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Balancing the stimulus and deficit
President-elect Barack Obama speaks with his economic team in Washington, DC.
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Kai Ryssdal: Let's begin today with a quick run through on the math for that eye-popping deficit number the Congressional Budget Office hit us with today. For the 2009 fiscal year -- that is, the one we're already well into -- the federal deficit's almost three times the size it was in FY '08. That is figuring in shrinking tax revenues as well as $400 billion or so spent so far on bailouts. It does not count the Obama Administration's stimulus plan. And the president-elect hinted today that the enormous budget shortfall means there are going to be limits on how much more the government's going to be able to spend. Here's our Senior Business Correspondent Bob Moon.
Bob Moon: A balancing act now confronts the incoming chief executive. Experts say his stimulus package needs to be big enough to be effective. His own advisers have said it could cost between $600 billion to $800 billion over two years. But some economists have recommended spending more than a trillion dollars.
Barack Obama: We expect that it will be on the high end of our estimates, but will not be as high as some economists have recommended, because of the constraints and concerns we have about the existing deficit.
Obama acknowledged the pressure to find budget savings. And with Medicare and Social Security costs skyrocketing, he explicitly opened the door to cuts in entitlement programs. At the Cato Institute, tax-policy director Chris Edwards wishes Obama well in reining in those costs, but also argues he shouldn't be spending $800 billion the country doesn't have.
Chris Edwards: I think the public really ought to start calling their members of Congress and saying, 'Look, this has gone too far, we're imposing all these costs on the next generation, and this is really unfair what is going on in Washington.'
Edwards concedes, though, it's tough being a deficit hawk in the current economic climate. And former congressional adviser and budget analyst Stan Collender says the overriding political reality is the deficit will be getting even bigger.
Stan Collender: Voting against this would be voting against the equivalent of the declaration of war after Pear Harbor. This is the No. 1 issue; it's the one mandate the president-elect got on election day. That is, fix the economy. And if this is what everyone thinks you need to fix the economy, then members of Congress are going to vote for it, regardless of the size of the deficit.
Collender says the real question is where the limit might be on how much more money America can count on borrowing from foreign investors buying U.S. Treasuries.
Collender: The truth is, we don't know where that is, because it's a balancing act, and we've never quite been in this position before.
In Los Angeles, I'm Bob Moon for Marketplace.
"obama explicity left door open for cuts in entitlements"
this is shameful and you are partly to blame. you cover economic issues without feeling a need to understand even the perennial ones.
social security is the one place the people get exactly what they pay for. not "arguably" like the benefit from new submarines or the bailout that saved the economy, but dollar for dollar people get back the money, corrected for inflation, that they put into social security. the departures from this are modest, and are properly understood as insurance costs, in a situation in which most people get back more than they paid in, and even the very rich get back at least as much as they paid in.
cutting entitlements will not save the taxpayer any money. it will end by forcing that same taxpayer to work past the age he had hoped to retire.
there is probably room for improving the way medicare works... but for the most part the real need there is to improve the way medical care works... a different problem entirely.
it is very discouraging that Obama may not understand this. it is nearly criminal that a "high end newssource" doesn't.
'Look, this has gone too far, we're imposing all these costs on the next generation, and this is really unfair what is going on in Washington.' This is a quote from Chris Edwards of the Cato Institute. Further on in your program you had David Frum chime in on the fiscal versus monetary stimulus debate.
Was Marketplace recently secretly purchased by Rupert Murdoch? What's with the far right commentary? I'm no idealogue, but your show over the past few months has been one free market demagogue rant after another. I felt compelled to post some comment after today's especially egregious show.
'WHAT'S GOING ON IN WASHINGTON IS UNFAIR??' Is Edwards serious? Is that a serious commentary? Did you put it in the show for comic relief? It has to be one of the lamest quotes in recent memory.
Please, can we have serious people discussing these serious issues. It looks like a depression is rearing its ugly head. Can we have some serious scholarly input on the show when discussing these topics? Enough with the conservative "think tank" commentary (or even the liberal think tank commentary). How about giving most of your time to non-partisan analysts who don't view the economic world through the prism of us versus them?
One more thing: that last discussion on the Jan. 7th show with Barney Frank was especially upsetting. I realize it was his quote that was under analysis, but did you have to emphasize the fact that Frank was making some lousy analysis of how the economic rebound in mid-2010 would give the Democrats the edge in the mid-year elections? Is this the extent to which the discussion has sunk? - - - the partisan advantage of a potentially ameliorating economy? What happened to the commentary on how many millions have been put out of work, and WHAT THAT WILL DO TO PEOPLE'S LIVES in the interim? What about the many millions of people who will fall below the poverty line, or about the many millions worldwide who will die as a result of the wreckage. I realize this is hard to present all the time, every day, in a half-hour segment, but if you're going to discuss potential fixes to what appears to be a serious and profound recession, how about some serious and profound analysis?
