PAUL KRUGMAN: Can I just say, on the Reagan thing, if public-sector employment had continued to expand the way it did during Reagan’s first term, instead of falling by about 600,000 as it has, right there we’d have something like 1.4 million people working in this country.

So if you actually look at the actual track record of government spending, government employment, Reagan is the Keynesian and Obama — mostly because of political constraints, although a little bit of lack of conviction on the part of his own people, has been the anti-Keynesian. He’s been the one who’s been doing what Republicans say is the right answer.

Ronald Reagan was not a Keynesian.  As Milton Friedman noted in his speech at the opening of the Cato Institute in 1993, “Reaganomics had four simple principles: lower marginal tax rates, less regulation, restrained government spending, noninflationary monetary policy.  Four cornerstones that led to the following:

Real economic growth averaged 3.2 percent during the Reagan years versus 2.8 percent during the Ford-Carter years and 2.1 percent during the Bush-Clinton years. Real median family income grew by $4,000 during the Reagan period after experiencing no growth in the pre-Reagan years; it experienced a loss of almost $1,500 in the post-Reagan years. Interest rates, inflation, and unemployment fell faster under Reagan than they did immediately before or after his presidency. The only economic variable that was worse in the Reagan period than in both the pre- and post-Reagan years was the savings rate, which fell rapidly in the 1980s. The productivity rate was higher in the pre-Reagan years but much lower in the post-Reagan years.

Yet, Obama is anti-Keynesian after spending $830 billion dollars on a failed stimulus program that had left the unemployment rate over 8% for over 38 months.  A program that would never allow unemployment to rise above 8% and would produce robust economic growth.  All of this would be induced by deficit spending. The president stated that the stimulus would create 2.5 million “shovel ready jobs” for infrastructure projects.  In fact, in an interview with Peter Baker of The New York Times, the president admitted that “he let himself look too much like “the same old tax-and-spend Democrat, realized too late that there’s no such thing as shovel-ready projects and perhaps should have let the Republicans insist on the tax cuts in the stimulus.”  In addition, his Vice President, Joe Biden, reiterated the Keynesian approach of this administration three years ago by stating that we must spend our way out of bankruptcy.

Also, to say”[Obama's] been the one who’s been doing what Republicans say is the right answer” is patently false.  Republicans aren’t for class warfare legislation, like the Buffet Rule tax reform, that institutes a mandatory 30% tax on millionaires, but leaves the charitable donation deduction.  Hence, the rich, also known and the job creating and investing class, could donate their way out of taxation.  Furthermore, Republicans never were for spending a trillion dollars on a new health care entitlement, Obamacare, that will cut 20 million Americans from their coverage while making 49 million more citizens dependent on government run medical services.

Nevertheless, it didn’t stop Paul Krugman from making more patently false remarks on ABC’s This Week.

KRUGMAN: Can I just — these are — these are — we’re talking as if $1 billion was a lot of money, and in $15 trillion economy is not. Solyndra was a mistake as part of a large program, which has been — by and large had a pretty good track record. Of course you’re going to find a mistake. I think, to be fair, that’s probably true in Massachusetts, as well.

But this is — this is ridiculous, that we are taking these tiny, tiny missteps which happen in any large organizations, including corporations, including Bain — Bain Capital had losers, too, right, even from the point of view of its investors? So this is ridiculous.

And the fact of the matter is, this president has not managed to get very much of what he wanted done. He — it’s terribly unfair that he’s being judged on the failure of the economy to respond to policies that had been largely dictated by a hostile Congress.

First of all, concerning clean energy initiatives, Solyndra is the tip of the iceberg.  Furthemore, it’s not just $1 billion dollars as:

“CBS News counted 12 clean energy companies that are having trouble after collectively being approved for more than $6.5 billion in federal assistance. Five have filed for bankruptcy: The junk bond-rated Beacon, Evergreen Solar, SpectraWatt, AES’ subsidiary Eastern Energy and Solyndra.

