Barack Obama Is Not the “Ice Cream President”

There’s an email making the rounds that tells a story about two little girls who run for class president in grade school. One girl works hard, runs a good campaign, and promises to do her best if elected. The other girl promises to give everyone ice cream. The teacher asks the children how they’ll pay for the ice cream. They have no idea, but they vote for the ice cream girl anyway.

That, says the email, is how Barack Obama won the election. He promised to give away free stuff that we can’t afford.

Bill O’Reilly got the ball rolling on this theory when he said, “It’s not a traditional America anymore, and there are 50 percent of the voting public who want stuff. They want things. And who is going to give them things? President Obama.”

Earlier that day, a Romney supporter told me that he expected his candidate to lose because Obama “bought” votes by “giving away” food stamps and welfare.

We have such short memories.

It was the Republican president George W. Bush who expanded eligibility for food stamps in the 2002 farm bill. It was 99 Republican representatives who voted to expand the program further in the 2008 farm bill. And it was that same Republican president who waived one of the work requirements for 32 states in November 2008.

That’s why the food stamp program added more recipients under Bush than it did under Obama.

The welfare claim is even more ridiculous. We may not remember the food stamp expansion under Bush, but surely we remember welfare reform under Bill Clinton. In 1996, Congress ended “welfare as we know it” and replaced it with “Temporary Assistance for Needy Families” (TANF), a program whose budget hasn’t changed in 16 years. It was $16.6 billion in 1996, and it’s $16.6 billion today.

In the year before welfare reform, 4.7 million Americans received assistance from the program. Today, only 2 million receive assistance from TANF.

When TANF was created, 68 percent of families with children in poverty received welfare. Today, only 27 percent get it.

Low-income entitlement spending has increased, but it would’ve increased under any president. Most of it is what economists call “automatic stabilizers” because they automatically increase during recessions. More people become unemployed. More people fall into poverty. More people lose their health insurance. So more people qualify for unemployment insurance and food stamps and Medicaid.

Since the end of the recession, low-income entitlement spending has been falling. In the next decade, the Congressional Budget Office says that it will return to the same level it’s been for the last forty years: a little more than 1 percent of our nation’s income. If you exclude health care, where costs are rising for completely separate reasons, the CBO expects low-income entitlement spending to fall below its forty-year average in coming years.

The CBO is making these projections, of course, based on the Obama administration’s budget. The president who is supposedly giving away free stuff, it turns out, is actually planning to reduce low-income entitlements.

What’s particularly galling about the Republicans’ argument is that Romney was the candidate who couldn’t explain how he’d pay for everything he was promising. Romney was the candidate who wanted to add a $480 billion tax cut to a $1.3 trillion deficit. Romney was the candidate who wanted to add $200 billion in new Pentagon spending every year.

It was the Republican president George W. Bush who turned a surplus into a deficit. It was Bush who took the nation into two wars while passing two massive tax cuts. It was Bush who signed Medicare Part D without figuring out how to pay for it.

Are we all suffering from a collective bout of amnesia?

The Romney camp’s explanation for their electoral loss fits right in with the broader picture they tried to paint of the Obama presidency. In their world, Barack Obama “has fundamentally changed the relationship between government and the people of this country,” as Jon Stewart put it in his debate with O’Reilly.

But it’s simply not true.

And the truth matters. Obama didn’t win the election because he’s giving away free stuff, and perpetrating such a myth only serves to obscure what’s really going on and what really needs to be done in Washington.

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This op-ed was published in today’s South Florida Sun-Sentinel.

The Fault Lies Not in the Stars But in Our Politicians

As I predicted on this page at the beginning of the year, the housing market has turned the corner.

The Zillow Home Value Index experienced the first year-over-year increase since 2007, the fourth consecutive month of increasing value. The Federal Housing Finance Agency also reported the fourth straight month of rising home prices in May.

At their current rate, new home sales are on track to beat last year’s numbers by 17 percent. Compared to a year earlier, the inventory of unsold existing homes has been declining for sixteen consecutive months. In fact, this month we saw the biggest drop in inventory ever reported.

