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Topic: Douglas Holtz-Eakin

Democrats Face the Voters with Lousy Economic Results

This report explains:

Real personal income for Americans — excluding government payouts such as Social Security — has fallen by 3.2 percent since President Obama took office in January 2009, according to the Commerce Department’s Bureau of Economic Analysis.

For comparison, real personal income during the first 15 months in office for President George W. Bush, who inherited a milder recession from his predecessor, dropped 0.4 percent. Income excluding government payouts increased 12.7 percent during Mr. Bush’s eight years in office.

“This is hardly surprising,” said Douglas Holtz-Eakin, an economist and former director of the nonpartisan Congressional Budget Office. “Under President Obama, only federal spending is going up; jobs, business startups, and incomes are all down. It is proof that the government can’t spend its way to prosperity.”

It’s also more bad news for Democrats this election year. It was Obama, after all, who went after his predecessor for falling incomes. (“American families, since George Bush has been in office, have seen average family incomes go down $2,000,’ Mr. Obama said in a September 2008 speech on the economy in Green Bay, Wis.”) The “Bush did it” excuse is sure to follow, but plainly Obama’s stimulus plans haven’t made a dent in incomes or unemployment as he promised they would. The report also reminds us that the AP survey of leading economists has more gloomy news: “The unemployment rate will stay high for the next two years and still be at 8.4 percent by the end of 2011. Home prices will remain almost flat for the next two years, even after dropping an average 32 percent nationwide since peaking in 2006. The economy will grow about 3 percent this year, less than usual during the early phase of a recovery, but few jobs will be added.”

It’s not a record of success by any measure, and having spent over a year producing a health-care bill the country dislikes, Democrats are going to be hard-pressed to defend their economic record. The only question remains is how badly the electorate will punish those who controlled every lever of government and failed to deliver on their economic promises.

This report explains:

Real personal income for Americans — excluding government payouts such as Social Security — has fallen by 3.2 percent since President Obama took office in January 2009, according to the Commerce Department’s Bureau of Economic Analysis.

For comparison, real personal income during the first 15 months in office for President George W. Bush, who inherited a milder recession from his predecessor, dropped 0.4 percent. Income excluding government payouts increased 12.7 percent during Mr. Bush’s eight years in office.

“This is hardly surprising,” said Douglas Holtz-Eakin, an economist and former director of the nonpartisan Congressional Budget Office. “Under President Obama, only federal spending is going up; jobs, business startups, and incomes are all down. It is proof that the government can’t spend its way to prosperity.”

It’s also more bad news for Democrats this election year. It was Obama, after all, who went after his predecessor for falling incomes. (“American families, since George Bush has been in office, have seen average family incomes go down $2,000,’ Mr. Obama said in a September 2008 speech on the economy in Green Bay, Wis.”) The “Bush did it” excuse is sure to follow, but plainly Obama’s stimulus plans haven’t made a dent in incomes or unemployment as he promised they would. The report also reminds us that the AP survey of leading economists has more gloomy news: “The unemployment rate will stay high for the next two years and still be at 8.4 percent by the end of 2011. Home prices will remain almost flat for the next two years, even after dropping an average 32 percent nationwide since peaking in 2006. The economy will grow about 3 percent this year, less than usual during the early phase of a recovery, but few jobs will be added.”

It’s not a record of success by any measure, and having spent over a year producing a health-care bill the country dislikes, Democrats are going to be hard-pressed to defend their economic record. The only question remains is how badly the electorate will punish those who controlled every lever of government and failed to deliver on their economic promises.

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Iceberg Dead Ahead, Captain Orders “All Engines Ahead Full”

Douglas Holtz-Eakin, a former director of the Congressional Budget Office, has an article in today’s Wall Street Journal, in which he predicts — correctly in my opinion — that we are headed for a fiscal iceberg.

Our fiscal situation has deteriorated rapidly in just the past few years. The federal government ran a 2009 deficit of $1.4 trillion — the highest since World War II — as spending reached nearly 25% of GDP and total revenues fell below 15% of GDP. Shortfalls like these have not been seen in more than 50 years.

Going forward, there is no relief in sight, as spending far outpaces revenues and the federal budget is projected to be in enormous deficit every year. Our national debt is projected to stand at $17.1 trillion 10 years from now, or over $50,000 for every American. By 2019, according to the Congressional Budget Office’s (CBO) analysis of the president’s budget, the deficit will still be roughly $1 trillion, even though the economic situation will have improved and revenues will be above historical norms.