SunPower landed a deal linked to a $1.2 billion loan guarantee last fall, after a French oil company took it over. On its last financial statement, SunPower owed more than it was worth. First Solar was the biggest S&P 500 loser in 2011 and its CEO was cut loose – even as taxpayers were forced to back a whopping $3 billion in company loans. Nobody from the Energy Department would agree to an interview.

How safe were the loans?

[Economist] Peter Morici replied… It’s, it is a junk bond…but it’s not even a good junk bond. It’s well below investment grade. Was the Energy Department investing tax dollars in something that’s not even a good junk bond? Morici says yes. This level of bond has about a 70 percent chance of failing in the long term,” he said.”

Furthermore, Robin Millican, Policy Director for the Institute for Energy Research, has stated how the Section 1603 program has allocated $20 billion dollars in cash payments, not loans that need to be repaid, to companies that install solar, wind and geothermal properties.  Congress wants to extend this program for an additional year at the tune of $3 billion dollars.

Lastly, the president has achieved most of his domestic agenda.  Obamacare was the signature achievement in the president’s first term.  In addition, there was Cash for Clunkers, Dollars for Dishwashers, Cash for Caulkers, and the Dodd-Frank Wall Street Reform and Consumer Protection Act.  If Mr. Krugman thinks the president is dealing with a hostile congress, he only needs to look at the docket that shows this hostility has produced a multitude of legislation aimed at creating jobs and curbing the debt and deficit.  Most of the bills have been blocked by the Democratic controlled senate.

(h/t Noel Sheppard)

In France, Socialist François Hollande said he will move quickly to implement traditionally Socialist tax-and-spend programs, which call for boosting taxes on the rich, increasing state spending, raising the minimum wage, hiring some 60,000 teachers and lowering the retirement age from 62 to 60.

Meanwhile, in California, Gov. Jerry Brown is calling for more social services cuts to help eliminate $15.7 billion deficit. Brown revealed a revised budget that calls for higher income and sales taxes to avoid deep cuts to K-12 and higher education. Rather than canceling an ill advised bullet train to nowhere that will cost the state at least $6 billion to build, Gov. Brown chose to scare Californians into voting for tax hikes by threatening cuts to education.

What do these three states have in common? They’re either already broke or will be soon due to government spending money it doesn’t have on socialist welfare programs, characterized within institutionalized “progressive” leftist circles as “entitlements”.

Greece, where the population is already suffering from 20% unemployment, describes austerity measures they’re expected to follow in order to receive additional bailout money from the EU as “barbaric”. With an economy so weak that it can’t employ one fifth of its own citizens, where does Greece expect to find the money necessary to become financially solvent?

France, if it enacts Hollande’s pledge to mimic Greece’s socialist welfare spending, will soon experience similar fiscal troubles. By following Greece down the road to fiscal insolvency, France will ensure that Germany stands alone in continental Europe as the sole, fiscally responsible, productive society.

California has been on a similar, European style path for decades, which is why California is closer to a fiscal cliff that most of the United States. The legislature in California continuously acts on the belief that it can spend the state into prosperity. California has taxed the rich, spent money on socialist programs, established sanctuary cities that fund the lives of millions of illegal aliens and spent huge amounts of money on education. Much of the cost of that education goes for the children of unlawful residents.

On the list of most business friendly states, California is currently ranked fiftieth. California has held that rank for the last eight years. Meanwhile, businesses are fleeing California in droves, seeking residence in states like Texas, where tax and regulatory policies are friendlier to business. The California tax base is fleeing along with those businesses.

In Sacramento California, government employee unions are running the show. Not only do “progressive” politicians vote overvalued salaries and perks for themselves, they also obediently kowtow to union demands for ever escalating salaries, benefits and pensions. This occurs because those politicians depend on union money, muscle and turnout for their own re-election. Rather than choosing to run the state responsibly, self interested career politicians continuously submit to demands from “civil servants” who are too often far from civil. The looming, unfunded costs of union benefits and pensions are among the largest liabilities contributing to the state’s $15.7 billion deficit.

