The economy and the deficit

I recommend yet another concise, thoughtful post from Steve Benen at The Washington Monthly: “It doesn’t have to be this way.”

I won’t repeat when Benen has to say since he expresses it better than I could. But I will add a couple of related thoughts:

How large a role the government should take in the economy is a matter of opinion, but it’s dishonest to pretend, as some politicians currently do, that the huge budget deficit we currently face is the result of a nonexistent massive increase in discretionary spending under Obama. That’s simply not true as a matter of objective fact, as noted in previous posts here and here.)

What we have is mainly a revenue problem resulting from Obama’s tax cuts and tax credits (benefiting mainly working people and the middle class), George W Bush’s tax cuts (benefiting mainly the very rich), and the Great Recession that can be blamed in large measure on the deregulation of financial markets that began in the 1980s. Tax revenues as a fraction of gross domestic product are the lowest they’ve been in my lifetime, and I’m, alas, no longer young.

Obama did push through a modest stimulus package consisting of tax breaks, aid to states, and some increase in federal spending, but that extra spending is largely over and done with and, as plenty of economists warned at the time, was simply too small to do much more than stop the economy from sinking into a major depression. Now Obama and the Democrats, yet again, are bending over backwards to please Republican fanatics and slash federal spending, putting more people out of work and very possibly putting us into an extended period of slow growth for a decade or more.

And in a way, that’s the optimistic view. If the far right continue to obstruct the routine process of raising the debt ceiling, the U.S. will no longer be able to pay its bills, and we could be tipped into a full-on depression.

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