Semi-Daily Journal

I always get curious just how history is going to judge Bush. What does he really expect his legacy to be? If there really is a starve the beast metality then when are the difficult, unpopular decisions made? Some might say the day after election day, but I have a hunch that Bush will never make the tough decisions, the buck will just be passed, and his place in history at the bottom of the pile will be assured.

I keep trying to picture a presidential debate between George Bush and the Democrat nominee. Bush/Gore 1 comes to mind. The Bush record is so indefensible. I cannot imagine the debate. I can't help but think there will be no debates in 2004.

I always get curious just how history is going to judge Bush. What does he really expect his legacy to be? If there really is a starve the beast metality then when are the difficult, unpopular decisions made? Some might say the day after election day, but I have a hunch that Bush will never make the tough decisions, the buck will just be passed, and his place in history at the bottom of the pile will be assured.

bakho writes:
> I keep trying to picture a presidential debate between
> George Bush and the Democrat nominee. Bush/Gore 1
> comes to mind. The Bush record is so indefensible. I cannot
> imagine the debate. I can't help but think there will be no
> debates in 2004.

I think you are missing something. Something you may not like, but something which has (so far) proven very true: many people really want to like George W. Bush. Because this is true, there doesn't have to be a defense of the record, since Bush will tell you that his record is defeating terrorism and letting Americans keep more of their money. Anybody who runs against that is obviously un-American. The only way that Bush would go down to defeat is if Iraq becomes an utter and complete fiasco, or if the economy unravels again. And even then, Bush won't lose because his record is indefensible, but because people have some gut-level feeling that things aren't working out and Bush happens to be the guy who is president at that moment.

The debate will go much like the first one.

* Simple questions on standard topics which allow the candidates to recite 2 minute prepared speeches.
* At the end of the debate, most people will believe the Democrat won.
* The post-debate talk shows and TV coverage for the next 2-3 days will say Bush won, and within a week the polls will reverse and most people will think Bush won.

How the Democrat will be judged:
a) If he launches strong attacks on Bush's record the coverage will talk about him being too "harsh" and "shrill" and "tense" and "off-putting", while Bush appeared "at ease" and "relaxed".

b) If he calmly proves Bush wrong on everything, citing stats and facts to back him up, the Democrat will be labeled "too bookish", "tended to talk down to his audience", in contrast to Bush who talked "like a regular guy".

c) If he follows the Bush pattern and simply recites 2 minute speeches using meaningless slogans and buzzwords, he'll be "too boring", "failed to establish a message", and "didn't connect with the people."

The debate will go much like the first one.

* Simple questions on standard topics which allow the candidates to recite 2 minute prepared speeches.
* At the end of the debate, most people will believe the Democrat won.
* The post-debate talk shows and TV coverage for the next 2-3 days will say Bush won, and within a week the polls will reverse and most people will think Bush won.

How the Democrat will be judged:
a) If he launches strong attacks on Bush's record the coverage will talk about him being too "harsh" and "shrill" and "tense" and "off-putting", while Bush appeared "at ease" and "relaxed".

b) If he calmly proves Bush wrong on everything, citing stats and facts to back him up, the Democrat will be labeled "too bookish", "tended to talk down to his audience", in contrast to Bush who talked "like a regular guy".

c) If he follows the Bush pattern and simply recites 2 minute speeches using meaningless slogans and buzzwords, he'll be "too boring", "failed to establish a message", and "didn't connect with the people."

I'm afraid, sadly, that I have to agree with J King. I have an old, dear friend who absolutely cannot have me send her bad news about her 'Bushy'. She is not the only one like this I encounter, BTW. The fiction is much better than the reality.

D

I'm afraid, sadly, that I have to agree with J King. I have an old, dear friend who absolutely cannot have me send her bad news about her 'Bushy'. She is not the only one like this I encounter, BTW. The fiction is much better than the reality.

D

Call me what you want, but is there any chance that his economic advisors and related cabinet members genuinely believe that we can climb our way out of the probable mess, or even that they know something we don't know?

"The Wall Street Journal's David Wessel is dismayed when he looks at the budget outlook that George W. Bush has created [...]"

