Mitch Daniels, deficit peacock (peddling "supply-side snake oil")

[ProSense]

Mitch Daniels, deficit peacock

by Andrew Fieldhouse

In issuing the Republican rebuttal to the State of the Union address, Indiana Gov. Mitch Daniels had the audacity to present himself as a fiscal conservative and lecture President Obama on economic policy. Daniels presenting himself as a fiscal conservative is farcical: The tax cuts he pushed through for President George W. Bush as director of the Office of Management and Budget (OMB) are responsible for roughly half of today’s structural budget deficit and half the public debt accumulated last decade. And as expensive as they were, those tax cuts failed to spur even mediocre job growth; Daniels and Bush presided over the weakest economic expansion since World War II, leaving Daniels with a dismal legacy as an economic policymaker.

Daniels ran OMB from Jan. 2001 to June 2003; during his tenure, he helped craft the 2001 and 2003 Bush tax cuts. (Later tax acts accelerated implementation of some of these tax cuts, but this is when the real fiscal malfeasance occurred.) When Daniels took charge of OMB, the Congressional Budget Office (CBO) was projecting a $5.0 trillion (4.0 percent of GDP) budget surplus over the next decade. When he left office, CBO was projecting a $1.4 trillion (-1.0 percent of GDP) budget deficit over the next decade. Roughly $4.8 trillion of the fiscal deterioration resulted from legislation enacted over 2001-2003; the tax cuts alone added $2.6 trillion to the public debt over 2001-2010. (The other major drivers of this fiscal deterioration were the wars in Afghanistan and Iraq, which Daniels didn’t bother to pay for or even put on budget.) The 2001 recession certainly contributed to the emerging deficits—just as half of this year’s deficit can be chalked up to economic weakness—but the Bush administration’s economic policies ensured a mediocre economic recovery.

Though this supply-side snake oil was peddled as economic stimulus, the Bush-era tax cuts failed every test of good stimulus: They were gradually phased-in, they were targeted to upper-income households likely to save rather than spend, and they were intended to be permanent. Better economic policy could have alleviated the ensuing ‘jobless recovery.’

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Michael Linden of the Center for American Progress coined the phrase “deficit peacock” for self-purported deficit hawks interested in attention but uninterested in fiscal responsibility. Paraphrasing Linden’s birding guide, these deficit peacocks: 1) Never mention revenues; 2) Offer easy answers; 3) Support policies that make the long-term deficit problem worse; and 4) Think our budget woes appeared suddenly in January 2009. This summarizes Daniels to a tee. For him to lecture President Obama on fiscal responsibility is shameful.

http://www.epi.org/blog/mitch-daniels-deficit-peacock/

That's one of the best smackdowns I've read in a long time.

[ProSense]

1. Kick

for countering Republican drivel!