These are precisely the results all Americans can expect for future generations if the cradle to grave mentality continues to be legislated by “progressive” me first career politicians. These results are predictable if the cradle to grave lie remains propagandized in schools, promoted in television programs, glorified in the movies and dutifully drubbed into the minds of sound bite voters by the news media.

If America is to be saved, these combined forces of the institutionalized “progressive” left must be stopped; starting with voting “progressive” politicians out of office. That’s the first order of business. When a patient arrives in an emergency room, stopping the bleeding receives top priority. The detailed surgery needed to excise the root problem, while still necessary, comes later. It took years for “progressives” to infiltrate and infect academia, Hollywood, the media and political class with their cancerous agenda. And while delay is not an option, it will take years to repair those institutions.

Unless that happens, today’s Americans will spend their declining years describing to young people who’ll listen, how the United States was once the place where the world’s people came for otherwise unavailable opportunity. How the land of the free and the home of the brave was more than just a line in a song.

In America, for an increasingly limited amount of time, cradle to grave suicide is still an option.

http://mjfellright.wordpress.com/2012/05/15/cradle-to-grave-suicide/

 Thus Obama’s budget proposal is exposed as nothing more than increased government spending under the guise of Obama’s often-used motto stating his desire to a “balanced approach in creating a budget.” And don’t forget the always-included tax hikes present in every Liberal Democrat [balanced] budget proposal of the past 5 years.  Nothing proves these points more emphatically than the Obama-Democrat yearly deficits since 2007, which have averaged over $1 trillion dollars in increased national debt since the year Democrats took over complete control of the U.S. Congress.

The CBC (Congressional Black Caucus) put forth their own pathetic attempt of a  budget proposal also on Wednesday. It went down in flames by a vote of 107-314.  Republicans stated that the CBC budget proposal would spend far more money than the U.S. government has available. No surprise there. Why does the U.S. Congress even have a Black Caucus anyway? There isn’t an Asian caucus, or even a White caucus, even though white people still make up a huge majority of the population today.  With the current race-baiting media circus of the Trayvon Martin tragedy being used by fake Democrats to further divide the nation this week, maybe it’s high time Americans call for the immediate disbanding of the discriminatory CBC.

The third budget proposal voted down in The House on Wednesday was a bi-partisan proposal put forth by Steve LaTourette (R-OH) and Jim Cooper (D-Tenn) that was modeled after many aspects of the Obama-created Bowles-Simpson deficit reduction commission. This proposal too went down in flames 38-382. Instead of responsible governing by enacting solid cuts in big government debt-spending, 382 members of The House have now been exposed as being the main engine of America’s plunge off the Greek-style debt-cliff.

Up next will be the passage of the Paul Ryan House budget proposal 2.0. Chris Chocola breaks down Ryan’s new proposal as follows: (emphasis added)

There’s a lot to like about Paul Ryan’s budget proposal. It cuts some spending. It flattens the tax code down to just two individual marginal tax rates. It also includes some innovative policies designed to halt the unsustainable growth of health care entitlement spending. However, on balance, the budget is disappointing for fiscal conservatives for two main reasons: It waives the spending restraint that was agreed to in last year’s debt limit deal, and it doesn’t balance the budget until 2040. Broken promises and unbalanced budgets as far as the eye can see are neither good policy nor a good campaign rallying cry.

As informed Americans stand on the edge of the Greek-style debt cliff looking out across the debt-laden landscape of their children’s future,when looking at the current budgetary buffoonery of Congress today, they are being left with 2 simple choices: Vote for Obama and the Democrats in 2012 and jump to their deaths right then and there, or vote for Republicans and hop on back of the slow-moving freight train that is on the exact same track of financial disaster as the Obama high-speed train to financial hell and chaos.  One kills you this decade, while the other slowly pushes you off the debt-cliff to the inevitable chaotic collapse of America and the Armageddon that financial insolvency brings with it. Not much of a choice there is it?