"You asked for it, you got it!"

It amazes me that the country-club Republicans think the radicals were on their side.

on the bright side, almost all our debt is denominated in our own currency. when the really big debtor has problems, the bank's in trouble.

sorry, Asia.

Brad, that mountain has been there for 30 years -- and SS has been broken since FDR created it. It's the Dems who refuse the obvious needed fix: follow Chile's lead and have mandatory savings that are owned by the saver. It's also always been the Dems who deny that SS is broken.
Obviously, Clinton's dot.com boom was the last time to really implement the inevitably painful transition, BEFORE the dot.com bust / recession. Now a LOT more pain is needed, but you and Paul Krugman need to own up to failing to discuss the mountain at the appropriate time.

When the US is fighting for the survival of capitalism against chaotic forces of Islamofacist terrorists ... (from Dr. Strangelove) sacrifices must be made.

US luck (& immigration policy), the unsustainable pension avalanche is bigger, and closer, in Europe.

Finally, Paul Krugman mentioned fears of global warming. Reducing global warming (I support gas taxes, immediately) will be expensive. But weather science is far less advanced than actuarial tables. The unsustainable SS avalanche is nearer, more certain, and will be far more expensive. Trying to get a sustainable industrialization - weather balance, under vast uncertainty, seems pretty irresponsible when the highly certain pension system is unsustainable, and has always been so.

All Dem economists who haven't been warning of the unsustainability of SS will be certainly tarred with their own irresponsibility. And Bush's rich cronies will be reelected and make sure that THEY don't pay for irresponsible Dem economist mistakes.

Sadly, because the idiotarian Left will try to force the election to be about Iraq & terrorism, Bush and his terrible rich crony capitalists will win again and do more economic mischief.

Tom,

I believe that Clinton was trying to get some type of social security solution in his final years in office. But, alas, he was distracted by the Republican-led witch trial. Al Gore's lock box had something to do with shoring up social security.

But, I agree. We need a strong centrist democrat that is capable of working with moderates accross the aisle to clean up the Bush mess. That's why i like Clark.

Tom,

I believe that Clinton was trying to get some type of social security solution in his final years in office. But, alas, he was distracted by the Republican-led witch trial. Al Gore's lock box had something to do with shoring up social security.

But, I agree. We need a strong centrist democrat that is capable of working with moderates accross the aisle to clean up the Bush mess. That's why i like Clark.

Tom,

I believe that Clinton was trying to get some type of social security solution in his final years in office. But, alas, he was distracted by the Republican-led witch trial. Al Gore's lock box had something to do with shoring up social security.

But, I agree. We need a strong centrist democrat that is capable of working with moderates accross the aisle to clean up the Bush mess. That's why i like Clark.

Let's stop focusing on the negative and pay some attention to the positive actions taken recently by this administration, such as its efforts to repatriate the Chinese textile industry. Not only does this expand employment opportunities for women and children, but even offers the prospect of revitalizing small town America, and especially hard-hit regions like Lowell, Massachusetts.

As Tom has put it well, this is a war for the survival of capitalism, and if we need to step on a few million Chinese textile workers to keep Americans clothed in homeland cotton... well, sacrifices must be made!

"Sadly, because the idiotarian Left will try to force the election to be about Iraq & terrorism, Bush and his terrible rich crony capitalists will win again and do more economic mischief."

Posted by Tom Grey at November 20, 2003 01:19 AM

BZZZZZZT! Thank you for playing, Mr. Grey. However, use of the word 'idiotarian' disqualifies your words from serious consideration,due to the fact that those who use it are bullsh*tters. In addition, you earn extra BS points from the ridiculous argument that SS has been broken since FDR created it.

However, you do qualify for a job writing propaganda ^H^H^H^H^H insightful analysis with Tech Central Station.

Ah, Chile. Negative real rates of return, and a big chunk of the population not participating. great program.

If only our economy could be just like chile's! Or russia - they have a flat tax!

When Clinton was running surplusses, we were collecting revenue at over 20% of GDP. Under Bush we are down to about 16% of GDP as revenue. There is nothing wrong with Social Security that asking the wealthy to pay their fair share cannot fix.