This is also nothing new. The national debt was for most of American history, as Hamilton said it would be, a “national blessing.” It allowed us to fight and win our wars and to relieve suffering in an economic depression far worse than what the country is experiencing now. But in the last thirty years — the most prosperous and relatively peaceful thirty-year period in American history — liberals and “conservatives,” Democrats and Republicans alike in Washington have allowed the debt to explode for their short-term political benefit while they hid the truth with phony accounting.

How bad was it? Consider this: In 1980, the debt was 33.3 percent of the country’s GDP. By 1990 the GDP had increased by 37.6 percent in real terms. But the debt had grown much faster. It was 55.9 percent of the much larger GDP. In the 1990′s GDP increased by 39.7 percent, and the debt more than kept pace. It was 58 percent of GDP in 2000. At the end of 2008, GDP had grown 18.5 percent over 2000, and the debt was fast approaching 80 percent of GDP.  And the debt, being denominated in dollars, is made smaller by inflation while GDP is enlarged.

No one believes that the debt can be kept under 100 percent of GDP in the near future. And if Obamacare gets passed in anything like its present form, it will only makes matters far worse. As Mr. Holtz-Eakin explains, President Obama’s promise not to sign a bill that adds to the deficit is false:

. . . the bills are fiscally dishonest, using every budget gimmick and trick in the book: Leave out inconvenient spending, back-load spending to disguise the true scale, front-load tax revenues, let inflation push up tax revenues, promise spending cuts to doctors and hospitals that have no record of materializing, and so on.

If you’re disturbed by the long-term outlook for the country’s fiscal health, you shouldn’t be. You should be terrified.

Douglas Holtz-Eakin, a former director of the Congressional Budget Office, has an article in today’s Wall Street Journal, in which he predicts — correctly in my opinion — that we are headed for a fiscal iceberg.

Our fiscal situation has deteriorated rapidly in just the past few years. The federal government ran a 2009 deficit of $1.4 trillion — the highest since World War II — as spending reached nearly 25% of GDP and total revenues fell below 15% of GDP. Shortfalls like these have not been seen in more than 50 years.

Going forward, there is no relief in sight, as spending far outpaces revenues and the federal budget is projected to be in enormous deficit every year. Our national debt is projected to stand at $17.1 trillion 10 years from now, or over $50,000 for every American. By 2019, according to the Congressional Budget Office’s (CBO) analysis of the president’s budget, the deficit will still be roughly $1 trillion, even though the economic situation will have improved and revenues will be above historical norms.

This is also nothing new. The national debt was for most of American history, as Hamilton said it would be, a “national blessing.” It allowed us to fight and win our wars and to relieve suffering in an economic depression far worse than what the country is experiencing now. But in the last thirty years — the most prosperous and relatively peaceful thirty-year period in American history — liberals and “conservatives,” Democrats and Republicans alike in Washington have allowed the debt to explode for their short-term political benefit while they hid the truth with phony accounting.

How bad was it? Consider this: In 1980, the debt was 33.3 percent of the country’s GDP. By 1990 the GDP had increased by 37.6 percent in real terms. But the debt had grown much faster. It was 55.9 percent of the much larger GDP. In the 1990′s GDP increased by 39.7 percent, and the debt more than kept pace. It was 58 percent of GDP in 2000. At the end of 2008, GDP had grown 18.5 percent over 2000, and the debt was fast approaching 80 percent of GDP.  And the debt, being denominated in dollars, is made smaller by inflation while GDP is enlarged.

No one believes that the debt can be kept under 100 percent of GDP in the near future. And if Obamacare gets passed in anything like its present form, it will only makes matters far worse. As Mr. Holtz-Eakin explains, President Obama’s promise not to sign a bill that adds to the deficit is false:

. . . the bills are fiscally dishonest, using every budget gimmick and trick in the book: Leave out inconvenient spending, back-load spending to disguise the true scale, front-load tax revenues, let inflation push up tax revenues, promise spending cuts to doctors and hospitals that have no record of materializing, and so on.

If you’re disturbed by the long-term outlook for the country’s fiscal health, you shouldn’t be. You should be terrified.

Read Less




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