A few details of the tax cut extension that have been released:

The text of the bill has not been made available for public viewing as promised, yet lawmakers are alluding to voting on it on Friday anyway.  That promise to the people to allow them to read the bills before they are passed has been broken several times by the Republican-led House, as can be seen here, and here. Barack Obama has also made a similar promise to allow the public to read the bills before passing them, which he too has also broken repeatedly. Remember the ludicrous statement that then Speaker Pelosi made about having to pass the bills before we can read them? Remember the public outrage?

Fox News reports on just who negotiated the latest Greek-style social welfare tax cut bill that will add an estimated 100 billion dollars to the deficit. (according to the above-linked Hill.com article): (emphasis added)

Democratic Sen. Max Baucus, the Senate Finance Committee Chairman, and Republican Rep. Dave  Camp, the House Ways and Means Committee Chairman, confirmed the agreement to  Fox News late Wednesday, capping a long day of wrangling over the final details  of the measure.

The legislation would continue a 2 percentage-point  cut in the Social Security payroll tax, renew jobless benefits averaging about  $300 a week for people languishing for long periods on unemployment rolls and  protect doctors from a huge cut in their Medicare reimbursements.

The measure carries a price tag of roughly $150 billion over the coming year, partly financed by new auctions of  telecommunications spectrum to wireless companies and by requiring newly-hired  federal workers to contribute more toward their pensions. The pension provision  was watered down from a version sought by House Republicans, and tentatively  agreed to by key Democrats, that would have required current federal workers to  contribute more to their defined benefit pensions.

Noticeably absent from the ‘negotiations” were any conservative politicians, thus this is referred to as “The Progressive Tax Cut Ext. Deal” of 2012. Once again, Congress has borrowed more money and added to the national debt by refusing to add offsets to pay for it. This pattern of irresponsibility brings the much-ballyhooed cliche’  pay-as-you-go (Pay-Go) that was spewed by Speaker Pelosi as a demand that all legislation be paid for before passage, to new heights of hypocrisy.  If the [supposed] summer of recovery has indeed turned this country around, then why would members of Congress continue to rape the Social Security fund to hand out another unemployment extension? According to Obama and the Democrats, they have added 4, 5,or 6 (depending which Obama speech lie you believe) million new jobs to the economy. Yet they still demand to give unemployed workers another extension of benefits.

More debt and deficit spending brought to America by the progressive members of Congress, as they brag about their happiness on reaching this “bi-partisan agreement.”

“Everything should not have to be a fight, and I am glad that most of my  Republican colleagues put the interests of the middle class ahead of politics to  forge this agreement,” Senate Majority Leader harry Reid said in a statement. “Americans expect us to put our  differences aside and find common ground. In the months ahead, I hope this shift  to the middle becomes the norm, rather than the exception.”  Yes indeed, adding billions to the trillion-dollar deficits is now being hailed as “progress” and “common ground” by Liberal Democrat Harry Reid. Doesn’t that make the hard-working taxpayers that have to foot the bill for all of this irresponsibility feel all warm and fuzzy inside?

Deficit Projection

The non-partisan Congressional Budget Office (CBO) projects that the 2012 federal budget deficit will be about $1.1 trillion, the economy will continue to be sluggish, with unemployment remaining above 8%, both this year and in 2013. The CBO predicted that deficits will decline over the next ten years, but only if the George W. Bush-era tax cuts expire as scheduled. But recall that Congress and Obama extended those tax cuts in 2010, so any predictions are difficult to make given the whims (spelled politics) of this administration and Congress. zFacts.com has a good chart of deficits as a percent of Gross Domestic Product (GDP) since FDR. As you can see, regarding deficits, there is plenty of blame to go around.

Obama’s Deficit Record

What is Obama’s deficit record? Not very good, as it turns out. What is most glaring about the chart cited above is that, in 2008, one of President Barack Hussein Obama’s campaign promises was to cut the deficit in half during his first term in office (see promise #11). If you are interested, you can see what else he promised.