In my debate post, it is my feeling that most of the Bush policies have never been debated publicly. I don't think a debate over his policies just before the election will help Mr. Bush in any way.

As for worst US president, Buchannon is still at the bottom of my list.

At the risk of preaching to the choir, I'll add that a basic element of falsity to Tom Grey's argument is the claim that PK has been ignoring Social Security issues. A glance at the index to "The Great Unraveling" and/or a cursory search of the Unofficial PK Archive or reveals literally dozens of writings on the issue. (My general impression of anti-PK fulminators is that they don't actually read PK very closely at all.) This is not to mention Congressional Democrats in the early '80s without whom the Social Security surpluses would presumably never have existed, economists such as Henry Aaron who have been writing on the subject for eons, etc.

As of 18 Nov, 2003, Social Security has a $2,885,509,619,538.62 surplus that should last quite nicely until at least 2040. SS is not broken or even in trouble. It is the rest of the budget that will suffer as the money borrowed from SS has to be repaid. Medicare/Medicaid is a different story that does require cost containment.

SS repayment merely requires that the wealthy pay their fair share of taxes. That may be politically painful, but fiscally sane. The Canadian economy is fine and their tax rates are much higher. The Fed can keep interest rates low as a monetary stimulus to counter fiscal policies that collect increased revenues. Greenspan raised interest rates too high in the late 1990s because the effect of increased collection of tax revenue was not adequately considered. As a matter of course, the best way to brake the economy as it recovers would be to raise taxes and keep interest rates low. This is the opposite of the Greenspan high interest rates/massive tax cuts policy of 2001 that helped create the fiscal mess.

"As Tom has put it well, this is a war for the survival of capitalism, and if we need to step on a few million Chinese textile workers to keep Americans clothed in homeland cotton... well, sacrifices must be made!"

Wait a minute, there is a pattern here:

"They attacked us because they hate our freedom" => let's roll back some of our constitutional liberty.

"This is a war for the survival of capitalism" => let's walk away from our commitment to free trade.

As a European economist, I have been educated to believe the US was (overall) a power of good because of its commitment to economic (and other kinds of) freedom. These days, however, it feels like the ideology I bought into was just preached to us because it happened to fit with the Cold War, and not because the US actually had such a strong commitment to economic (and other kinds of) freedom... (Of course, I am only referring to *some* American ideologues, not America[ns] in general.)

Responding to the title question, yes, President Bush may rate as one of the poorer ones budget-wise *today*, but as an international leader, my (European) take is that he's gonna be celebrated long ago he's replaced in office.

On the issue of the debates (should there be any), one thing this White House knows is how to make the most of Bush's fairly narrow public speaking capacity. He has become much better at public speaking, but we have little idea of how he would respond to a debate in which his record is on trial. His performance before Australia's Parliament was, um, less disasterous than it could have been. His refusal to try again before the British Parliament, or to leave his economists in the same building, suggests his patience for dissent is awfully thin. I don't know what that means in terms of debate rules, but I am absolutely sure that somebody is on that issue at the White House, and that the results aren't likely to be aimed at making democracy work.

Z has an amazingly clear sense of how the media operate.

It doesn't matter what the Democrat says or does. The media will conclude that he (someday, she) lost the debate, is out of touch with ordinary people and is lacking in character. There are nearly a dozen Democrats running, but if one took the crooked media seriously, they're all Al Gore. Not that that's a bad thing to those outside the media bubble.

Someday, the Republicans will run someone with the moral nicety of Nero and the manners of Genghis Khan and this will still be true.

________________________

Tom Grey has not heard the bad news. Chile's pension system has some serious drawbacks. The Republican-dominated CBO, writing a generally favorable report on the pension system, said "Chile's system still faces important challenges, however. Coverage is far from universal, and the lack of pension savings may create social problems and present a significant fiscal risk for future Chilean governments. Moreover, the structure of Chile's private investment firms encourages high marketing costs that are passed on to workers through lower rates of return. The system allows frequent transfers of funds and encourages competition among AFPs with almost identical investment portfolios. Accordingly, a significant share of AFPs' costs reflect efforts to attract investors, and in 1997, 65 percent of account holders changed their investment firm at least once. Marketing and sales costs in 1991 were estimated to exceed one-third of AFPs' total costs" (http://www.cbo.gov/showdoc.cfm?index=1065&sequence=2)

This was written during some of the best economic days.

