WSJ on Debt Crisis: Reject Reality

July 28th, 2011 at 10:37 am David Frum | 115 Comments |

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I used to write editorials for the Wall Street Journal myself, 20 years ago now.

So I’m well aware of the challenge faced by those assigned to compose these documents. The strict demands of the paper’s ideology do not always lie smoothly over the rocky outcroppings of reality. It can take considerable skill to match the two together.

In that regard, this morning’s lead editorial about the debt-ceiling crisis is a true masterpiece.

If you were to write a story about government debt, you’d probably be inclined to write about the two sets of government decisions that produce deficits or surpluses: decisions about expenditure and decisions about revenue. You’d want to do that not only as a matter of fairness, but also as a matter of math.

And that’s why, my friend, you would wash out as a WSJ editorialist. They wrote this editorial without any reference to revenues whatsoever.  Boom! Gone! Don’t deny reality. Defy reality.

(I should say: the Journal does allow itself one passing reference to revenues at the very end of the piece, when having disregarded the big tax cuts of 2001, 2003, 2008, 2009 and 2010, it warns of future increases in tax rates possibly all the way up to 80% unless the Democrats mend their ways.)

One of the many traps and impediments facing a Journal editorialist writing about debt is that up until 2009, the US debt burden rose most under the two presidents the Journal most ardently supported: Ronald Reagan and George W. Bush. The debt burden declined most under the presidents the Journal most despises – Dwight Eisenhower, Bill Clinton and Jimmy Carter.

How to deal with this troubling problem? It must have taken some searching, but the Journal managed to find a chart vaguely relating to debt that went up under Clinton and stayed flat under Bush. They chose chart 11.1 from the historical tables of the Offices of Management and Budget. (That’s more information by the way than the Journal included – I guess they wanted to enhance the treasure-hunting fun of those curious to check their work.)

You can see the original of the chart here: “Summary Comparison of Outlays for Payments to Individuals, 1940-2016, as percentage of Total Outlays.”

What’s so great about this chart is that it excludes two of the biggest federal spending programs: Medicare Part B and Medicaid, both of whose costs rose faster in the Bush 2000s than in the Clinton 1990s. Isn’t that ingenious? Would you ever have thought of doing that? Again – that’s why you would wash out. This is not a job for just anyone.

But maybe my favorite bit of the editorial is the solemn warning at the end that unless the US corrects its course, it may follow in the wake of Greece. The Greek crisis, as almost every economist published on the Journal oped page would acknowledge, is the product of the collision of heavy Greek borrowing against the hard constraint of the Euro currency. And guess which US newspaper was the most passionate advocate of the Euro currency? Guess which paper wants the US to be tied to some basket of commodities all the better to inflict Greek-like crises on Americans?

No, no, I wont answer. Like the Journal’s editorialist, I’ll follow the motto: the less said, the better.

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115 Comments so far ↓

  • jjv

    Counting the extension of the Bush tax cuts under Obama-that were only sunsetted because of arcane budget rules-as a massive tax cut is simply wrong. Taxes would have gone up if no action was taken. Action was taken to keep them the same. That is not a massive tax cut. And let us also look at revenues. Did they massively increase or decrease under Reagan and Bush? Massive increases in revenue but huge spending. Finally, Ronald Reagan’s chief spending was on a military build up that beat our main foe and gave us the “peace dividend” that Clinton could feast upon. Jimmy Carter had the end of the Vietnam war and a gutting of the military. Running up debt to end the Soviet Union (or hasten its end if you are so inclined) is well worth it. If you think-as you do-Afghanistan and Iraq were worth it the same is true of GWB. How much tax revenue was saved by avoiding the recession that was coming absent the Bush tax cuts? Finally, the charts on Clinton before the Republican Congress are not so good.

    • Nanotek

      aahhh … the villagers

      • balconesfault

        An interesting twist.

        Assume that military spending drops over the next few years thanks to withdrawal from Iraq and Afghanistan. Assume for a moment that somehow government was made to be “more efficient” and costs of running the Federal Bureaucracy dropped significantly.

        Entitlement costs, of course, are fixed, or at least tied to economic conditions. Let’s say they stay the same.

        What happens with the WSJ Graph? Why … it jumps some more! Since the military and bureaucratic spending dropped, keeping entitlements the same (or even cutting them a little) would still result in the line jumping upwards.

