Thanks for your comments. I would like to say the following in response:
The figures are for annual deficits not for federal debt which everybody knows is $10 trillion now. That figure effects the US credit rating and the currency. The federal debt has been growing almost all the time over the past forty years. The years it has shrank, it has shrank by very little i.e.
1970: $2 billion,
1974: $2,
1975: $4,
1999: $2,
2000: $105,
2001: $102 billion
The deficit each year adds to the federal debt. Even if you balance the budget the federal debt still remains at the same level. The only way to reduce the debt is to have budget surplus.
I still tend to think that the Obama campaign may have missed the clarity of these figures. It is at least better to talk about than defending against remarks about Joe the plumber.
If at this point the Obama campaign needs to introduce a new talking point it should be something like this because of the economy and it will also help other democrats running for the Congress.
Is there a way to make sure that the Obama campaign knows about the apparent clarity of these figures? Please.
I download the following federal budget data from the Congressional Budget Office. It clearly shows that for the last forty years the Republicans have been the party of huge federal deficits. During both the Carter era (1977 – 1980) and the Clinton era (1993 – 2000) the deficit shrank and during the Reagan era (1981 – 1988) and the Bush II era (2001 – 2008) the deficit broke all previous records.
All figures in Billions of dollars. The 2008 Budget deficit is a record $455 billion.
1968 -31
1969 -3
1970 2
1971 -10
1972 -21
1973 -20
1974 2
1975 4
1976 -35
1977 -21
1978 -32
1979 -14
1980 -9
1981 -17
1982 -43
1983 -112
1984 -143
1985 -179
1986 -211
1987 -157
1988 -126
1989 -117
1990 -120
1991 -150
1992 -186
1993 -192
1994 -144
1995 -146
1996 -93
1997 -81
1998 -38
1999 2
2000 105
2001 102
2002 -131
2003 -288
2004 -294
2005 -239
2006 -229
2007 -152
2008 -455
I think, given all the attacks democrats get for taxing people, democrats should highlight the deficits the Republicans have created for us and the debt they are leaving for our children. The Republicans have been a party of debt and deficit for the last forty years. They have shown fiscal indiscipline of the worst kind.
Dear Senator Obama:
Now that the British Prime Minister Gordon Brown has shown some understanding of the financial problem, it is time for us to see it as well. As I had strongly advocated in my two previous blogs (Sahil's blog) that helping the banking system directly was the right thing to do. Main Street deals with the banks and banks are the institutions we regulate and have responsibility for. FDIC insures deposits in these banks.Now that we seem to be focusing on the banks and will probably get the short term fix; we need to look at the long term fix for our economy.I have sent many letters to you and to Dr. Jason Furman and would really wish that you look at my proposal once. We are in problem of very unusual kind, one that happens once in hundreds of years, and it needs a very radical solution. In my proposed solution I have done away with interest and income tax and changed the powers of money itself. My solution is the only one so far available that will solve the problem for good. Please take a look at it; you will need it down the line when it becomes clear that solutions proposed by the experts are not working. This is the time when the experts change.
Sincerely,
Syed G.Q. Sahil
The $700 billion bailout package proposed by the President and not passed by the Congress highlights the economic dilemma being currently faced by the US. It is somewhat similar to that faced by Japan in the 1990s.
The US government wants the house prices to stabilize and the financial system to keep working. Houses are still over priced by almost any standard and it is unlikely that we will have much interest in buying houses unless house prices take another significant dip. But allowing house prices to fall further may accelerate the rate of delinquencies and foreclosures and as a result may cause many of our financial institutions to fail and the financial system to slow down to a dangerous level or grind to a halt.
The economic dilemma is that if we allow house prices to fall to its natural levels a major part of our financial system will fail but if we prop up house prices, higher house prices will stand in the way of economic recovery.
Faced with this dilemma the administration sided with Financial Institutions and Wall Street players. Wall Street is so well entrenched in Washington that it managed to get the administration come to its rescue. Wall Street’s money and power reach every center of power in Washington. By the way I would like to mention that both Treasury Secretaries Robert Rubin and Henry Paulson came from Goldman Sachs.
They sent a bill to the Congress when the Congress was about to go on a recess to campaign for the November elections, they probably thought the trick that worked so well on “Yes Minister” TV series should work in real life as well. No wonder the bill lacked details, it was barely three pages. I have heard part of the testimony the Treasury Secretary and the Federal reserve Chairman gave to the Congress: All they said was that the alternative was far worse. Does anybody remember anything more?
The failed bailout
The failure of this $700 billion bailout makes me proud as an American. I now have much more confidence in the ability of the Congress to do the right thing. Here are my reasons:
1. The Federal Reserve has a trillion dollar war chest for these situations. It has enough tools and ammunition to deal with the problem. It can pump liquidity into the banks that it regulates. These banks deal directly with Main Street and we need to help them directly not through Wall Street. The Federal Reserve has the channels and the means to do so effectively. We need to watch and save our regular banking system.
2. The Hedge Funds, the sovereign wealth funds, the private equity can go ahead and park their money in US treasury for as long as they want. They have no where else to go. Somebody, including the Federal Reserve, will sell those Treasury Securities; the money from those sales should be channeled and is also likely to go to the main street banks. The FDIC could launch a program to insure special Jumbo deposits made to these banks for the time being.
