Patterico's Pontifications

6/26/2010

Bankrupting America

Filed under: Economics,Obama — DRJ @ 8:34 pm

[Guest post by DRJ

The Financial Times reports the real reason Budget Director Peter Orzag left the Obama Administration:

“Mr Orszag, whom Mr Obama has dubbed a “propeller-head” because of his brilliant facility with projections and spreadsheets, has tried but failed to convince his colleagues to “step up the action”, according to one insider.

In particular, he has collided with the political team, led by Rahm Emanuel, Mr Obama’s chief of staff, over Mr Obama’s 2008 election pledge not to raise taxes on any households earning less than $250,000 a year – a category that covers more than 98 per cent of Americans.

Economists say that would put all the fiscal emphasis on draconian – and highly unrealistic – spending cuts, or else pushing the marginal tax rates on the very rich to confiscatory levels. “Peter feels strongly that this is a pledge that has to be broken if the President is to take a lead on America’s fiscal crisis,” says an administration official not authorised to speak on the matter.”

Tyler Durden has the bottom line:

“As we speculated previously, the sudden and unprecedented departure of Peter Orszag, the day prior to the US Budget’s formalization (which incidentally never happened as now the US will likely not have a 2010 budget at all, for fear of disclosing to most Americans just how broke the country is ahead of mid-terms) was due to Orszag’s disagreement with the administration’s, and particularly Larry Summer’s, inability to fathom that reckless spending is a recipe for bankruptcy. As the FT reports: “Peter Orszag, Barack Obama’s budget director, resigned this week partly in frustration over his lack of success in persuading the Obama administration to tackle the fiscal deficit more aggressively, according to sources inside and outside the White House.” And so, as any remaining voices of reason realize they are dealing with a group of deranged Keynesians, soon there will be nobody left in the administration who dares to oppose the destructive course upon which this country has so resolutely embarked, which ends in one of two ways: debt repudiation, or war. And with the only remaining economic “advisers” being the trio of Summers, Romer and Geithner, you know America will somehow hit both of these mutually exclusive targets.”

Obama’s Army of Keynesians is bankrupting America.

Does this mean “We are all Keynesians now“?

– DRJ

32 Comments

  1. I’m still in shock that the Democrats are going to intentionally not pass a budget for FY 2011.

    I am having trouble thinking of an epithet strong enough to describe the abdication of their most basic responsibilities in running the nation.

    Comment by SPQR (26be8b) — 6/26/2010 @ 8:39 pm

  2. I am having trouble thinking of an epithet strong enough….

    “typical” pretty much covers it when you are talking about Demoncrats and bullsh1t like this.

    i wonder where the war will be?

    Comment by redc1c4 (fb8750) — 6/26/2010 @ 8:48 pm

  3. SPQR – Surely we can count on the MFM to cover the cowardice of the Dems. They refuse to pass a budget. They refuse to even offer a budget.

    Comment by JD (53a6ca) — 6/26/2010 @ 8:54 pm

  4. It’s unprecedented, or maybe even unexpected?

    Comment by Gazzer (dd9e24) — 6/26/2010 @ 10:29 pm

  5. “Mr Orszag, whom Mr Obama has dubbed a “propeller-head” because of his brilliant facility with projections and spreadsheets

    Uh, no, a propellor-head is just a nerd–your standard, passive-aggressive, tweaky, eternal virgin, emotionally stunted nerd.

    Either the Financial Times was out of step with the office banter, or Obama can’t even get his terms of endearment correct.

    The Zerohedge article you linked to was particularly amusing, because as the same site pointed out during Orzag’s resignation, his main legacy as budget director is ensuring that the $6.5 trillion in debt on Freddie and Fannie’s balance sheets was left off the government debt ledger.

    Comment by Another Chris (121ff0) — 6/26/2010 @ 11:00 pm

  6. “Peter feels strongly that this is a pledge that has to be broken if the President is to take a lead on America’s fiscal crisis,” says an administration official not authorised to speak on the matter.”

    Raise your hand if you didn’t see this coming after Obama’s “crack financial team” (or is that financial team on crack?) misread this depression as a liquidity problem rather than a debt problem, and blew their hedge bet that the stimulus would hold the U3 under 8%.

    Comment by Another Chris (121ff0) — 6/26/2010 @ 11:04 pm

  7. Not passing a budget not only frees Democrats from having to cast a vote for huge deficits going forward, but it also frees their hand to spend.