Other voices are more critical, describing the system as corrupt and wasteful (which is sort of what the CBO says if one reads between the lines): "This whole model is frankly impossible without a dictatorship. Only the dictatorship could have disciplined the working class into submission while their salaries were lowered and their pensions used to accumulate wealth for others. Only a dictatorship can keep a country quiet while education, universities and health care are privatized, and while an absolute marketization of the labor force is imposed." http://www.globalaging.org/pension/world/chile2.htm

One has to agree with Barry that the use of the term "idiotarian" makes it fairly clear that Mr. Grey is not willing to consider mere facts. And one has to agree with bakho that the Social Security system is in much better shape than the part of government being administered by Republicans. Jean Phillipe Stijns is correct to sense the hypocrisy of American rhetoric. The United States achieved its economic pre-eminence in part by being protectionist while talking others into free trade.

SS in and of itself is not that big a problem and could , in theory, be managed, especially if we were taking actions now.

The other budget problems, especially, healthcare
are another thing.

The newcons are using the relatively minor SS problems as an opening to destroy the system.

The problem is that the "starve the beast" program and large scale deficits are a program
of destroying the village to save it. The neocans believe -- as almost the same people did about
Iraq -- that their solution will somehow emerge
without any serious consequences. But we can not have a crises that will cause people to give up
SS without it doing massive damage to the economy
and stock mkt first.

The stock market is the Presidents report card, and it is saying Bush is the worse president since Hoover.

In my experience as a white,middle aged, male, most of my friends & clients believed in Bush. Now, they just sort of keep quite and frown. If the dems can be reasonable while making these people realize that Bush is a disaster the dems can win despite the stupidity of the press. In a way that is why I am supporting Dean, I believe that none of the other Dem canidates have a chance of beating Bush. But, Dean does because he is able to define the terms of the debate better than any of the others. What I really beleive needs to be done is convince them that the Republican party has been hijacked by a bunch of nuts and that they need to go back to traditional Rebublicans.

Spencer,

Let's not forget that Dean has the advantage this time that Bush had last - he doesn't have a record on national issues. He can craft his stance in vague terms meant to appeal to the widest possible group of voters. Meanwhile, his base can be quietly reassured that he really means what they hope he means. Among the front runners, Dean is unique in this regard. Lieberman certainly isn't able to be all things to all people. Neither is Kerry.

Bush is going to win in 2004 and 2008 and until he is replaced by the next supreme ruler, president by acclamation. My only regret is that I probably won't live long enough to see it.

"I always get curious just how history is going to judge Bush. What does he really expect his legacy to be? If there really is a starve the beast metality then when are the difficult, unpopular decisions made? Some might say the day after election day, but I have a hunch that Bush will never make the tough decisions, the buck will just be passed, and his place in history at the bottom of the pile will be assured."

Posted by Rich at November 19, 2003 09:06 PM

Remember Reagan? The line on the right was that it was no longer the Reagan economy it was the Bush economy, the minute the recession hit. In the mid/late 1990's, as the economy improved, it became the Reagan economy once more.

Also, the WSJ was famous for setting the boundaries of the Reagan era at 1982-1990. That gave him from the trough of the worst post-WWII recession to the peak before the next recession.
This made him look much, much better.

Now, it would be easy to adjust for this, but I never saw anything in their editorial pages which did, and many articles which didn't.

In short, the right will throw bucket after bucket after bucket of BS, and engage in serious revisionist history.

Or is the worst Jimmy Carter-- "history's greatest monster"?

Brad, it's one thing when you highlight a policy and say "Why are we ruled by these idiots?" But now you're in Bush-kookoo land, like the Democratic Underground political illiterates who voted Bush the most evil man by a 2-1 margin over Osama and Saddam, or for that matter like the unhinged righties who were convinced that your former boss was a Soviet agent, a serial murderer, and a drug smuggler to boot with his lesbian Lady Macbeth of a wife. 50 years from now you could be right, but right now you just look shrill-- and it doesn't do your much more thoughtfully damning posts any favors.