3. There are plenty of banks who may need help down the line and we don’t want to exhaust our ability to help when Main Street really starts to hurt. Any rescue package should be specifically targeted to Main Street and not through Wall Street as has been the case for the last 28 years. Let us focus on saving the banking system that the Federal Reserve regulates.
4. The banks may not be willing to lend to other banks but they are willing to lend to customers. Lending to other banks has become risky and it is easy to see why; one wrong loan to another bank can wreck the lending bank. The Federal Reserve has the knowledge, know how, and the tools to address this problem effectively. Just yesterday I received three offers from my banks for a 0% promotional financing; my business has yet to turn a profit.
5. The housing market needs to go through a correction and that means more losses for the lenders. The correction is essential for recovery. The faster the correction the faster the recovery. The government should not get in the way of market correction by buying those toxic assets. It should focus its efforts to help people to remain in their houses by designing programs that would restructure mortgages. Our money, effort, and focus should be on Main Street directly and not through Wall Street.
6. Most of the $700 billion would have gone to the players on Wall Street, including the Hedge Funds, Sovereign Wealth Funds, private equity, and investment banks. These players would have again gone to lend aggressively to the housing sector to keep the house prices up. High house prices would weigh down on the economy and we would again be facing new crises a year or two down the line. We may even keep mired in a recession because the housing correction was not allowed to happen. Remember Japan.
7. This bailout was a favor to those who have been reckless and excessively greedy. This bailout would destroy the basic ingredient of free market for ever. It would destroy market discipline and induce unmanageable amount of moral hazard in the economic decision making in the financial markets. In other words it would set the wrong precedent. The meltdown predicted is a hoax. It is mid day Tuesday and I predict not much else is going to happen on Stock Exchange. What happened yesterday is correction. Let us not try to bailout Wall Streets profits.
I hope the Congressmen who showed the courage to go against the wind are rewarded for their courage.
Senator Obama studied at Columbia University. It is his alma mater; he also claimed home advantage there during his interview on September 11, 2008.
When the Columbia University was attacked for not allowing the Military to recruit on campus and for allowing President Ahmedi Nijad of Iran to speak at the university; he took the opportunity to make his position clear on ROTC, which is to allow the military to recruit on the campus, but he did not say a word in defense of Columbia University.
We all including Senator Obama, he also studied at Harvard University, work hard to get into these universities and even try to get our children into these universities but when time comes to stand by the values promoted by these very institutions we are increasingly choosing to look the other way. When negative emotions against our country was at an all time high around the world and when emotions at home were also that of belligerence Columbia took the enormous risk of showing civility and establishing our value of free speech by inviting the President of Iran to speak at the University. It was just providing him an opportunity to speak; there was no danger of the President of Iran converting the students of Columbia into Shiite militants. The President of Columbia went to great length to pacify the hawks of our country by berating the President of Iran even before he spoke.
In my view it was a courageous effort by Columbia. It is the stuff civil societies are made of.
Our nominee Senator Obama failed on these counts:
1. We are supposed to defend our school; we go to great lengths to root for our schools at games etc. Senator Obama didn’t have a single word for Columbia. When you defend your school it has a parallel to defending the country or the institution or the people you have associations with. It shows your loyalty. A word or two for Columbia would have been appreciated even by the Republicans because you would be defending your home ground.
2. Columbia did not do anything outrageous by either of the two acts. It does not allow RTOC because of its opposition to “Don’t ask don’t tell policy.” It was not as if they were taking sides, DADT was signed into law by a Democratic President. Even though I personally disagree with the proportionality of the response by Columbia and others to “Don’t ask don’t tell” I appreciate the courage and the underlying effort to fix a wrong in favor of a minority of Americans. As to inviting the President of Iran I have already discussed the matter above.
Senator Obama is already branded as a liberal. But still people keep asking as to who is “Nominee Obama,” with some justification. If Senator Obama had said a word or two in defense of Columbia that night it would somewhat answer that question. People tend to define you with the associations you keep. Senator Obama has to establish some solid associations. Columbia could be one of those.
It is not a good strategy to fight off associations other people throw at you but to make one yourself. A good offense is the best defense.
If people don’t associate you with Columbia somebody else will have them associate you with Pastors you disassociate. Somebody is associating himself to the military and the Vietnam War some to Caribou hunting, gas pipelines and Alaska. You have to associate yourself to some piece of America that we are all familiar with. South Side of Chicago is not as well known as Columbia. Your association with South side of Chicago may not be as relevant to becoming the President as your association with Columbia and Harvard.
I think Sarah Palin will end up hurting the Pro life camp and also her presidential ticket.
Sarah Palin’s choice of continuing with her pregnancy even though she knew the child had Down syndrome has made me think about the abortion issue. I was surprised to realize that Sarah Palin’s choice of continuing the pregnancy symbolizes one of the most questionable and painful positions of the pro life camp. I think every body who thinks about Palin will think about her this particular choice and as a consequence think about pro life positions in a fearful way. I wonder as to why Senator McCain would try to portray pro life position in such a painful way.
