated.

  36. If I understand correctly, Wray is stating that we will have a robust economy when the three account identities have the stated values. Does a foreign balance of +3 imply a trade surplus?

    No, firstly he’s talking about your long-term average (rather than “robust”), and secondly it’s dealing with monetary flows. He mentions a current account deficit of 3% of GDP – goods come into the country and money flows out. The government pumps out about 5% in excess money, 2% of which goes into building up net private savings, and 3% goes overseas.

    PS: I see the concept here, but it will take more study for me to really grasp it in terms of economic trends. I agree, this theory speaks very strongly against austerity like the UK and our Tea Party advocates call for. Don’t their economic pundits understand this, or is the theory faulty? Logic alone tells me that austerity is contraindicated.

    You’re talking about the people who state that Obama is a Kenyan Communist, despite knowing that he’s an American whose policies are actually to the right of those of Reagan (Reagan raised taxes when needed, remember). My guess is that they know full well what they’re doing at one level, but at the more important level they talk themselves into supporting whatever bullsh1t is being pushed today as the Official Party Line.

  37. “Dana, it should be obvious to you that if we raise taxes, let’s say to the Clinton levels, that the deficit and debt will decrease. That has already been demonstrated! If it is not obvious to you, then you are not being truthful about this point.”

    It should be obvious to you Perry, that if we raise taxes to say the Clinton level, the deficit and debt will grow accordingly because politicians will piss away the enhanced revenues as they have demonstrated time over time. Or do you believe that suddenly the pols will become responsible caretakers of the public trust? When the day comes that both you and Pho open a business in the U. S. and face the regulations, limitations and taxes burdened on the owner then you can talk all your high-fallutin’ claptrap on economic theory. Until then, listen to your elders.

    BTW Perry, are you still taking economic advice from a librarian? If so I have some medical opinions you may be interested in.

  38. “BTW Perry, are you still taking economic advice from a librarian? If so I have some medical opinions you may be interested in.”

    I’ll forgo the medical opinions, Hoagie-John, but instead point out to you that you and PiaToR are speaking two different languages, so to ‘speak’! He is speaking the language of macro economics, you micro economics. Even those who speak the same language do not necessarily agree, of course.

    There is little doubt in my mind that America has a macro economic problem, as per the sad state of our national debt and our distribution of wealth. In some respects, we have a Murdoch-like scandal going on here, in which corruption prevails and is calling the shots, impacting the micro economics of the middle and poor who are victims and suffer. If you don’t see this, you are either not paying attention or you have swallowed the right wing media party line, you know, that of the Murdoch propagandists on our side of the big Ocean!

    PS: Have you checked your email re our Italian Market here in Lewes, a “Touch of Italy”?

  39. It should be obvious to you Perry, that if we raise taxes to say the Clinton level, the deficit and debt will grow accordingly because politicians will piss away the enhanced revenues as they have demonstrated time over time.

    Clinton ran a surplus. Try to deal with the actual facts.

    BTW Perry, are you still taking economic advice from a librarian?

    Have you noticed, Perry, that he is unable to actually address my points about monetary flows, instead launching an ad hominem attack on my profession?

  40. “Have you noticed, Perry, that he is unable to actually address my points about monetary flows, instead launching an ad hominem attack on my profession?”

    It has become a characteristic of the culture of these people, PiaToR. CSPT is a microcosm of the wider phenomenon, in which ad hominem attacks and propaganda become the mode of operation for these people. The Murdoch scandals are just one more recent indicator.

    The fact that a screamer like Rush Limbaugh being as popular as he is, is very telling of this cultural intellectual decline; and there are a lot more like Rush on our airwaves. I suppose when a once dominant nation is in decline, people get emotional and then seek scapegoats. People like Rush exploit these emotions, and get themselves rich as a result. And the saddest, most frightening aspect to all this, is that these lemming-like behaving individuals don’t recognize that they have been had, as they vigorously defend their ideology as though it were a religion. Now be prepared for the defensive onslaught characterized mainly by the use of their usual ad homs.

    [Added: Instead of screaming, we need to seek ways that we can work together to pull ourselves back up by our bootstraps.]

  41. Just as a brief historical note, the US has been debt free only once in its history. On 1 Jan 1835, President Andrew Jackson was able to proclaim to the country that the Treasury had a positive balance of $440,000.

    In the summer of 1836, a land speculation bubble burst and the US experienced the longest contraction in its history (well, perhaps until now) – six years of decline.

    Yeah, that bodes well for teabagger proclamations that austerity will restore the US economy…

  42. Pingback: Congressman Mike Doyle: $3.5 Trillion in Spending is Too Little for the Government to “Spend Any Money”

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