        The reason the line flattened during the Bush administration had nothing to do with cutting entitlements … but rather just with spending a buttload of money on war.

        In short, it’s a silly piece of trivia at best, and intentionally deceitful propoganda at worst … perhaps of value to jjv, but meaningless to those who want to engage in a serious budget discussion.

    • Elvis Elvisberg

      “the Bush tax cuts under Obama-that were only sunsetted because of arcane budget rules”

      So… you don’t care about the cost, because of the manner of their enactment ten years ago? That makes literally no sense. Who gives a hoot whether the rate changes are categorized as a tax cut or not, the question is, “what is the effect of that policy on revenues?” And the answer is, “it’s enormous.”

      [img]http://www.cbpp.org/images/cms//5-10-11bud-f1.jpg[/img]

      (The two main reasons they were sunsetted, in reality, were (1) like the ACA, they were passed under majority vote in the Senate, and (2) Republicans wanted to lie about their long-term cost. Republicans like jjv always intended for the rate changes to become permanent, but by pretending they were only for 10 years, they could understate their cost).

  • zephae

    I really liked this piece, especially the great chart you pulled out that I would normally expect to see from TerryF98, Watusie, or LFC. Excellent piece.

    • Watusie

      Apparently Frum has decided that this whole “chart” thing is such a great way to illustrate points that he is reserving it for himself alone – us lowly commentators no longer get to post charts.

      • armstp

        Wat,

        They likely cut the charts out because you were beating them over the head too much with them. They don’t much like facts.

    • medinnus

      Actually, my takeaway from the article is a lesson that Quisling de-louse-sional village idiot tool of the Tea Baggers JimJoeCrotchLickingBob already taught us – look hard enough, and you can find a chart that lies to support your idiot contentions.

  • Nanotek

    “The strict demands of the paper’s ideology do not always lie smoothly over the rocky outcroppings of reality.”

    When DF engages warp drive, there’s no one like him.

    Thanks. I struggle to grasp fiscal/economic discussions normally but this made perfect sense quickly.

  • balconesfault

    It must be hard seeing all the previous bastions of conservative media being turned into propoganda mills with no intention of accurately portraying reality.

    It would be as if the New York Times were suddenly publishing pieces calling for the public confiscation of all estates greater than $10 million in value and nationalization of the oil companies.

    The sad thing is that confirmation bias runs so deep in those who read or listen to any Murdoch-owned media … that they mostly already believe that the NYT is publishing pieces calling for the public confiscation of all estates greater than $10 million in value and nationalization of the oil companies.

  • dante

    I read WSJ for the lolz, and troll on there when I want to point out the hypocrisy of the current “fiscal conservatives”. Here’s my point (on spending cuts and tax increases):

    Both decrease the deficit. Both are unpopular. We need to trim our massive military, our corporate and farm subsidies, and reform our entitlement programs, BUT we also need more revenue. We need to be responsible and all pitch in to help. During WWII we raised taxes on everyone, and it was patriotic to buy war bonds. Today people are fighting to keep their hedge-fund tax rates and their mortgage interest deduction on their million-dollar vacation homes. It’s SICK and depressing to think that we as a country have fallen so far.

  • Rokker

    Ideologues always exist in self-supporting realities.

  • Primrose

    I wanted to throw an idea out there Mr. Frum that the likely economic problems that will stem from a default is the point of this crisis. Some operatives have concluded, as you have, that the state of the economy will make or break Mr. Obama’s re-election. Their answer (unlike yourself) is not to fix the economy but to break it during election time. Thus, we default and the economy spirals down, interest rates go up, housing (weak already collapses) and Mr. Obama can’t be elected.

    This is wildly cynical, almost to the point of conspiracy but what is going on is so crazy, so lacking in reason, and backed even by unsentimental political folks that I can’t help but there is a subtext we are all missing.

    • balconesfault

      This is wildly cynical, almost to the point of conspiracy

      “our top political priority over the next two years should be to deny President Obama a second term in office”
      Mitch McConnell

      What’s the old quote?

      Just because you’re not paranoid doesn’t mean they’re not out to get you …

      • FSC

        The actual, slightly more amusing way to put it is: “Just because you’re paranoid, doesn’t mean they’re not out to get you.”

        In any case, very appropriate.