Budget smudget. The budget will be far less important in the coming election than the strength of the economy. If the economy is growing at 4%, the Administration will have a distinct advantage even though long term budget polices may be awful. Same in California, if AS can settle the short term debt issue with more long term debt all will seem well to most voters.

We are not worried about a budget problem in 5 years or even 3 years. "Now" is the election issue. A strengthening economy in 2004 will be hard to run against for any Democrat, sigh.

>>now you just look shrill<<

Can you name a president whose budgetary policy is worse?

Bush has a budgetary policy??

The coupling of massive tax cuts with massive increases in spending while complaining that the tax cuts are too small and the spending is too much never struck me as a coherent policy. Perhaps the question should be rephrased. "Can you name a president whose lack of budgetary policy had worse results?"

Brad beat me to the punch (it's his blog, after all!). The question of fiscal irresponsibility is subject to empirical verification, and it's perfectly clear, simply by looking at the facts, that the backbone administration is the most fiscally irresponsible in american history.

The closest comparison i can dredge up is LBJ's attempt to hide the costs of Vietnam, but in comparison, it's quite small potatoes.

"As of 18 Nov, 2003, Social Security has a $2,885,509,619,538.62 surplus that should last quite nicely until at least 2040."

Actually, as of 18 Nov, 2003 Social Security had $2,885,509,619,538.62 worth of unmarketable IOUs from the U.S. Treasury. As such those IOUs are a claim on future debt of the U.S. Treasury. Social Security will need to begin redeeming those IOUs around 2018. This fellow appears to have been saying something about it for a while:

http://www.ironwoodpublications.com/pages/856709/index.htm

What were FDR's budget deficits? I'm not an economic historian, so I may be wrong, but weren't they somewhat higher than the 4-5% we are running now? Were they not even higher than under Hoover?

What were FDR's budget deficits? I'm not an economic historian, so I may be wrong, but weren't they somewhat higher than the 4-5% we are running now? Were they not even higher than under Hoover?

Unfortunately shrillness seems to be running at a fever pitch on all sides. Some people can’t seem to express themselves without hurling insults—like calling someone a moron because you disagree with him. Moreover repeatedly calling the president of the US a liar (even if he might be one) does not set a civilized tone. I can remember a time when people who strongly disagreed on various issues could nonetheless remain civil. And by the way, we really only have two certified liars as president, Richard Nixon, and William Clinton. Nixon had to resign for lying or face removal from office. Clinton perpetrated a fraud on a court and was held in contempt. As a consequence he had his law license suspended.

maciej: "What were FDR's budget deficits? I'm not an economic historian, so I may be wrong, but weren't they somewhat higher than the 4-5% we are running now? Were they not even higher than under Hoover?"

The NIPA data go back to '29, see for yourself:
http://www.bea.doc.gov/bea/dn/nipaweb/index.asp

Excluding the WWII years, the FDR era deficits reported in NIPA actually do not, for the most part, exceed the recent NIPA deficits as a fraction of GDP.

OK more economically minded people, what's the proper measure of the iniquity of deficit borrowing: deficit as a % of GDP or deficit as a % of expeditures? In 1936, according to the NIPA tables, some 40% of gov expenditures came from borrowed money, vs about 10% recently. In both cases, the deficit as a % of GDP was between 3 and 4%.

OK more economically minded people, what's the proper measure of the iniquity of deficit borrowing: deficit as a % of GDP or deficit as a % of expeditures? In 1936, according to the NIPA tables, some 40% of gov expenditures came from borrowed money, vs about 10% recently. In both cases, the deficit as a % of GDP was between 3 and 4%.

Zarkov: Bush is ripe for certification.

"But, alas, he was distracted by the Republican-led witch trial."

What a crock. In case you haven't heard, there are no real witches, so a "witch trial" (e.g., the Salem witch trials) is by definition the trial of an innocent person.

Bill Clinton was charged with lying to a grand jury. That is *exactly* what he did.

Anyone who calls the impeachment trial of Bill Clinton a "witch trial" merely demonstrates how uncaring they are of the truth. (Sort of like Bill Clinton...)

