Good News: Obama Renounes PAYGO During Recession

by: Matt Stoller

Wed Oct 15, 2008 at 23:58

Tucked into tonight's debate was a little noticed statement from Obama about fiscal responsibility and what he'll have to cut.  He talked about how the country needs to live within its means and so he supports PAYGO, but importantly, also said we'll have to get back to that after we get through these rough economic times.  I don't have the exact quote but it's very good news that he supports a Keynesian stimulus, and hopefully he'll be able to bring the Blue Dogs along.  They want to renounce the stupid PAYGO rules, because making all policy revenue neutral prevents obviously good investment choices like bonding out government revenues to build mass transit, new energy systems, etc.

The first discussion of any import within the new Democratic caucus will take place on November 17, when the caucus decides the rules they will vote on in January.  Those rules may include PAYGO or they may not; hopefully if they do include PAGYO there will be exceptions for investment activities that will eventually produce revenue.  Good news, tonight.  I didn't like the embrace of clean coal or Obama's stepping on progressive interest group aims as he did with charter schools and tort reform, but then, that's been consistent with his platform all along.

... Adam B. has the specific quotes in the comments.

Matt Stoller :: Good News: Obama Renounes PAYGO During Recession

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A critical step (4.00 / 3)
for Democrats to take is to recognize the difference between spending and investments.  In financial terms investments have positive cash flows.

Things like investments in education and energy should NOT be considered as simple expenses.  

The biggest fight Progressives will have is avoiding the deficit argument.  The answer is twofold:
*Cut defense spending
*Classify some spending as investments

Same point about healthcare (4.00 / 2)
Obama made the same point about healthcare -- that investing in better coverage now saves money in the future. Really, I think one could probably frame all his spending priorities (education, health care, and energy) as investments in America. What is more patriotic than that? If anyone can sell it to the public, it is Obama -- let's just hope he is aiming high, and push him to aim even higher.

[ Parent ]
The only time paygo even exists (0.00 / 0)
is when there is a Democrat in the WH.  Then all of a sudden, there's a budget.  Republicans and their deficits on the other hand haven't been concerned with paying the bill one bit. If BlueDogs and other Democrats jump on the paygo bandwagon now, would be just one more vivid example of why we need better Democrats.  

[ Parent ]
I noticed that as well (4.00 / 3)
I wasn't entirely convinced, but that did seem to be the gist of what he is saying.

It is also an awesome way to frame big energy and healthcare proposals - by convincing voters and legislators that they need to be part of an immediate economic recovery plan, regardless of cost. Balanced budgets can be back on the table once the economy stops failing.  

"Don't hate the media, become the media" -Jello Biafra

This Isn't New (4.00 / 1)
I don't have the link for it, but I've heard this before.

Goolsbee said as much on NPR, this morning, for example.  But I think Obama's said it directly as well.

Still, very good to have it said in such a high profile venue.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

FDR faced the same dilemma (4.00 / 1)
In 1932 he campaigned against Hoover's spending and promised balanced budgets. When he took office he intended to do that.

But Frances Perkins convinced him of the idiocy of such a move, and instead got him to maneuver around his pledge by declaring he would run "emergency deficits."

And When He Tried Trimming Them To Balance The Budget--He Got A Massive Recession (4.00 / 2)
In '37-'38.  It was only after that that his advisors really discovered Keynes.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
here's what I've got (via NYT) (0.00 / 0)
What I want to emphasize, though, is that I have been a strong proponent of pay-as-you-go. Every dollar that I've proposed, I've proposed an additional cut so that it matches.

And some of the cuts, just to give you an example, we spend $15 billion a year on subsidies to insurance companies. It doesn't -- under the Medicare plan -- it doesn't help seniors get any better. It's not improving our health care system. It's just a giveaway.

We need to eliminate a whole host of programs that don't work. And I want to go through the federal budget line by line, page by page, programs that don't work, we should cut. Programs that we need, we should make them work better.

Now, what is true is that Senator McCain and I have a difference in terms of the need to invest in America and the American people. I mentioned health care earlier.

If we make investments now so that people have coverage, that we are preventing diseases, that will save on Medicare and Medicaid in the future.

If we invest in a serious energy policy, that will save in the amount of money we're borrowing from China to send to Saudi Arabia.

If we invest now in our young people and their ability to go to college, that will allow them to drive this economy into the 21st century.

But what is absolutely true is that, once we get through this economic crisis and some of the specific proposals to get us out of this slump, that we're not going to be able to go back to our profligate ways.

In all honesty (0.00 / 0)
we will never get through this crisis to balanced budgets because if the crisis is defined as the "threat of a downturn" then the government can never withdraw 500+ billion in deficit spending in a 14 trillion dollar economy without causing a sizable downturn.

But honesty is in short supply when it comes to the economy.

[ Parent ]
I'll be Honest (4.00 / 2)
I REALLY don't think Obama came off as a major centrist tonight. Yes, he triangulated on tort reform and charter schools, but who are we kidding? These are currently unimportant issues that will not be at the forefront of the minds at congress. The things at the front, which will thus be the highest on the priority list of bills are things such as Health Care, Tax Code, Spending and Budgets, and Trade. For these, Obama in unequivocal terms endorsed:

Universal Health Care (you can argue over how universal his plan will be, but he is endorsing giving everyone a right to coverage, a ban on pre-existing condition bias, and lowering costs, which are basically the main goals for all proponents of National Health Care)

Fair Trade (opening up trade borders with emphasis on environmental and labor rights on both sides of the border)

Progressive Taxation (raising taxes on the 5% wealthiest of America to pay for a tax cut stimulus for the middle and working class)

Keynesian Fiscal Spending (as Matt has pointed out, key investments in infrastructure in order to revitalize our economy, especially in regards to energy independence through green initiatives)

Did he triangulate on charter schools and tort reform? Yes, and I wish he hadn't, but these are not issues which are likely to come up in congress with a massive recession looming. In fact, in regards to what he is proposing, he wants to implement bankruptcy reform (to undo, ironically, the acts of his VP) and increase education to public schools, and will implement them long before he implements the others. On the whole, I think he did a good job articulating key Progressive principles tonight, and despite the few minor examples (which won't be implemented or likely even discussed in the next few years), I don't seem to be as disappointed as some others.

Former Edwards Supporter, Obama Supporter since January 30, 2008

I disagree that charter schools aren't progressive (4.00 / 3)
I wouldn't say that charter schools are progressive or not progressive. It just depends on the rules under which they are started and operated. Vouchers on the other hand...blech.

I went to a charter school started by a bunch of hippies. Jared Polis, the incoming Democratic Congressman from Colorado's 2nd CD is a huge charter proponent, having founded a few himself.

Charter schools can be a great way to reach students who are under-served by the cookie-cutter approach of public school systems. For some, like Jared's students, they might need extra help to learn English while having a flexible schedule so they can have jobs while going to school. For others, like me, regular schools don't allow the freedom to excel in certain subjects while maintaining grade level in others.

Other charter schools have been founded based on ideology or as an escape hatch for students in lousy districts (rather than fixing the districts). That would be bad. It's all in how they are approached, managed, and regulated.

I have seen the same thing in Florida (0.00 / 0)
My daughter went to a GREAT charter school in Tampa for a while.

Florida public schools are terrible, and Tampa schools are even worse.  Had it not been for the Charter School, I would have pulled her from the public system.  

[ Parent ]

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