        • balconesfault

          I think where the term “conspiracy” fails is that by definition conspiracies are inherently secret or surreptitious.

          In this case … the Republicans have been very forthcoming in declaring what their primary intentions are. It’s just rather amazing that people aren’t taking them at face value.

        • Primrose

          Fair enough point.

  • TAZ

    Ahhhhhh, Intellectual Honesty.

    Its like a cool breeze on a scorchingly hot day.

    Wish it blew in Washington too.

  • Steve D

    The really dishonest thing about both charts in the article, and it’s a fundamental technique of lying with statistics, is that the charts don’t start at zero. The chart reproduced here makes it look like payments to individuals were near zero in 1965 and have increased astronomically (well, they have, but not quite like the chart suggests). To get a true picture, measure the interval from 25 to 50 per cent and then draw a line that far below the bottom of the chart. (Is the WSJ so cash strapped they can’t afford a column inch or two for accurate graphing?) The really rapid ramp-up is the Great Society of LBJ.

  • adavid

    I cancelled my subscriptions to Baron’s and the WSJ when they were acquired by Murdoch. I have not regretted it.

    • Cforchange

      Me too for the WSJ. There was a time when business journals were pertinent to America and American business. Then we went global. Then the banks became too big to audit. Voila, here we are with a fully developed mess.

      Something just isn’t right when hedging against our success is the ultimate mode of investment.

  • andydp

    Know how Medicare Part D is prohibited from negotiating drug costs like VA and all 50 states do ? Estimates are the US could save $ 24 billion a year.

    Tuesday, the WSJ carried an op ed piece that equaled/compared negotiating drug costs to “Price Controls”. Can you think of a better spin ?

    • LFC

      Don’t forget Billy Tauzin (former R-LA) who pushed through the provision that prevented Medicare (i.e. “us”) from negotiating drug prices. After the bill passed he went on to lead the drug industry lobbying group PhRMA for big bucks. Nice for somebody to f*** the entire country and then cash in, eh?

    • Banty

      Wow, I thought negotiating was part of a free market. Who knew?

      As an aside, we have a true-blue (well, OK, true-red) Tea Partier on our block, Gadsden flag flying and everything. He one of those guys who bother the Town Board about this, the sheriff about that. One of his bugaboos is how some businesses close to the local high school rent out extra parking spaces to students who aren’t seniors, or who didn’t get the lotteried student parking spots set aside for seniors. I don’t get it. (There’s no obstruction or other issue as far as can be determined.) Renting out parts of private property to fill a demand. Thought that was – a free market in action.

      • armstp

        Bany,

        I have a guy flying the Tea Bag flag on his front lawn near me. I real redneck with his NASCAR flags as well. The other day I saw hispanics cutting his law and tending to his garden. The hispanics who do landscaping in my area all tend to be illegals. I think that Tea Baggers is likely a total hypocrite, given I am sure he rails against illegals. Isn’t it always the case.

        I also had a 60 year old women just yesterday on another website get into it with her typical Tea Bagger BS of railing against government and Obama. Her big statement was that she would soon have to buy her own health insurance and did not have a problem doing it, as her COBRA was about to run out. I said to her that did she not know that COBRA is a government program and that in fact Obama increased your benefits through COBRA through the stimulus bill? Her reply was that she had to go clean bed pans.

        It is non-stop with these morons.

        There is also a garden center near where I live where I usually spend between $1,000 and $1,500 a year. This year he put up his Tea Bag flag and I have spent zero dollars there.

  • LFC

    David pointed out the deficit as pct of GDP. Using that metric, Barack Obama’s figures look bad today because the Bush years caused both a cratering of revenue and created large amounts of new spending.