    Budget resolutions set the limits Committee Chairmen must work within, balancing the priorities for their appropriations. With no budget, there are no effective limits. Republicans will not even be able to complain about “budget busting” when there is no budget to bust.

    Most of the actual voting on this spending will take place after the election in the lame duck session, and the bloated appropriations will become the new baseline going forward. Any rollback attempts will be treated as “draconian cuts targeted at minorities and the poorest Americans” etc. etc. etc.

    Comment by Adjoran (ec6a4b) — 6/27/2010 @ 1:05 am

  8. The party will end with an interest rate spike imposed when the Treasury auction fails. This can happen very quickly when you have clueless ideologues running things.

    One step the Democrats are taking to deal with the consequences is to abolish the electoral college. It has passed the House and I doubt many have noticed. That way, Obama can be elected in 2012 by the urban minorities and the small states, which happen to vote R, can be disenfranchised.

    Comment by Mike K (82f374) — 6/27/2010 @ 7:05 am

  9. > Does this mean “We are all Keynesians now“?

    Almost correct:

    This means

    We are all victims of Keynesians now.“

    Comment by IgotBupkis, President, United Anarchist Society (79d71d) — 6/27/2010 @ 7:18 am

  10. I believe abolishing the EC would require an Amendment to the Constitution, so passing it in the House is on the same order as the sheep voting to outlaw wolves.

    Comment by IgotBupkis, President, United Anarchist Society (79d71d) — 6/27/2010 @ 7:20 am

  11. “Mr Orszag, whom Mr Obama has dubbed a “propeller-head” because of his brilliant facility with projections and spreadsheets

    This is a very personal way to marginalize Orszag, and his technical analysis. Silly numbers! This is a real shame, because now all anyone will remember about Orszag is that the POTUS called him a “propeller-head”. ‘Pick the Target, Freeze It, Personalize It and Polarize It.’-Saul Alinsky

    Comment by TimesDisliker (7244cf) — 6/27/2010 @ 7:30 am

  12. Summers Romer and
    Geithner in same bush league as
    Moe Larry Curly

    Comment by ColonelHaiku (181d1a) — 6/27/2010 @ 7:42 am

  13. inability to fathom that reckless spending is a recipe for bankruptcy.

    As I travel about for work, I notice a lot of signs touting this or that project as a result of the O!ne’s spending. Problem is, the signs touting the projects are completely inundated by the “for sale” and “closed” signs, and the projects themselves are of either marginal utility, or a project that would have happened with local money anyway.

    It’s gonna be a long time before the damage is undone…if ever.

    Comment by EW1(SG) (edc268) — 6/27/2010 @ 7:56 am

  14. EW1(SG), here they threw those signs on projects that had already been started before the faux “stimulus” bill had passed.

    Comment by SPQR (26be8b) — 6/27/2010 @ 7:57 am

  15. #14 SPQR: Yeah, saw a lot of that also. I suppose you could justify some of that by pointing out that “Reinvestment & Recovery Act” funds were supplementing the original funding, or that this year’s appropriation was covered under said Act…but really, just how many of your friends work on a road crew?

    Comment by EW1(SG) (edc268) — 6/27/2010 @ 8:19 am

  16. public employee
    ticks now fare better than dog
    dog day afternoon

    Comment by ColonelHaiku (181d1a) — 6/27/2010 @ 8:46 am

  17. Sidney Lumet heist
    parasite never kills the host
    Ripley please burn hive

    Comment by TimesDisliker (7244cf) — 6/27/2010 @ 8:55 am

  18. Never thought I’d see the day when our neighbor to the north is behaving in a much more sensible and effective long – term economic fashion than us. If some hack like Orzag actually was the only person left with any sanity, we are truly f–ked.

    Comment by Dmac (ab1849) — 6/27/2010 @ 10:37 am

  19. I believe abolishing the EC would require an Amendment to the Constitution

    Apparently, there is a way to do it by having the states votes to elect all electors at large. That is my understanding. Were they to be open about it, I doubt it would get anywhere.

    Comment by Mike K (82f374) — 6/27/2010 @ 10:51 am

  20. resigned this week partly in frustration over his lack of success in persuading the Obama administration to tackle the fiscal deficit more aggressively

    By “aggressively,” I’m sure he’s referring to raising taxes as much as anything else.

    Most of the left — meaning most of those in the White House and a majority of the current Congress — will happily, joyfully, enthusiastically raise taxes from A to Z the second they believe no one is looking. Or the second they believe such a tactic won’t undermine their chances in November.

