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Credit: Marketwatch

This week, Rex Nutting of the MarketWatch caused a stir with his analysis correctly showing that federal spending has hardly budged under President Obama, rising at the slowest pace since the Dwight Eisenhower was in the White House. Predictably, James Pethokoukis of the conservative American Enterprise Institute cited the jump in Washington's spending as a percentage of the U.S. economy to comically "prove" that "actually, the Obama spending binge really did happen." Comically, that is, because Pethokoukis conveniently ignores the staggering economic contraction resulting from the Bush recession, with GDP only last year having returned to 2008 levels. Even less surprising, the perpetual tax-cutters of the right neglected to mention that thanks to the steep recession and the Treasury-draining Bush tax cuts, total federal tax revenues as a percentage of GDP hit their lowest level since 1950.

On January 7, 2009, Reuters reported that President Bush was bequeathing a $1.2 trillion budget deficit to his successor. That record gap was fueled by Bush's $700 billion TARP program and plummeting tax revenue due to the shrinking American economy. As Reuters noted, President-Elect Obama "said he expects deficits around $1 trillion for years, forcing tough budget choices."

Which is exactly what came to pass. But even with the 2009 stimulus program and the necessarily growing outlays for Medicaid, unemployment insurance, food stamps and other safety net programs, those trillion deficits had less to do with Barack Obama boosting spending than the dramatic loss of tax revenue. As former Reagan administration official Bruce Bartlett explained in October 2009:

According to the Congressional Budget Office's January 2009 estimate for fiscal year 2009, outlays were projected to be $3,543 billion and revenues were projected to be $2,357 billion, leaving a deficit of $1,186 billion. Keep in mind that these estimates were made before Obama took office, based on existing law and policy, and did not take into account any actions that Obama might implement...

Now let's fast forward to the end of fiscal year 2009, which ended on September 30. According to CBO, it ended with spending at $3,515 billion and revenues of $2,106 billion for a deficit of $1,409 billion.

To recap, the deficit came in $223 billion higher than projected [in January], but spending was $28 billion and revenues were $251 billion less than expected. Thus we can conclude that more than 100 percent of the increase in the deficit since January is accounted for by lower revenues. Not one penny is due to higher spending.

Obama's own tax cuts, the ones contained in the February 2009 stimulus bill, "reduced revenues in FY2009 by $98 billion over what would otherwise have been the case."

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If nothing else, Mitt Romney seems dedicated to proving that repetition of a lie will make it true. On no point is Romney's tilting against the windmill of truth more comically pathetic than his long-ago debunked claim that President Obama "did not cause this recession, but he made it worse." After a tidal wave of fact-checkers demolished his mythology last summer, Romney on June 30 pretended, "I didn't say that things are worse" before reinstating the falsehood in his stump speech just days later. Now, Mitt has a new twist on his "Obama made it worse" fraud, declaring in light of the improving economic outlook that "It's getting better not because of him, it's in spite of him and what he's done."

Sadly for the myth-maker from Massachusetts, the numbers and the overwhelming consensus of economists - including John McCain's 2008 brain trust - demand Mitt Romney give credit where credit is due.

That, of course, is something the serial deceiver Romney is refusing to do, even as he acknowledges the economy is improving. As Mitt put it in New Hampshire ten days ago:

"I'm sure the president will want to take credit for it, for any improvement. Guess what? He doesn't deserve it."

Two days later during a GOP debate, Romney repackaged his con job this way:

"The president is going to try and take responsibility for things getting better. You know, it's like the rooster taking responsibility for the sunrise. He didn't do it," Romney said. "In fact, what he did was make things harder for America to get going again."

But back on planet Earth where the force of gravity still applies and the sun rises in the east and sets in the west, Romney's slander shuold receive the ridicule it rightly deserves.

This summer, Time blasted Romney's accusation that "the recession is deeper because of our President," concluding "that Romney's claim has no credible basis" because "there's no credible economic data showing that Obama has inflamed our economic problems." As Greg Sargent noted on June 27, both the AP and the Washington Post's own fact-checker demolished Romney's talking point on the recession which the NBER declared over in June 2009. Confronted three days later by NBC producer Sue Kroll about the growing economy, modest job gains and surging stock market, Romney simply denied he ever made the charge:

"I didn't say that things are worse...What I said was that economy hasn't turned around."

Nevertheless, just four days later Romney marked Independence Day by returning to his lie. As the New York Times reported:

Speaking at the annual July Fourth parade here on Monday, Mr. Romney told a crowd of supporters and passersby, "the recession is deeper because of our president," adding, "it's seen an anemic recovery because of our president."

Mr. Romney made a similar assertion earlier when reporters had pressed him on the point near the parade staging grounds, after initially seeming to limit his commentary to the president's handling of the recovery, which he said, "has been slower and more painful,'' But then he went ahead and said it, that the president "made the recession worse."