    But since “spending” is viewed by the right-wing as the problem, let’s look at a graph that shows spending in constant dollars. Note the flattening that occurred under Clinton and started with the Democratic Congress (it did NOT start with the GOP controlled Congress as they’d have you believe). Also notice the spike in revenues. The combination brought about a balanced budget. Now look at the spending spike that occurred under GW and the GOP controlled Congress, coupled with a collapse of revenue. Revenue went back up due to a carefully nurture real estate and derivatives bubble, but once that unsustainable fantasy collapsed we’re back to too little revenue today. It’s all there to see for people who can read a graph (i.e. JimBob need not apply).

    http://www.marktaw.com/culture_and_media/TheNationalDebtImages/ReceiptsOutlaysFY2000.gif

  • sparse

    jjv:
    “Finally, Ronald Reagan’s chief spending was on a military build up that beat our main foe and gave us the “peace dividend” that Clinton could feast upon. Jimmy Carter had the end of the Vietnam war and a gutting of the military. Running up debt to end the Soviet Union (or hasten its end if you are so inclined) is well worth it. If you think-as you do-Afghanistan and Iraq were worth it the same is true of GWB.”

    this, plus the charts frum provides, make it pretty clear to me that the debts and deficits we have are about military spending. entitlement spending does not shift so radically from administration to administration as military spending does. that’s the real variable, that’s the real driver of our fiscal problems.

    and here’s the thing- it is not at all clear to me what we have gotten from all this spending. vietnam? anything to show for that? nope. they went communist anyway, and the sky did not fall. reagan buildup? experts now say that the soviet union would have fallen anyway, even if we had not spent all that wealth (sorry, jjv). iraq and afghanistan? i’m just not seeing the payoff, in fact, the renewed instability and emboldening of iran and syria are quite worrisome. getting punked by pakistan to the tune of billions a year? not very cost-effective.

    military spending distorts markets every bit as much as welfare. and we have poured trillions into it and are not safer, and the business interests we managed to advance through this projection of power are not returning the favor. imagine the outrage if a tuition assistance program paid for americans to get a college education, but then half of them turned around and moved overseas, taking their tax dollars with them?

    apologies for the off-topic rant. it’s just that i am so reminded of conversations i have had with people who are really struggling paying their bills, every month they are fifty bucks behind and so can’t afford healthy food. but every day they buy a pack of cigarettes.

  • midwest guy

    The formerly respectable journal has become a political tool. This is a sad and serious development, as there are very few remaining sources of genuinely unbiased information.

    • Banty

      Thank you very much, Rupert Murdoch.

    • balconesfault

      as there are very few remaining sources of genuinely unbiased information.

      I don’t believe it’s possible to be truly unbiased. So I don’t expect it, and I’m more worried about media who professes or aspires to being truly unbiased. For example, just about every great piece of investigatory journalism has a bias in a sense … a bias that pursuing a particular kind of corruption is more important than exposing others.

      The problem as I see it is when bias becomes wholly partisan, to where you laud your side for positions or actions that you deride the other side for … and to where you’re willing to do your best job to intentionally distort the information you’re disseminating to support your side.

      As Frum points out, it’s hard to believe that the WSJ editor really believed the graph he chose was the best tool for discussing growth of the debt. One would have to be an economic moron to think that was the best tool.

      Imagine my uncle owned a restaurant in town, and a visitor asked me where’s a good place to eat. I’d say my uncles place is a great place … that’s bias. I might say my uncle’s place is the best place … that’s still bias. And frankly I have no problem with that.

      But if I start making up stories about how other restaurants have been cited for non-existent health violations, or claiming that the beef served in another restaurant (that comes from the same place my uncle buys his beef) is substandard, or falsely telling him that a certain place he’d heard of went out of business – that’s no longer bias.

      That’s what Murdoch media does. They’re not biased – they’re partisans, and they have no interest in the truth, no intention whatsoever of divulging exculpatory details about their foes, or about telling damning evidence about their friends. They are propaganda … and they’ve taken the formerly staunchly conservative WSJ and made it a propaganda mill (sadly carrying over to the newsroom at the WSJ, which previously had maintained a respectable distance from it’s hard-right leaning editorial page).

      • Primrose

        Interesting distinction balconesfault between being bias and partisan. I think it is a useful one.

  • Banty

    Bravo, David Frum.

    Amazing how payments to individuals as a percentage of outlays becomes a Bad Thing. Oh, yeah, socialist redistribution. Looking at what payments to individuals were excluded, it seems that’s bad unless Republicans do it …

  • JimBob

    Frum, the editorials you wrote for the Wall Street Journal talked about hacking up Medicare I seem to remember. That’s when you actually knew what you were talking about.

    Medicare alone has a 25 trillion unfunded liability

    By the Numbers: 2011 Medicare Trustees Report

    http://waysandmeans.house.gov/News/DocumentSingle.aspx?DocumentID=247999

    Yes, the entitlement state is taking the country over the cliff. Anyone with a lick of sense knows the government has made promises it can’t possibly keep. It is called Medical Technology!! The rest of the world will not lend us the money to continue down this path.