In one sense SS was broken at birth because it was set up as a pay-as-you go system instead of a funded system. That first cohort was able to retire without having to make any payments into the system. It bears some resemblance to a Ponzi scheme. But the financial problem is minor compared to the demographic problem. Suppose we raise taxes enough preserve the payout tables. What will that money buy if there are too few people working to provide the goods and services for a huge pool of retirees? With a large demand for scarce labor, wages and prices will increase forcing retirees back to work. The problem will become acute around 2050. I don’t think this problem is fixable beyond the next 30 years.

>>Actually, as of 18 Nov, 2003 Social Security had $2,885,509,619,538.62 worth of unmarketable IOUs from the U.S. Treasury.<<

Oh, they're very marketable. Should the Managing Trustee* of the Social Security Trust Fund seek and gain Congressional authorization to invest the SSTF in something else, he would have no trouble doing so at all.

--------

*The Managing Trustee is the Secretary of the Treasury. If the Managing Trustee wants to turn any of the IOUs ("bonds") into cash, he will find the Secretary of the Treasury eager to oblige him.

In the 9 years from 1933 to 1941, the debt slightly more than doubled from $22.5 billion to $48.9 billion, an average of about $3 billion per year. WWII saw real boost in debt that went up to about $60 billion per year. After the war, we ran surplusses. The upward march of the public debt started in 1957 and ended under Bill Clinton.

I don't have GDP figures, but total spending was south of $100 billion during FDR. Bush43 spends over $2 Trillion per year. At $400 billion deficit, over 16% of budget is being financed by red ink. Bush racks up more debt in one year than FDR did in 13 years in office.

06/30/1945 $258,682,187,409.93   
 
06/30/1944 $201,003,387,221.13   

06/30/1943 136,696,090,329.90   
 
06/30/1942 72,422,445,116.22   
 
06/30/1941 48,961,443,535.71   
 
06/29/1940 42,967,531,037.68   

06/30/1939 40,439,532,411.11   
 
06/30/1938 37,164,740,315.45   
 
06/30/1937 36,424,613,732.29   
 
06/30/1936 33,778,543,493.73    

06/29/1935 28,700,892,624.53   

06/30/1934 27,053,141,414.48   
 
06/30/1933 22,538,672,560.15 

Re: Mark's 2:42. I call "war on metaphor"!

Re: Mark's 2:42. I call "war on metaphor"!

Re: Mark's 2:42. I call "war on metaphor"!

In the 9 years from 1933 to 1941, the debt slightly more than doubled from $22.5 billion to $48.9 billion, an average of about $3 billion per year. WWII saw real boost in debt that went up to about $60 billion per year. After the war, we ran surplusses. The upward march of the public debt started in 1957 and ended under Bill Clinton.

I don't have GDP figures, but total spending was south of $100 billion during FDR. Bush43 spends over $2 Trillion per year. At $400 billion deficit, over 16% of budget is being financed by red ink. Bush racks up more debt in one year than FDR did in 13 years in office.

06/30/1945 $258,682,187,409.93   
 
06/30/1944 $201,003,387,221.13   

06/30/1943 136,696,090,329.90   
 
06/30/1942 72,422,445,116.22   
 
06/30/1941 48,961,443,535.71   
 
06/29/1940 42,967,531,037.68   

06/30/1939 40,439,532,411.11   
 
06/30/1938 37,164,740,315.45   
 
06/30/1937 36,424,613,732.29   
 
06/30/1936 33,778,543,493.73    

06/29/1935 28,700,892,624.53   

06/30/1934 27,053,141,414.48   
 
06/30/1933 22,538,672,560.15 

maciej: "OK more economically minded people, what's the proper measure of the iniquity of deficit borrowing: deficit as a % of GDP or deficit as a % of expeditures? In 1936, according to the NIPA tables, some 40% of gov expenditures came from borrowed money, vs about 10% recently. In both cases, the deficit as a % of GDP was between 3 and 4%. "

I don't understand the use of "iniquity" ("wickedness"?) here. In any event, I don't think the comparison being proposed is appropriate. In '36, there was no Social Security (the first Social Security taxes were collected in '37). So a better comparison would arguably be with the modern "on-budget" surpluses and deficits. Excluding the "off-budget (mostly Social Security) surplus adds about 1.5% of GDP to the more commonly reported "unified" budget deficits for FY02 and FY03. So the FY03 on-budget deficit is more like 5% of GDP, or a bit less than 32% of Federal outlays excluding Social Security benefits.

