Welcome! Follow me on twitter at @johnrlottjr . Please e-mail questions to firstname.lastname@example.org.
Austan Goolsbee continues to make outrageous claims
Goolsbee's halting discussion here seems consistent with even him being uncomfortable with the claims that he is making.
Austan Goolsbee: Well, the milestone of the government debt has virtually nothing to do with the reasons that the deficits have been large in the last two years. The long run fiscal challenge facing the country, as you have highlighted many times, are associated with the aging of the population, the rise of health care costs, and the choices that we have made about tax rates. . . .
The fact that the Congressional Budget Office is saying that the deficit is going to be record breaking before Obama has ever gotten into office is, I think, a little indicative of what the true reasoning of the increase in the deficit is. Which is that we had the worst economic downturn of our lifetimes. . . .
And there the Romney Plan that they have outlined would make that substantially worse is $3 to $5 trillion in tax cuts that you try to pay for in addition to whatever deficit reduction that you try to have . . .
Neil Cavoto: They do spur growth . . .
Austan Goolsbee: Depending on what rates they are they can spur some growth. . . .
Ironically, just a few days ago the message from the Obama administration was that we can't cut the deficit now because of the Keynesian arguments that doing so would hurt the recovery.
1) The aging population can't explain the deficit over the last two years. In 2008, Social Security and Medicare as a percentage of total Federal government spending was 33.8% (see Table B-81). In 2012, it is supposed to be 33.2%. Thus they haven't even gone up as fast as the rest of government spending.
3) Government spending as a share of GDP soared under Obama. See a discussion here. Note that the last year that Republicans controlled both the presidency and the congress the 2007 budget deficit was $160.7 billion (see Table B-78). This discussion is also relevant for the second paragraph. I have previously written up a response to the CBO point and I will link to it here when I find it.
The rest of Goolsbee's discussion here is quite misleading. His attacks on the Republicans not making an agreement ignores the fact the tax increases are to go into effect now, but the spending cuts are delayed for years. There is no way to bind future congresses to ensure that those spending cuts will be made. In addition, American's taxes are already extremely high compared with other countries.