Budget-busting deal shows that Barack Obama was much better at business than Trump

Obama White House / Flickr obama laughing...
Obama White House / Flickr

I promise I’ll get to why Obama was better at business than Trump, but first let’s remember a story you probably know well. It’s called: “The Boy Who Cried Wolf.” In that old fable credited to Aesop, a boy repeatedly sounds the alarm to alert his neighbors about a terrible danger—that wolves have set upon his flock of sheep. After a few false alarms, the townspeople ignore Peter the next time he ‘cries wolf’, and then his sheep are eaten (in some versions Peter serves as dessert for the wolves as well). According to Aesop, the moral is: “this shows how liars are rewarded: even if they tell the truth, no one believes them.”

Screenshot_2018-02-09_10.48.12.png

I doubt I’m the only one to think of that story in light of the utterly indefensible, yet utterly unsurprising hypocrisy of congressional Republicans when it comes to what they once, with a straight face, referred to as ‘fiscal responsibility.’ Paul Krugman exposed this hypocrisy in excruciating detail in his article, entitled “Fraudulence of the Fiscal Hawks.” Krugman cites a 2011 document authored by then-House Budget Chair and now Speaker of the House Paul Ryan, that sounded a klaxon-like alarm about impending danger: “The United States is facing a crushing burden of debt” that will “capsize” our economy—and, he claimed, it wouldn’t take long.

Screenshot_2018-02-10_10.00.24.png

The danger was so, well, dangerous, that House Republicans at that time threatened to default on our nation’s debt—and plunge the economy into actual chaos not soon but immediately—if we didn’t impose harsh, deep spending cuts. “WOLF! WOLF! WOLF!” is essentially what Paul, our modern-day Peter, shouted back then. Today, he, along with the Republican-led Senate and a Republican president, just passed a tax plan—whose benefits go overwhelmingly to the financial elites—and a budget plan that, by next year, will bring us right back to deficits about as big as they were in 2011.

Furthermore, if the provisions of the Republican rich man’s tax cut are extended—as its proponents have promised—these policies will bring our national debt, as a share of Gross Domestic Product, close to levels not seen since we had to fight for our survival in World War II.

Here’s how much things have changed thanks to the rich man’s tax cut and this budget deal brought to you by a Republican Congress and president: Eight months ago, the Congressional Budget Office projected that the federal budget deficit for the next fiscal year (which starts October 1) would be $689 billion. The non-partisan Committee for a Responsible Federal Budget now projects next year’s deficit to be around $1.2 trillion—not far from twice as high. It would be higher still if not for “budget gimmicks” and “one-time savings” such as selling off a shit(hole)load of oil from our Strategic Petroleum Reserve. That’s supposed to be the oil we’re saving for a crisis-induced shortage, in case you were wondering.

The budget deal in and of itself contains some positive elements, along with a simply absurd and unnecessary increase in military spending that, when adjusted for inflation, will bring us to a level very near the post-World War II peak. How in the world does it make sense to spend more on the military in 2018 and 2019 than during the Vietnam War, or during the Reagan-era arms race we ran with the Soviets?

Separate from the debate over its merits, here are two pieces of information about the deal that demonstrate with a capital H the hypocrisy of Trump and Ryan:

The budget deal, which Mr. Trump supports, is more costly than the fiscal plan that Hillary Clinton proposed during her 2016 presidential campaign.

Paul Winfree, an economist at the conservative Heritage Foundation, calculated that the 2019 base level of nondefense discretionary spending surpasses what President Barack Obama sought in his final budget request.

So on the one hand, Paul Ryan is the Peter who cried wolf. However, if we look at this another way, it’s even worse than that. It’s not just that he lied about an impending wolf attack when there was no wolf. Ryan did cry wolf a bunch of times—and of course blamed Barack Obama and the Democrats for making our village vulnerable to the wolf with their supposedly profligate budgetary policies. Then, when he and his Republican allies finally took over the village government, they invited that same dangerous wolf, namely the “crushing burden of debt” he bleated about for years, to come in and “capsize” the whole damn place. Ryan was never really afraid of the wolf to begin with. At least the fictional Peter’s lie was the lie of a naughty child who didn’t understand how dangerous it was. Paul’s was the lie of an adult who knew exactly what he was doing.

CBO-projects-that-interest-rates-will-raise-significantly-from-current-levels.jpg

Now let’s return to the matter I laid out in the title, namely how this deal shows that Barack Obama was better at business than the Tangerine Palpatine who currently occupies the Oval Office. The deficits we ran in 2009, 2010, 2011, etc. resulted largely, as Krugman noted, from the Great Recession, and the toll the economic crash took on the government’s coffers because of reduced tax revenues and increased entitlement spending. When people can’t find work, government spending on the safety net that helps them survive rightfully goes up.

Net-interest-costs-are-projected-to-rise-sharply.jpg

Please remember that the federal funds interest rate—which plays a major role in determining interest rates across the board, was reduced to almost zero in December 2008, and didn’t start going up over the next seven years. Now, however, we are expected to see continued increases in interest rates over the next few years, leading the interest our government pays on its debt to jump bigly (sorry, couldn’t resist).

Our government ran significant deficits in the first few years of Barack Obama’s presidency, and is projected to run similarly large deficits under Donald Trump. The Obama stimulus package, however, helped stabilize the economy—that’s the almost universal assessment of actual, fact-based economists. Any money we borrowed to fund that stimulus was well spent.

Furthermore, because of low interest rates during that time, we had much more reasonable borrowing costs. If anything, we should have borrowed more then—for example, on infrastructure spending of the kind proposed by Obama, but which Republicans in Congress blocked, although now they’re on board with Trump’s infrastructure proposal, one that is problematic because it relies far too much on state and local governments to pick up the tab. The current Democratic alternative proposal is far superior.

Looking back, Republicans, starting when they took control of the House in 2011, blocked all kinds of investments proposed by Obama that would have not only come at a time of lower interest rates but also would have further stimulated an economy that was still recovering, one in which there was plenty of labor itching to get back to work. By comparison, the unemployment rate today is at historic lows.

Going forward, we are about to blow a trillion-plus dollars on tax cuts for the rich which could very well overheat an economy that was already humming, thanks to Obama’s policies. And we’re going to borrow at much higher interest rates in order to do it. That’s before the budget deal that will add more even debt, again at higher interest rates.

Under Obama, we borrowed money at the right time for the right reasons. Under Trump, we’re doing the exact opposite. Republicans are not only hypocrites on the matter of fiscal responsibility, they’ve given us a president who has demonstrated that he’s worse at business than a supposedly naive community organizer.

Ian Reifowitz is the author of Obama’s America: A Transformative Vision of Our National Identity (Potomac Books).


Get The Trump Impeachment Newsletter.

Leave a Comment

1 Comment on "Budget-busting deal shows that Barack Obama was much better at business than Trump"

avatar
  Subscribe  
newest oldest most voted
Notify of
tom webster
Guest
tom webster

SO MUCH FOR THE BLOWHARD WAY TO BANKRUPTCY. HE LOST AT, AND IS BEING SUED FOR ALMOST EVERY DEAL HE MADE. PROJECTS PAID FOR WITH RUSSIAN MONEY, GO BANKRUPT AND DON ‘T PAY THE PEOPLE WHO ACTUALLY DID THE WORK. THIS IS THE ART OF THE DEAL THE GUTLESS WONDER PROMISED US. OH FOR SOME MORE OBAMA.