As it turns out, it's not just the tidal wave of reporters and fact-checkers that washed away the mud Mitt Romney hurled at President Obama on the economy. A bevy of economists, including ones who worked for Romney endorser John McCain, long ago concluded that Barack Obama saved the U.S. economy from calamity.

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Credit: Washington Post

With the rise of the Occupy movement and confirmation from the nonpartisan CBO that the U.S. income gap is at its highest level since 1929, defensive conservatives by necessity spawned a thriving if laughable cottage industry in income inequality denialism. Now with word from the New York Times that the share of income for the top 1 percent dropped from 23 to 17 percent between 2007 and 2009, you can expect more cries of "so get a time machine, Occupy Wall Street!"

But the right-wing echo chamber need not worry about the plight of the tragically rich. While working Americans continue to struggle as the economy slowly recovers from the Bush recession, the rebound of Wall Street has ensured that the upper crust has already recouped its losses. As the data show, millionaires are not only making a rapid comeback. For the gilded class, the economic downturn is already over.

Seizing on federal tax data showing that the average income for the top 1 percent fell to $957,000 in 2009 from $1.4 million in 2007, conservatives have complained that income inequality is so over:

Analysts say the drop largely reflects the stock market plunge, and most think top incomes recovered somewhat in 2010, as Wall Street rebounded and corporate profits grew. Still, the drop alters a figure often emphasized by inequality critics, and it has gone largely unnoticed outside the blogosphere.

By focusing on the top 1 percent, the Occupy Wall Street movement has made economic fairness a subject of street protest and political debate.

"It's very interesting that this has become such a big topic now when the numbers are back to where they were in the 1990s," said Steven Kaplan, an economist at the University of Chicago's business school. "People didn't seem to be complaining about it then."

That might have been because during the 8-year Clinton boom that generated 23 million new jobs, the rising tide for once did lift all (or at least most) boats. But after the Bush recession that started in December 2007, many Americans' dinghies were capsized by yachts once again cruising at full speed. As it turns out, the recession that has proved so devastating for most Americans for the wealthy has been merely a hiccup.

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Credit: CBPP

On this the fourth Thanksgiving weekend since the start of the Bush recession, families across America are still struggling with persistently high unemployment, underwater mortgages and stagnant wages. But as the nonpartisan Congressional Budget Office (CBO) reminded us this week, Americans can be thankful for the 2009 stimulus. Despite Republican mythmaking that the American Recovery and Reinvestment Act (ARRA) "created zero jobs," the CBO reported that the stimulus added up to 2.4 million jobs and boosted GDP by as much as 1.9 points in the past quarter. As it turns out, that conclusion confirms the consensus of most economists - including John McCain's 2008 brain trust- that President Obama's recovery program is continuing to deliver benefits for the American people.

From the beginning, the CBO has testified to the success of the largely concluded 2009 stimulus package in driving employment and economic growth. (That's one reason why Republicans like GOP frontrunner Newt Gingrich want to abolish the agency.) Now, as The Hill reported Tuesday, the CBO has found that "President Obama's 2009 stimulus package continues to benefit the struggling economy":

The agency said the measure raised gross domestic product by between 0.3 and 1.9 percent in the third quarter of 2011, which ended Sept. 30. The Commerce Department said Tuesday that GDP in that quarter was only 2 percent total.

CBO said that the stimulus also lowered the unemployment rate by between 0.2 and 1.3 percentage points and increased the number of people employed by between 0.4 million and 2.4 million...

By CBO's numbers, the $800 billion stimulus added up to 0.9 million jobs in 2009, 3.3 million jobs in 2010 and 2.6 million jobs in 2011.

But to really gauge the success of the stimulus, it's worth taking a second look at just how dire the U.S. economic situation was when the Obama administration made its fateful prediction that unemployment would peak at 8 percent. As The Economist and the Washington Post's Ezra Klein detailed, in early 2009 the American economy was not only in much worse shape than anyone imagined; it was literally on the brink of collapse.

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"Reality," Stephen Colbert famously told President Bush to his face, "has a well-known liberal bias." That inconvenient truth is at the heart of the expanding Republican war on the nonpartisan Congressional Budget Office (CBO). Increasingly frustrated by CBO analyses showing that the 2009 economic stimulus worked as designed, that the Paul Ryan GOP Medicare rationing plan would massively shift costs to seniors, that income inequality is at record levels and, most damning of all, the Affordable Care Act reduces the national debt, Republican leaders have slandered the agency's work as "smoke and mirrors" and "budget gimmicks, deceptive accounting, and implausible assumptions used to create the false impression of fiscal discipline."