Obama’s current excuse: we had no idea how bad things were. Let’s examine what really happened when Obama took office. Obama was less than completely honest (some would say he out-and-out lied) when he said that the budget deficit he faced “when I walked in the door” of the White House was $1.3 trillion. In 2008, George W. Bush started with a deficit of $600 billion (bad enough). Then, when the economy collapsed, Bush passed the Troubled Asset Relief Program (TARP), which cost $700 billion. Under the federal budget, a loan and a grant are treated the same way, so the TARP loans increased the deficit to $1.3 trillion. But in reality the $700 billion for TARP was a short-term loan, and $500 billion of it has, as of now, already been repaid. So the real deficit Obama inherited was $600 billion plus the TARP loans of $700 billion. He promptly increased the deficit to $1.4 trillion in 2009, more than doubling it if you consider the deficit Bush proposed. He ran a deficit of $1.6 trillion in 2010, and $1.27 trillion in 2011. The projected deficit for 2012 is $1.1 trillion. He had better hurry if he wants to keep his campaign promise!

Specific Effects

How will sustained deficits affect the US economy? Just like a personal credit card, deficit spending increases debt. We all know the final outcome of not being able to pay debt accumulated on a personal credit card. Well, the US Government works the same way. Deficit spending can stimulate economic activity in the short run, especially in a recession. But (and there is always a “but”), in the long run, the resultant debt increase, caused by deficit spending, is damaging to the economy because of higher interest rates that result from increased dollars in the economy, thus causing inflation. Foreign governments and investors will be less willing to buy Treasury bonds because of repayment in inflated dollars. The ultimate effect of continuing to run deficits is that it crowds out jobs because there is less money to hire people. Debt service (paying interest on the debt caused by deficits) comes ahead of job creation if the US is to avoid default. To add to the deficit in the hope of creating more jobs is simply not going to happen. Additional deficit spending harms small businesses that are trying to borrow money to create jobs and consumers who are seeking credit to buy cars and homes. Why? Because debt service reduces the amount of money that can be borrowed.

So what does all of this mean? Well, as long as foreign governments will continue to sustain us, nothing. But China, the largest US debt holder, is not pleased with the US, particularly with the Standard & Poor’s downgrade of US long-term debt rating. If China reduces buying Treasury bonds, the dollar will weaken and America’s borrowing costs will increase sharply because the Treasury will have to increase the percentage rate (yield) of bonds to attract buyers. As long as China (and any other foreign government) keeps buying our debt, we are just fine and can keep living beyond our means. But at some point economics says that the “piper must be paid.” The question now is, “How ugly will the payment be?” Does what is currently happening in Greece and across Europe come to mind?

Summary

So continuously running deficits are harmful to the economy because of the circulatory nature of borrowing to pay the interest on increasing debt caused by deficit spending. And when the money people refuse to lend more money by refusing to buy more Treasury bonds, the “house of cards” will come tumbling down. Just like with a personal credit card, you can for a short time live beyond your means. But, sooner or later, the debt must be paid. And borrowing from another credit card will only make matters worse by sinking you deeper in debt.

But that’s just my opinion.

Source: Office of Management and Budget, "Table 7.1—Federal Debt at the End of Year: 1940–2016"

The above chart shows the increase in debt as % of GDP, or Gross Domestic Product. Common sense economics dictates that as revenue increases, spending increases along with it, so this chart speaks volumes about the ex-Speaker Pelosi’s debt explosion under her period of House rule. When Liberals try to attack this debt-chart, their main rhetoric always includes the supposedly unfunded wars of G.W. Bush. That nonsense is debunked by the simple fact that while Liberal Democrats ruled Congress, ( both Houses 2007 -2010) not only did they not pull our troops out of Iraq and Afghanistan, but their fearless leader started another war in Libya in which we supplied the bombs and majority of funding while hiding behind the NATO mantra. Considering that Obama didn’t even confer with Congress before our billions of dollars in bombs started dropping on Libya, how does that fit into Pelosi’s Pay-Go (supposed) rule? Kind of hard to have Congress pay as they go when they learned of the initial bombings, pretty much after they had already begun, isn’t it?  Yes wars cost a lot of money yet how about asking Barack Obama, Harry Reid and Nancy Pelosi about "The Unfunded Wars" of the past 5 years under their rule just once? While you are at it, how about asking them as to why this country is running without a budget for 3 straight years now,  which is illegal according to The Congressional Budget Act of 1974 ?  

