Matt Yglesias

CAP Budget Reax

Everything you wanted to know about the Obama budget and more from the Center for American Progress policy teams:

1. Dan Weiss on the climate and energy elements.
2. Cindy Brown and Melissa Lazarín on education.
3. Larry Korb on defense.
4. Michael Ettlinger on the big picture.

It’s not Obama’s style to actually say this, but were this budget to be enacted it would be by far the most significant progressive step in over forty years.

39 Responses to “CAP Budget Reax”

1. ssa Says:
   February 26th, 2009 at 6:31 pm

   This is the least progressive budget the almighty Obama could have cooked up. He is a cop-out to the Right. $1 trillion in tax increases for the uber-rich is nothing in an age of poverty and recession.

   http://www.sunstateactivist.org/ssablog/

2. Kolohe Says:
   February 26th, 2009 at 6:50 pm

   What’s your take that the 10 year plan never balances the budget? The deficit is cut to half trillion in four years, but then steadily goes up in nominal terms, and will remain about the same % of the GDP (roughly 3%).

   On the one hand, it’s refreshing honesty; everyone always has had a balanced budget in the outyears, no matter what the initial conditions or near term projections were.

   On the other hand, shouldn’t he have a plan to balance the budget after the current ‘crisis’ is over? Or will the recession last 10 years?

3. Michael Says:
   February 26th, 2009 at 6:51 pm

   that is his style and good in some ways. He is re-casting progressive change as just positive, American change.

4. StevenAttewell Says:
   February 26th, 2009 at 7:43 pm

   Kolohe:

   It’s probably neither possible nor wise to try to cut the deficit completely in the next four years in terms of ending the recession, creating recovery, and funding our domestic priorities. Half in four years is good. But even when we’re out of recession, it’s not wise to try to do things too drastically – even Clinton took 8 years to balance the budget completely.

5. Kolohe Says:
   February 26th, 2009 at 8:14 pm

   Steve Attewell-
   Completely agree.

   But there appears to be *no action at all* after year 4. All spending cuts/tax increases go into effect by 2012 and then everything is pretty much static – that is, baseline + population and inflation growth. (and the economic projections are pretty much static after that as well, but this is pretty much normal. e.g. starting in 2013 unemployment is around 5%, real gdp growth is around 3% a year, inflation is around 2%, long term interest rates around 5%)

6. Dustin Says:
   February 26th, 2009 at 8:19 pm

   were this budget to be enacted it would be by far the most significant progressive step in over forty years

   According to Larry Korb, the defense budget has nearly doubled in real terms over the past decade, and Obama’s budget proposes to increase real spending even more. I realize defense is only one part of the budget (a very, very big part) but it’s hard to see how this spending is consistent with your claim above.

7. Kolohe Says:
   February 26th, 2009 at 8:25 pm

   But many of them are going to be retired (or deceased) by that point,

   Well, there is the estate tax repeal.

   Mathematically you’re right, the deficit in the far out years is roughly equal to the annual interest payment plus around 100 billion more or less.

   But, I don’t buy ‘too tough’. Look I’m willing to give Obama the benefit of the doubt that he inheritted a soup sandwich. (and he sure rode the heck of the proverbial ‘first envelope’ in his speech Tues).

   But he’s on watch now. And presumably, he wants the job till 2016. Whatever has happenned, happened. He’s got to deal with it. He’s the one that says effectively ‘we’re americans; they’re aint no problem we can’t solve.’ And he has a unbreakable alliance on the house side (for likely his entire term), and obstruction in the senate takes near total party unity by his opposition.

   Like Gene Kranz, or at least Scott Glenn said, failure is not an option.

8. Kolohe Says:
   February 26th, 2009 at 8:30 pm

   DoD budgets (the total including ‘contigency operations’) go down in nominal terms in 2011 and 2012

   Department of Defense (051) including cost
   of overseas contingency operations ……… (FY08)593 (FY09)666 (FY10)673 (FY11)614 (FY12)604 (FY13)609 (FY14)618

   (Table S-4 page 119 of the budget doc released today)

9. Rich in PA Says:
   February 26th, 2009 at 8:55 pm

   ssa: That was funny. More, please!

10. Kolohe Says:
    February 26th, 2009 at 9:34 pm

    DTM-
    This is what he said tues:

    My budget does not attempt to solve every problem or address every issue. It reflects the stark reality of what we’ve inherited — a trillion-dollar deficit, a financial crisis, and a costly recession.

    Given these realities, everyone in this chamber — Democrats and Republicans — will have to sacrifice some worthy priorities for which there are no dollars. And that includes me.