Now in the latest escalation in the GOP's attack, former House Speaker and resurrected 2012 Republican presidential candidate Newt Gingrich wants to abolish the CBO altogether.

Gingrich’s most recent tirade against the CBO came during a campaign stop in New Hampshire. A supporter of the nonpartisan Congressional scorekeeper during his days as House Speaker in the 1990’s, Gingrich on Monday described the agency as part of a leftist conspiracy:

"The Congressional Budget Office is a reactionary socialist institution which does not believe in economic growth, does not believe in innovation and does not believe in data that it has not internally generated.”

That salvo came two weeks after Newt called for the abolition of the agency during his ersatz debate with Herman Cain (around the 6:45 mark of the video above). As TPM reported:

"If you are serious about real health reform, you must abolish the Congressional Budget Office because it lies," Gingrich said at a Saturday debate with embattled pizza entrepreneur Herman Cain. "Every hospital will tell you that if you get the family and patient involved, it is better and less expensive. The Congressional Budget Office refuses to see this as a savings. It wants more bureaucracy and less patient involvement."

Gingrich's animus is hardly surprising. When House Republicans proposed HR 2 in January to repeal the dreaded "Obamacare," they quickly got a rude awakening from the CBO. Demolishing Republican talking points on the subject, the CBO concluded repealing the Affordable Care Act would increase, not decrease, federal budget deficits:

Over the 2012-2021 period, the effect of H.R. 2 on federal deficits as a result of changes in direct spending and revenues is likely to be an increase in the vicinity of $230 billion.

That result did not fit the GOP script. So House Majority Leader Eric Cantor doubled down, essentially accusing the agency of lying:

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Credit: Martin Sullivan

House Budget Committee chairman and supposed GOP wunderkind Paul Ryan chose the wrong the week to attack President Obama for "sowing social unrest and class resentment." After all, just one day earlier the CBO confirmed that income inequality in the U.S. is at highest level in 80 years, a yawning gap certain to be enlarged by the latest crop of proposed Republican tax cut windfalls for the wealthy. Worse still, 24 hours after Ryan accused Obama putting the nation on path to "painful austerity, the kind you see in Europe," new GDP figures showed the U.S. economy grew at a healthier 2.5 percent last quarter. Meanwhile in the UK, where the Conservatives' draconian austerity program is now well underway, the economy has ground to a complete halt.

Writing in the New York Times, Catherine Rampell summed up the new U.S. GDP data from the Bureau of Economic Analysis. "The American economy, "she wrote, "has finally reached the size it was before the recession began four years ago." But as Martin Sullivan explained in words and pictures (above):

Republicans constantly remind us that the Obama stimulus--the American Recovery and Reinvestment Act of 2009--did not work. They voted against it. In the United Kingdom the government is led by Conservative Prime Minister David Cameron. His government did not adopt stimulus. Instead it boldly enacted an economic program that cut spending and raised taxes. The chart below shows the results and compares it to the U.S. experience. After three and a half years, U.S. GDP is just about returning to the pre-recession peak. That's awful. But it's far better than the U.K. where GDP is still five percent ($750 billion in US terms) below its pre-recession peak.

If anything, Sullivan understates the divergent paths and performance of Team Obama in Washington and David Cameron's Tory "austerians" in London. As the data show, the 2008 economic calamity in the U.S. was more severe. As The Economist and Ezra Klein of the Washington Post documented, only months after the February 2009 passage of the stimulus did the White House and the American people learn than the U.S. economy actually contracted by a staggering 8.9 percent in the last quarter of 2008. Reviewing CBO data, the Center on Budget and Policy Priorities found that without the American Recovery and Reinvestment Act, U.S. GDP could have been up to 2.5 percent lower. By the third quarter of 2011, CBO estimated that ARRA saved up to 2.5 million jobs and reduced the unemployment rate by 1.3 percent. As former McCain economic adviser Mark Zandi put it last year, federal intervention prevented "Depression 2.0."

To be sure, trillions in lost economic growth, persistently high unemployment and consumer spending stuck at 2006 levels are nothing to write home about. But British Prime Minister David Cameron would take U.S. economic performance in a heartbeat.

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Can you teach a dog to fly? Not a chance, but when a tea party politician asks questions about Keynesian economics, you can at least present him with the wings of knowledge to help them take off. It's a basic principle of Keynes, that in times of economic depression, government spending is required to help stimulate the economy. Since tea party freshman, Rep. Tim Huelskamp (R-KS) is an anti-government zealot, he rejects already proven facts because his ideology requires him to bow down to conservative pressure that says government is the enemy. The CBO's Doug Elmendorf was questioned by Huelskamp about this very issue and what arises from it is a teaching moment.