    “The Greek crisis, as almost every economist published on the Journal oped page would acknowledge, is the product of the collision of heavy Greek borrowing against the hard constraint of the Euro currency. And guess which US newspaper was the most passionate advocate of the Euro currency? Guess which paper wants the US to be tied to some basket of commodities all the better to inflict Greek-like crises on Americans?”

    In Frum’s world Greece would just print the money. Push a button and just like that the problem is solved.

    Bottom line, Frum has become a bigger hack than he already was.

    Just a reminder, when Nixon closed the gold window our debt was 400 billion. Now we borrow 4 billion a day from countries that don’t have our best interests at heart.

    http://www.youtube.com/watch?feature=player_embedded&v=RvL_Dm2d99A

    • balconesfault

      JimBob

      My guess is that your life represents at least a few hundred thousand dollar unfunded liability.

      Now, we can all assume that in the future you’ll earn enough to fund that liability … but unless you have enough $$ in the bank today to cover every meal you’ll eat, ever roof that will ever be over your head, every gallon of gas you’ll drive in every car you’ll buy, every doctors visit and band aid and tube of toothpaste … that portion of your future existence is unfunded.

      Should we terminate you? Naaahhhh ….

      • JimBob

        No, I will not be using medicare. And I shouldn’t get it anyway.

        • balconesfault

          You entirely missed the point.

          Medicare is currently “a 25 trillion unfunded liability” in the way that the rest of your life is unfunded, unless you already have all the money in the bank needed to pay for everything you’ll need to pay for from here out.

          If you actually assume that you’ll have some income going forward … as honest economists assume when talking about Medicare and Social Security … the numbers change substantially.

        • Sinan

          I love it when I see intelligence in a debate. I have said the same thing about all these unfunded liabilities the right keeps spewing out like Cassandras. My little girl has an unfunded liability of about 3-6 million at least. That is likely what she will need to live on for the next 50 years. Where o where can she get that dough? She should start right now saving money and cutting costs. Never mention to her that all she has to do is get a great education, get a great job and make more money ie. TAXES

        • JimBob

          No I didn’t miss the point. I have all the money I’ll ever need. I will not need Medicare or Social Security. End of story. And as more and more boomers retire that unfunded liability will be growing by the year.

        • Banty

          ::::whooosh::::: over JimBob’s head

        • JimBob

          Wrong idiot. Another graduate of the school for blithering idiots.

        • Steve D

          Hey, if we take it to the Year 3000, we’re on the hook for quadrillions. And if we go out to when the Sun goes red giant, sextillions or more.

          Also, more than seven billion people will die by the year 2100! EVERYBODY PANIC!

          Another freak-out is that the money in the Social Security Fund is only IOU’s. Guess what. Unless you have a huge grain silo and petroleum tank on your property, ALL your wealth is IOU’s. You have to trust the bank or your IRA will convert those bytes into dollars, then you have to trust that someone will accept those intrinsically worthless pieces of paper for real goods. Watch any post-apocalyptic movie to see what happens when that social contract collapses. (I’m not stockpiling guns and ammo. If it ever gets that bad I’ll just ambush a survivalist and take his stuff.)

        • indy

          Jimmy boy,

          There’s an old saying in regard to a person with multiple divorces: ‘After two it’s probably you.’ I think we can generalize it a bit, and say that after several hundred people tell you that you are ignorant, you probably are.

        • JimBob

          Lets have a debate kid. Lets do it fool!!

        • Sinan

          Apparently Jim has enough dough for the rest of his life right now so his asset base is a dwindling resource for him and his family. His biggest problem now is to somehow make it grow at the same rate as he is depleting it. I am not sure if he thinks that 330 million us can manage to pull this off but if he thinks that then he must have either missed the history of the world course or chose to ignore it. While we have no idea how much he has and what his burn rate is, everyone has a limit. I have a very good friend who has a very good business and up until last year, was rolling in dough. He was also a rabid tea partier. Then he got throat cancer. Now is is burning cash like a whore on crack. He is not so crazy about our medical system anymore either. I don’t want to pile on and ask him if he changed his mind because he is not long for this world. But deep down, my bet is he now understands he never did have enough dough and he never did really understand our health care system until he needed it.