    Ok again points for honesty, saying we can’t do everything. But he goes on:

    But that does not mean we can afford to ignore our long-term challenges. I reject the view that says our problems will simply take care of themselves; that says government has no role in laying the foundation for our common prosperity.

    For history tells a different story. History reminds us that at every moment of economic upheaval and transformation, this nation has responded with bold action and big ideas. In the midst of civil war, we laid railroad tracks from one coast to another that spurred commerce and industry. From the turmoil of the Industrial Revolution came a system of public high schools that prepared our citizens for a new age. In the wake of war and depression, the GI Bill sent a generation to college and created the largest middle class in history. (Applause.) And a twilight struggle for freedom led to a nation of highways, an American on the moon, and an explosion of technology that still shapes our world.

    Shorter Obama: Americans can do anything.

    I’d submit that submitting a budget that has a deficit of 3% of GDP each year from 2015 to 2019 but with economic growth of 2.6% every year is not sustainable* and “ignores long term challenges”.

    Furthermore the administration can’t have it both ways. They can’t take credit for increased integrity by looking at a time horizon longer than anyone else normally does, and then say ‘well anything after 2012 doesn’t count’. True honesty then would cut off their future predictions at 2012; at least publicly acknowlege that after FY 2013 the projections are notional.

    *It is a close call though. 2.6 is the real growth, so the nominal is somewhat higher (but not much using their estimate of 1.8 for GDP deflator and 2.1 for CPI) and thus closer but not quite equal to the debt growth (2.9-3.0 of nominal GDP per year per their tables)

11. Kolohe Says:
    February 26th, 2009 at 9:39 pm

    And I’m not asking for Obama’s taxpayers to pay off the debt (not only because I myself will have my peak earning years during his administration). I’m asking that by the end of his administration, and preferably after the need for fiscal stimulus is done, that no more debt is added – and failing that (because it is literally a bridge too far) that the debt growth is at least less the rate of economic growth.

12. Ben P Says:
    February 26th, 2009 at 9:42 pm

    How many Senate votes are needed to pass the budget?

    If 60, I doubt something close to this proposal makes it.

    If 51, something fairly similar probably makes it.

13. Kolohe Says:
    February 26th, 2009 at 9:54 pm

    I think I screwed up the * calculation above. Are GDP deflators additive or multiplicative?

    I.e. if mesaured economic growth is nominally 5%, and measured inflation is 2%, is real GDP growth 3%? Or is it [(1.05 - 1)/(1.02)] = 4.9%? Or 1.05/1.02 – 1 = 2.9%? After thinking about it more, I think now it’s the last one, and the deficits (debt growth) are in fact smaller than GDP growth.

14. joe from Lowell Says:
    February 26th, 2009 at 10:08 pm

    Kolohe,

    A ten-year budget forecast is a projection of what would happen if current policy was implemented and nothing changed in ten years. It is not a policy statement about what we’ll be doing in years 7-10.

    If the economy doesn’t out-perform expectations for the next few years, there will have to be a course correction in Obama’s second term.

15. S.P. Gass Says:
    February 26th, 2009 at 11:53 pm

    Re: Climate and Energy, the article says there is money to develop a plan for nuclear waste disposal, but it doesn’t give any hints on what that plan might be. It says shipping nuclear waste by truck and rail is dangerous. Presumably, you’ll need to move the nuclear waste one way or another.

    I heard Senator Judd Gregg on NPR this evening and he made a point that cap and trade will result in increased costs being passed onto consumers.

16. S.P. Gass Says:
    February 27th, 2009 at 12:37 am

    In this case, the plan is to invest the revenues in clean energy technologies (which will hopefully make it cheaper for consumers to switch to using less carbon)

    Does this mean that the cap-and-trade fees paid by carbon dioxide creating electric utilities will be used to fund greener powerplants for those same utility companies?

17. Realist Says:
    February 27th, 2009 at 1:18 am

    It just doesn’t make sense for a single country to pass cap and trade unilaterally. That just throws away the leverage you could use to get a good international agreement.

18. SLC Says:
    February 27th, 2009 at 7:39 am

    I’;m sure that Mr. Yglesias will want to comment on dodays’ column by his favorite columnist about President Osamas’ Europeanization of the US.

    http://www.washingtonpost.com/wp-dyn/content/article/2009/02/26/AR2009022602908.html?hpid=opinionsbox1

19. Marc Says:
    February 27th, 2009 at 8:30 am

    It’s actually funny, albeit a bit sad, that wingnuts believe that calling something European is equivalent to calling it bad. They’ve really regressed to the 1930s – when the wealthy went to movie theatres to boo Roosevelt on newsreels.