Brian Beutler:

Rep. Tim Huelskamp (R-KS), a tea party-backed freshman who voted against the final debt limit bill, recently asked to hear from the Congressional Budget Office about the impact of government spending on economic growth. It's an article of faith on the right that vastly shrinking government will unleash the forces of private enterprise, and faced with CBO's opposing view, Huelskamp wanted to know the answer to two questions:

1). What current federal departments, agencies, programs, or portions thereof do not contribute to economic growth?

2). In the programs that CBO believes do contribute to economic growth, what level of spending cuts would amount to a level you believe would be significant enough to "probably slow the economic recovery"?

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The CBO proves the only reason America should have a deficit problem is if Conservatives want one.

Ezra Klein:

The Congressional Budget Office just released the latest edition of its long-term budget outlook (pdf), and it shows the same thing as always: If Congress lets the Bush tax cuts expire or offsets their extension, implements the Affordable Care Act as scheduled and makes or offset the Medicare cuts prescribed by the 1997 Balanced Budget Act — which CBO calls the “extended baseline scenario” — the national debt will be totally manageable. If Congress passes laws extending the Bush tax cuts without offsetting the cost, repealing the Affordable Care Act and its cost controls and protecting doctors from Medicare cuts without making up the savings elsewhere — the “alternative fiscal scenario” — the national debt will be totally out of control:

Or, if Politicians want a deficit they will get one. We can now say to the Villagers that if you guys want to have a serious and adult conversation about our deficit then tax increases for the rich are off the table and all the talk deficit fearmongering for months has been total garbage.

Hullabaloo

In other words there is no long term debt crisis unless the politicians decide to create one. Everything's already in place to keep it perfectly under control. So why are we talking about it?

I don't think there's any better evidence that this deficit fever is nothing more than a disaster capitalist boondoggle. The wealthy elites and their nihilist ideologue allies in both parties are flogging this debt crisis in order to enact favorable legislation and fill out their long term wish list. That they are doing it under a Democratic administration just makes it sweeter.

The new CBO scores are out on the health-care bill, with good news for Democrats. The overall cost of health-care reform is estimated at $940 billion, but when compared to savings, the net deficit reduction in the first ten years is $130 billion, with an estimated $1.2 trillion saved in the second ten.

More significantly, CBO estimates that Medicare spending will drop by 1.4% per year, an estimated 32 million people will be covered, and would extend Medicare's solvency by an additional 10 years.

Based on the specifics in the report (PDF), it appears that the "Cadillac Tax" is effective in 2018, but it's not clear what limits will be used to determine the premium threshold, Louisiana Medicaid funding remains intact, but the Nebraska subsidies have been removed.

Republicans are in a bit of a bind now. Democrats can rightly characterize this legislation as a landmark "deficit reduction act" which also happens to extend health insurance coverage to 32 million people. That leaves Republicans having to argue against extending coverage to 32 million uninsured while strongly regulating private insurers, and saving money at the same time.

For the moment, it appears they are in a deep state of denial. Meanwhile, the SEIU has endorsed the bill, and an AFL-CIO endorsement is pending.

Either way, it's a win for Democrats, and it looks like they'll head toward a Sunday vote.

With its estimate Tuesday that the $787 billion Obama stimulus package created up to 2.1 million jobs in the last quarter of 2009, the Congressional Budget Office (CBO) joined in the near-unanimous chorus of voices proclaiming the package's success. Of course, it wasn't just the overwhelming consensus of economists which concurred that the stimulus saved or created about two million jobs while adding over three percentage points to U.S. gross domestic product. As the Washington Times, the Wall Street Journal, Bloomberg and ThinkProgress all documented, the hypocritical groveling of Republican Congressmen for stimulus dollars they opposed only served the validate that the recovery package was good public policy.

Echoing Obama administration claims that the American Recovery and Reinvestment Act (ARRA) produced a net of between 1.5 and 2.0 million jobs for the economy, the CBO estimated that the economic stimulus law added between 1 million to 2.1 million workers to employment rolls by the end of last year. As ABC noted, the Recovery Act "also boosted the country's economic growth by 1.5 to 3.5 percent during the time period and lowered the nation's unemployment rate by between 0.5 and 1.1 percentage points."

And going forward, the CBO forecasts, the picture is brighter still:

CBO projects that the stimulus measure to have a greater impact this year, boosting gross domestic product by 1.4 to 4 percentage points and lowering the unemployment rate by 0.7 to 1.8 percentage points.

Just as important for policymakers, CBO Director Douglas Elmendorf shed some light on which aspects of the stimulus bills gave taxpayers the biggest bang for the buck. As most Democrats argued, federal spending on goods and services, transfers to state and local governments for infrastructure and other aid, and unemployment benefits delivered the highest estimated "multipliers." Tax cuts, especially for wealthy Americans and corporations, yielded the smallest returns.

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