    Comment by Mark (411533) — 6/27/2010 @ 10:56 am

  21. Part of the problem that the Obama administration has is that taxes are already schedule to be “aggressively” raised and that fact is already factored into the budget figures that are so disasterous.

    Comment by SPQR (26be8b) — 6/27/2010 @ 11:03 am

  22. World leaders on Sunday endorsed a bold pledge by rich nations to slash budget deficits in half in three years despite President Barack Obama’s concerns that cutting stimulus spending too quickly could stall the global recovery.*

    American leadership!

    Comment by happyfeet (19c1da) — 6/27/2010 @ 12:14 pm

  23. what we do is what
    we do it’s all the same it’s
    what we do on Left

    Comment by ColonelHaiku (181d1a) — 6/27/2010 @ 12:24 pm

  24. what we do is what
    we do it’s all the same it’s
    what we do on Left

    what Left do is what
    Left do it’s all the same it’s
    what Left do worldwide

    Comment by ColonelHaiku (181d1a) — 6/27/2010 @ 12:26 pm

  25. No disrespect, but the merry band of looters may be losing a critical vote: Lucianne reports that Sen. Robert Byrd is seriously ill and in a Washington hospital.

    Senator Harry Byrd, 92, ‘seriously ill’ in Washington hospital

    WASHINGTON — Sen. Robert Byrd, the longest-serving member of Congress, is “seriously ill” and has been hospitalized, a spokesman for the West Virginia lawmaker said Sunday.

    In a statement, Byrd spokesman Jesse Jacobs said the senator was initially admitted to a Washington-area hospital late last week for what doctors thought was heat-related illness.

    “However, upon further examination by his doctors, other conditions have developed which has resulted in his condition being described as ‘serious,”‘ Jacobs said. (MSNBC)

    Comment by Vermont Neighbor (5841cd) — 6/27/2010 @ 12:55 pm

  26. The headline above is a little delicious, no? ‘Sen. Harry Bird.’ Wishful thinking. Either that or two for one.

    Senator Harry Byrd, 92, ’seriously ill’ in Washington hospital

    Comment by Vermont Neighbor (5841cd) — 6/27/2010 @ 1:00 pm

  27. look like senator
    join darling wife ErmaByrd
    before Summer gone

    Comment by ColonelHaiku (181d1a) — 6/27/2010 @ 2:31 pm

  28. This will be a serious problem for America.

    Comment by Samantha (f5ebb9) — 6/27/2010 @ 2:57 pm

  29. But don’t the Democrats have to at least vote to raise the debt ceiling? Any possibility of forcing the issue then?

    Comment by Sean P (6f6c60) — 6/27/2010 @ 3:28 pm

  30. I don`t really believe any out there are catching on. Dump 750 to the rich for doing nothing new, expand budget constraints to ensure greater demand and higher interest on cash. Inflation goes up, prices go up, employees fall farther behind in financial solvency. Fixed income people require greater help that thier not going to get from the rich. Banks, and mortgage companies dump homes back into market. Home prices down, interest rates up. Entry level workers stil can`t qualify to pick clut in housing market. Market over valued at 10 in 2000, 10 years later 10 still holds despite working class pouring all savings in. Budget in check, Bush tax welfare repealed, rich forced to invest to keep standard of living. This is still america, and we DONNOT negotciate with terrorists.

    Comment by tod (87a4e4) — 9/23/2010 @ 12:04 pm

  31. Hers a thought that the great minds of todays finance don`t seem to consider. Raise the bottom two tax brackets, give poor more money to keep. Thier going to get more without an employer raise. Raises cause higher taxes on buisiness. More money for the poor, less taxes on all buisinesses, and the rich were smart enough to earn it in the first place without Gov help right. keep thier 750 because they can earn more. I mean they were smart enough to earn it in the first place right.

    Comment by tod (87a4e4) — 9/23/2010 @ 2:26 pm

  32. From time to time I paruse the public airwaves to check the status of things. With great delight yesterday did I hear hear Newt, the defacto voice of the republican party call for a repeal of the Bush tax gifts. While gitty with disbelief, FOX was not deone calling for greater equality by assuring america that the middle class was happy with thier standard of living, and needed no increase. The message is now clear, If your not in it for america, let me make this perfectly clear, your outta here.

    Comment by tod (87a4e4) — 10/1/2010 @ 8:22 am

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