20. joe from Lowell Says:
    February 27th, 2009 at 8:58 am

    SLC,

    Here’s your comment: you guyz are screwed. Ha ha.

21. Tom Says:
    February 27th, 2009 at 9:02 am

    SLC: It is not cute or funny to ad hominem with the “osama ” reference !

22. SLC Says:
    February 27th, 2009 at 9:02 am

    Re Joe from Lowell

    Hey, don’t associate me with goatfuckers like Krauthammer.

23. Njorl Says:
    February 27th, 2009 at 9:23 am

    It just doesn’t make sense for a single country to pass cap and trade unilaterally. That just throws away the leverage you could use to get a good international agreement.

    Not necessarily. The countries that might adopt cap and trade are the countries with a long history of industrialization. The sticking point preventing a global agreement that is actually useful (unlike Kyoto, which was nearly pointless) is that some wealthy countries have a long history of putting CO2 into the atmosphere. Developing countries believe they should be able to put as much CO2 into the atmosphere as the US or UK has on a per capita basis. That would be fair, but, very likely, catastrophic.

    Adopting cap and trade now spurs development of technology that will be useful in future negotiations. Only when we can convince China that CO2 reduction can be accomplished in a less painful way will we be able to get them to sign on to a useful agreement.

24. Njorl Says:
    February 27th, 2009 at 9:25 am

    Hey, don’t associate me with goatfuckers like Krauthammer.

    SLC,
    The only one associating you with Krauthammer is yourself. When you refer to the president as “Osama”, you scream at the top of your lungs that you are Rush Limbaugh.

25. Njorl Says:
    February 27th, 2009 at 9:34 am

    I’;m sure that Mr. Yglesias will want to comment on dodays’ column by his favorite columnist about President Osamas’ Europeanization of the US.

    Up until the last paragraphs, I was wondering why Krauthammer was writing a column praising Obama.

26. anonymiss Says:
    February 27th, 2009 at 9:48 am

    I just find it incredible that people are giving Obama crap for failing to eliminate the deficit while he deals with the greatest economic crisis we’ve faced since 1929, and while he’s trying to turn around a decade where his predecessor massively grew the debt while accomplishing nothing.

    The deficit is a problem, and he’s made it clear that he wants to get to it. But, uh, that was one of the biggest problems we faced 4 years ago–the problem his predecessor made worse instead of addressing. Right now, it doesn’t break the top 10 list. It’s got to wait.

    It’s also demented that the same Republicans who went on a batshit insane spending spree with our nation’s credit card is now giving Obama a hard time because he’s using it to actually solve problems.

    I swear, our discourse is demented.

27. SLC Says:
    February 27th, 2009 at 9:54 am

    I find it amazing that the conservatives like Mr. Fred and Mr. Al who comment on this blog never mention that their hero, Dubya, turned a 150 million budget surplus into 8 years of deficits. By the way, what ever happened to Mr. Mixner?

28. joe from Lowell Says:
    February 27th, 2009 at 1:55 pm

    Oh, that’s just pathetic, DTM. Sad, really.

    Up until the last paragraphs, I was wondering why Krauthammer was writing a column praising Obama.

    They’ve been doing that a lot lately. “Barack Obama wants to spread the wealth. Did you hear me? He says he wants to SPREAD the WEALTH! Stop cheering, you idiots!”

29. Peter K. Says:
    February 27th, 2009 at 2:56 pm

    Krauthammer:
    Conservatives take a dim view of the regulation-bound, economically sclerotic, socially stagnant, nanny state that is the European Union. Nonetheless, Obama is ascendant and has the personal mandate to take the country where he wishes. He has laid out boldly the Brussels-bound path he wants to take.

    Let the debate begin.

    Krauthammer and many conservatives are in Blagovian denial about what conservative economic policy has wrought. The results are in, and the debate in some regards is over even if people like Mr. Krauthammer can’t accept it. (Or perhaps some are just like defense lawyers spinning a losing case and leaving out salient details.)
    
    By the way, what ever happened to Mr. Mixner?

    Whatever happened to Petey? I mean the way Obama behaved at the Harvard Review wouldn’t have led us to believe he’d present a budget like this.

30. joe from Lowell Says:
    February 27th, 2009 at 7:49 pm

    We wouldn’t want to have slow growth, now would we? Can you imagine if regulation of the financial sector has made the proliferation of exotic derivatives more sclerotic? We might not have had this unbound economic growth.

    Also, can I get fitty cents? I’m tryin’ to get me a sandwich.

31. A bridge too far Says:
    March 11th, 2009 at 2:46 am

    There is obviously a lot to know about this. I think you made some good points in Features also.

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