"Bill Clinton was charged with lying to a grand jury. That is *exactly* what he did.

Anyone who calls the impeachment trial of Bill Clinton a "witch trial" merely demonstrates how uncaring they are of the truth. (Sort of like Bill Clinton...)"

Posted by Mark Bahner at November 20, 2003 02:42 PM

The witch trial metaphor is appropriate because of the multi-year investigations of Clinton for any lie that the right could come up, even if a previous investigation had cleared him.

Which anybody who kept abreast of events in the 1990's already knows.

The comparisons made by some posters between Bush's deficits and FDR's seem strange to me. Prior the WWII there was, to put it delicately, substantial unused capacity in the economy, along with a liquidity deficit. The criticisms of FDR I've heard invariably call his deficits too small. The world has changed since then.
About Social Security: how the system is financed seems to me largely irrelevant. A funded system would not change the underlying economics.
Nor do I see why doomsday should come in 2050. If one assumes a 2% annual productivity growth rate between now and then, productivity will be 3-4 times what it is now. So, what we are saying as a society if we maintain Social Security is that we are willing to accept a slower growth rate in the real income of the working age population in order to put a floor under the poverty of the aged. There are various points that can be argued about that, including whether it should be done at all (I think it should be). But I don't see why it's a priori unreasonable, let alone impossible.

>>Actually, as of 18 Nov, 2003 Social Security had $2,885,509,619,538.62 worth of unmarketable IOUs from the U.S. Treasury.<<

Oh, they're very marketable. Should the Managing Trustee* of the Social Security Trust Fund seek and gain Congressional authorization to invest the SSTF in something else, he would have no trouble doing so at all.

--------

*The Managing Trustee is the Secretary of the Treasury. If the Managing Trustee wants to turn any of the IOUs ("bonds") into cash, he will find the Secretary of the Treasury eager to oblige him.

Posted by Brad DeLong at November 20, 2003 05:16 PM

Brad, the trust fund cannot sell those IOUs on the open market. They are therefore unmarketable.

Government bonds are claims on future taxes. When the Treasury redeems these bonds in order to invest them into something else, they will be added to the negative side of the U.S. balance sheet. The only way the government puts things on the positive side is through taxation. Taxes will have to increase or our deficit will increase. Though both parties are playing accounting games, the debt exists today. The money has already been spent.

Jonathan, good point about the historical comparisons. I took the questions about FDR as probably seeking to establish a point along the lines of 'look at the comparative fiscal probity of the current administration in this time of crisis.' As it happens, the data don't even have to be adjusted for the relative severity of the Great Depression and the current conditions to assail that sort of argument.

Look. SInce the SS fix under Reagan, the government has been collecting excess payroll taxes from boomers. We are paying for our own retirement or so we have been told. Do you think any administration can say, "Sorry, but we gave away your SS retirement money to the wealthy in the form of tax cuts. We lost your retirement money."???? We are not rolling over for that one.

To those who think that SS obligations can be written off, think again. You gave our SS tax money to your wealthy buddies?? They can darn well pay it back- with interest. There is nothing wrong with SS or the federal budget that wealthy Americans paying their fair share of taxes cannot fix.

bakho, I am not suggesting that the debt is no longer valid. I am saying that the money has been spent.

George W. Bush is an idiot. I'm sick of Republicans saying otherwise. Grow up and figure it out. This is not about Democrats and Republicans, we've had some great Republican Presidents, this is about Bush having his head up his A$$. HE IS THE WORST PRESIDENT IN U.S. HISTORY

Genius hath electric power which earth can never tame.

Assassination is the extreme form of censorship.

Imitation is the sincerest form of television.

A good traveler has no fixed plans, and is not intent on arriving.

Advertising is 85% confusion and 15% commission.