    • LFC

      Let’s keep this to our structural debt today. Why? Because Social Security and Medicare added (-$30B) to the deficit in 2010. That means that we actually took in more than we put out, and yet we still have a $1T+ deficit.

      Entitlement reform is necessary for our long-term fiscal health, but first we have to get our current structural deficit spending in order. And that means reducing spending on defense, reducing discretionary spending, AND raising revenue. The easiest move that will have the most impact is to let the budget busting Bush tax cuts expire. They failed at every goal Bush said they would achieve. Time to let them die. All of them, not just on “the rich”.

      BTW, here is a great post and graphic to show how much health care money is wasted on paper work. It’s past time to standardize all paperwork. The fact that every private health insurance provider can (and does) have different forms and requirements is brutally inefficient.

      http://andrewsullivan.thedailybeast.com/2011/07/paperwork-is-making-healthcare-sick.html

      • JimBob

        2010 Budget

        Mandatory spending: $2.173 trillion
        $695 billion (+4.9%) – Social Security
        $571 billion (+58.6%) – Unemployment/Welfare/Other mandatory spending
        $453 billion (+6.6%) – Medicare
        $290 billion (+12.0%) – Medicaid
        $164 billion (+18.0%) – Interest on National Debt

        The total deficit for fiscal year 2009 was $1.42 trillion

        Discretionary spending $1.378 trillion

        So we borrow just to fund our Discretionary part of the budget.

        I agree we should get rid of the Departments of Education, Agriculture, Commerce, Energy, Veterans Affairs, and HUD. But that’ll never happen because the Black Middle class would be devestated since they make up such a large part of the workforce in those departments. Democrats aren’t going to layoff their voters. Hell most of the regulars here would lose their jobs. So Defense, Medicare, Medicaid, and Social Security is where the money is.

        So all you graduates of the School of Blithering Idiots, there aren’t enough rich people to make a dent in our debt. It is the Entitlement State that is driving our debt.

        • balconesfault

          I agree we should get rid of the Departments of Education, Agriculture, Commerce, Energy, Veterans Affairs, and HUD. But that’ll never happen because the Black Middle class would be devestated since they make up such a large part of the workforce in those departments.

          Yeah. That’s why we don’t get rid of Veterans Affairs. Because of the blacks.

        • Sinan

          Bingo. Scratch every single conservative deep enough and it comes to this simple basic concept. It’s all the fault of those black people. Thanks Jim for being honest with us.

        • Primrose

          Don’t cry foul when people call you a racist JimBob. You are.

          And an agricultural powerhouse like the US shouldn’t have a dept. of agriculture? A military power like ours shouldn’t concern ourselves with veterans? Not really honoring those who serve are you? A capitalist country shouldn’t have commerce?

          You seem to feel that America doesn’t stretch farther than your own small town. But actually, it does. We are a big, diverse country and that requires at least a modicum of organization.

  • balconesfault

  • Elvis Elvisberg

    [comment moved up to reply to the comment to which it was in reply, ie: http://www.frumforum.com/the-wsj-surpasses-itself/comment-page-1#comment-321197 ]

  • stillonmt

    The funny thing is that it is as if the editorial page authors never read the news pages. It is as if there are two ships passing in the night. The editorial page wants to be ignorant of the actual news.

  • jamesj

    My blood was pumping as I read this editorial earlier today. I am pleasantly surprised to find Mr. Frum giving it much-deserved criticism on this site and the Frum Twitter account.

    But when you look at the comments posted under the editorial on the WSJ website, your heart just sinks. Most of them support the article’s shoddy reasoning and dismiss without a second of thought any counter-narrative (even when the counter-narrative is completely accurate). It is disturbing that you can rile people up about deficits to this level while simultaneously having those same people ignorant of the overall nature of the issue. It is hard to tell whether we’re facing some innate flaw in human reasoning or a willful ignorance for emotional reasons. I don’t see any easy answer to the problem. As long as large chunks of the US population are easily stirred into populist rage we’ll continue to have problems like the current one.

