Obama says he’ll cut the budget deficit by one and a half stimulus dollars

Recall that stimulus is a number. A very large number. Obama is now trying, as Democrats have since Clinton, to claim the mantle of “fiscal responsibility” which, to them, means “just as much spending but higher taxes” instead of the usual meaning that you and I think of, lower taxes and much less spending. He claims he will reduce the deficit by half (Bush’s deficit was 1.3 trillion, recall) down to about 5 hundred billion dollars. However, assuming that Obama fails to increase revenue (given economic trends, this seems probable) the stimulus will add another trillion on top of the regular budget deficit. In order for him to do what he is suggesting, he would have to reduce spending by 1.5 trillion, or one and a half stimulus, dollars. Granted, he isn’t planning on doing this all right away, but the stimulus bill is going to lead to long term spending increases-it reverses welfare reform and is launching government run health care, which will contribute hugely to future deficits. Not to mention the growing cost of existing entitlement programs, and the coming Social Security explosion. So Obama should make up his mind-is he an old fashioned FDR Keynesian, or a Clinton “New Democrat”?



Filed under Economics

2 responses to “Obama says he’ll cut the budget deficit by one and a half stimulus dollars

  1. Read my lips. 🙂 Democrats don’t cut spending. They raise taxes.

  2. timetochooseagain

    Yes indeed! To them being fiscal responsible must not exclude them from having ever more extensive control over the capital in the economy. To my mind, the only “responsible” fiscal policy is to leave as much capital in the economy as markets have distributed it (to ideal efficiency).