Last month, housing starts reached their highest level since October 2008. This month, home builder confidence reached the highest level since March 2007. Foreclosures in distressed markets like California have reached their lowest level since 2007.

In other words, our long national nightmare is over.

And yet, our malaise has only deepened. Output growth is weak, unemployment remains stuck at 8.2 percent, and the twin engines of growth — exports and manufacturing — have stalled. If the cause of our discontent has reversed course, what fresh hell is holding us back?

Some of the blame belongs to the European Union, whose weakness has driven the euro down, making the U.S. dollar more expensive. As a result, exports have flatlined, along with the manufacturing sector that depends on them.

But the real sand in the wheels has been the cutbacks in Washington.

No, that’s not a typo. Despite all the news you’ve heard about the big bad budget deficit, the truth is that the government has been retreating, leaving the private sector to fend for itself.

In the two and a half years since the end of the recession, government spending, adjusted for inflation, has fallen by 2.6 percent. Government purchases have also fallen by 2.6 percent. Government employment has fallen by 2.7 percent.

Compare that to the two and a half years after the end of the 1982 recession, over which Ronald Reagan presided. By this point in Reagan’s term, government spending had increased by 10.2 percent, government purchases had increased by 11.6 percent, and government employment had increased by 3.1 percent.

Or we could compare to George W. Bush. From 2000 to 2007, government spending grew faster than it has from 2007 to 2011.

Any way you measure it, government spending growth has been very weak.

From 1980 to 1984, real government spending increased over 14 percent. From 2008 to 2012, in contrast, it has increased only 6 percent. And, since the beginning of last year, it has turned negative. In fact, this year, real government spending per capita is falling faster than it has since the aftermath of the Korean War.

But the real bloodbath is yet to come. On January 1st, $110 billion in automatic spending cuts are scheduled to kick in, followed by over $1 trillion more in spending cuts and tax increases over the next decade — unless, of course, Congress enacts a new law to postpone them.

Republicans are particularly concerned about this so-called “fiscal cliff,” not only because they abhor tax increases, but especially because half of the spending cuts will come from the Pentagon. Democrats are equally concerned about the possible extension of the Bush tax cuts for the rich, which are scheduled to expire at the end of the year.

So Democratic Senator Patty Murray made them an offer: We will agree to postpone the “fiscal cliff” if you will agree not to extend the Bush tax cuts for household incomes above $250,000.

Senate Democrats held up their end of the bargain on Wednesday, passing a bill to extend all the Bush tax cuts below $250,000. But Washington insiders say that the bill is as good as dead in the Republican-controlled House.

House Republicans, it seems, are determined to hold the economy hostage to the selfish interests of the rich — yet again.

But it doesn’t have to go down like this. Weak economic growth is not a fait accompli. The fundamentals of our economy are improving. The recovery will accelerate…if the government steps up like it did in previous recoveries.

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This op-ed was published in today’s South Florida Sun-Sentinel.

How the Republicans Tried to Kill the Payroll Tax Cut…and Why

With the election year approaching, both parties are going to tell you that they will fight for you, the average American. Both will claim that, in the waning days of 2011, they pushed to lower your taxes, to boost the economy, to save the middle class.

Here’s how it really went down.

As part of the Democrats’ stimulus bill in 2009, the Making Work Pay credit reduced taxes by 6.2 percent, up to $400, on earnings, phased out between $75,000 and $95,000. (The numbers were double for couples.) It expired at the end of 2010.

Instead of renewing the MWP credit, Republicans insisted on replacing it with a two-percentage-point cut in employees’ payroll taxes, which reduced the average tax cut for low-income taxpayers and quadrupled the average tax cut for high-income payers — even though the poor are far more likely to spend those tax cuts and stimulate the economy.

The payroll tax cut cost almost twice as much as the MWP credit, but it didn’t affect the Social Security trust fund because the Treasury filled the hole with general revenues. In other words, they borrowed and increased the deficit. Apparently, Republicans didn’t care as much about the budget deficit as they did about tax cuts for the rich.   Continue reading “How the Republicans Tried to Kill the Payroll Tax Cut…and Why”