As is the pattern recently in the Liberal Congress, it has been the "lets pass this bill now so we can see what’s in it" path to fiscal insolvency, and just worry about how to pay for it later.   If we look at the amount of debt increases in the above chart, we see that we were cruising along the highway of prosperity  on the Cadillac express under GOP Speakers, and now we are on the highway to debt hell in a Chevy Volt, largely due to Nancy Pelosi’s Liberal rule of the House during the past 5 years.  Speaker Boehner’s spending is not in the above chart, simple because he hasn’t been the Speaker for a full year. ( He is also being stymied at any chance of enacting any form of budgetary sanity by  Liberal obstructionist Harry Reid in the U.S. Senate.)

   We are heading for a huge economic crash due to the irresponsible debt-spending of the past decade. To make matters worse, when we drive off of the debt cliff, we will not be doing so in the relevant comfort and safety of  the once mightily-fortified-by-American-steel Cadillac’s of yesteryear, where our chances at surviving the crash are a lot better than when we hit the bottom of the debt cliff…. in a Chevy Volt. ( IF there is enough affordable electricity available to even plug in your Chevy Volt, which is very debatable considering the fact that  massive, over-reaching green energy regulations are prohibiting affordable energy production throughout America today) Not to worry, if Liberals and their save-the-planet-through- crushing-our-economy bed-pal political activists get their way, we can just ride the high-speed rail off the debt-cliff. 

Dear Fox, Tea Party, and grassroots political activists across this great nation: The following is what I feel to be the most important question facing Americans today, along with a few variations:

The MAIN QUESTION to ASK in tonight’s Fox GOP debate – The size and scope of our government has grown exponentially since the 2006 elections, when Democrats took over BOTH Houses of Congress. The hidden agenda of empowering our government to the point of taxation without representation can not be denied by the fact that this country is running without a firm budget for the third straight year. Without a budget in place it is impossible to get debt-spending under control, which seems to have been done to avoid Congress from being held accountable for their continuing irresponsibility. Exactly how would you stop this madness and force our Congress to pass firm yearly budgets so the people can actually see some hope for a balanced budget in the near future ?

Variations of the above question addressing our dangerous debt-spending by irresponsible partisanship and the blatant avoidance of responsibility in Congress.

Lay out the first three steps you would take as our President to force Congress to pass a yearly budget by the date it is required by, in The Congressional Budget Act of 1974 ?

What actions would you propose to be taken against irresponsible members of Congress for ignoring the law when failing to pass a firm yearly budget, considering the fact that they are breaking the very oath of office they took when becoming members of Congress ?

Would you be willing to promise the people of America that from day one you will veto every single spending bill that adds to our irresponsible national debt?

We desperately need true leadership for America in the office of the President in 2013. We need a true leader that will demand we limit our government to only spending what it takes in,  every single year, as in passing a balanced budget amendment to the U.S. Constitution. While the difficulty of actually passing a balanced amendment to our constitution must not be understated, a balanced budget amendment would get our current deficit spending under control. This unconscionable debt-spending will eventually end American freedoms, liberty, and any chance for individual prosperity . When looking for our next common-sense conservative President, We The People must demand answers and solutions to our extremely dangerous debt-spending levels. How about it Fox News, Tea Party groups and grassroots Americans? Let’s put aside the cheap rhetoric and actually ask our Presidential hopefuls for some real solutions to our main problem of debt-spending tonight. The rest of the questions simply will not mean much to an insolvent nation enslaved to big government tyrants.

When thinking about all the current GOP candidates during  the past 2012 debates, and asking myself who has defined their own specific solutions for stopping our  dangerous debt-spending  and actually saving our Republic,  I simply cannot remember one candidate with a concrete solution. Isn’t that what these GOP Presidential debates should be  attempting to inform the people about?