  • JimBob

    “Medicare, the program for the elderly, was supposed to cost $12 billion by 1990 but instead spent $110 billion. The costs of Medicaid, the program for the poor, have exploded as politicians like California Democrat Henry Waxman expanded eligibility and coverage. In inflation-adjusted dollars, Medicaid cost $4 billion in 1966, $41 billion in 1986 and $243 billion last year. Rather than bending the cost curve down, the government as third-party payer led to a medical price spiral.”

    From the Wall Street Journal editorial. Reality hits the road.

    • balconesfault

      Jim – do you really believe, as you indicated earlier, that the amount of actuarial “unfunded liability” for Medicare and Social Security grows each time a “boomer” retires?

      Or in your words: “And as more and more boomers retire that unfunded liability will be growing by the year.”

      If so, you seem to be wholly ignorant of how the 25 trillion number that’s being bandied about was derived. For you to be so cocksure about something that you don’t understand is kind of sad …

    • Elvis Elvisberg

      Medicare does a better job controlling costs than private insurance.

      The US relies more on private insurance than any other developed nation.

      The US spends over twice as much per capita, for equal or worse outcomes, on health care than the OECD average.

      Obama didn’t push for a “Medicare for all” public option– and the GOP universally opposed it– even though studies indicate it would have saved billions.

      The problem with the long-term debt is the problem with Medicare is the problem with our health insurance system.

  • Houndentenor

    WSJ is just another Rupert Murdoch propaganda rag now.

  • chephren

    David Frum:

    I hope you send this rather devastating analysis to the WSJ in the form of a letter to the editor, if not as a rebuttal for their editorial page. This deserves wider circulation.

  • JimBob

    Sinan, you win the award for being the biggest idiot on this forum.

    • Sinan

      Hey JimBob. Thank you for that compliment. Whenever I get that type of response from a die hard conservative I know they have run out of juice and just given up. But do continue with your posting and self-examinations for the benefit of all of us. We encourage you to purge yourself of your biased views of liberals, blacks, Mexicans and all the other -icans you want to blame for this crisis. When you get through all the right wing scapegoats, try reading Frum’s article again. It may make you faint though.

    • Traveler

      No, you are fighting with SD and NH to win that kewpie doll. But that comment might have just won it for you. Your lack of basic economic understanding having failed you in any sort of reasoned response, you now resort to this 2nd grade ad hominem attack.

    • armstp

      Jimboooo,

      I thought I was the biggest idiot on FF? Come on, let me keep that from you at least.

  • adamcarralejo

    Fantastic article! best stuff i’ve seen from here in a while … good work, keep it up!

  • JimBob

    Babies and Dollars: Implications for USA, Russia, and the World

    http://www.eppc.org/publications/pubID.4522/pub_detail.asp

  • John Frodo

    Wow David soon you will be taking the morning briefing from Fidel with me.
    http://thinkingaboot.blogspot.com/2011/06/if-debt-is-so-bad-how-come.html

  • think4yourself

    @ Sparse: “this, plus the charts frum provides, make it pretty clear to me that the debts and deficits we have are about military spending. entitlement spending does not shift so radically from administration to administration as military spending does. that’s the real variable, that’s the real driver of our fiscal problems.”

    Sparse, I have to disagree that military spending is the driver of our debts and deficits, even though it is a part. Military spending is approximately 650B per year (more if you count Homeland Security, etc.) Add in the last ten years of war and related expenses and you can add about 100B per year to that. While that is a large part of our expense, providing for the common defense is the first reason for the existence of a Federal Gov’t. We can argue if we ought to be spending more than the next 14 countries combined for military. We can argue if it was right and proper to go to war in Iraq and Afghanistan and we can argue if those wars ought to be funded by a separate tax, but to blame our current debt and deficit entirely on the military would not be correct.

    We have about 14T in debt. Certainly much of the huge growth in the last 2 1/2 years was related to the recession in that it lowered tax reciepts to Federal and State Gov’ts AND it increased the gov’ts expenses in the form of unemployment insurance, increased medical expenses and cost of stimulus. Prior to that the explosion in debt under GW Bush was his ill-advised tax cuts, unfunded Medicare Part D, and of course war-related expenses. So yes, military is a part, but not the largest part.

    Frankly none of those are the important issues. Where entitlement comes into play is what happens over the next 30 years. Baby boomers just hitting 65. Given increasing lifespans, this group of 79 million Americans will likely partake of entitlement funding for 25 to 40 years. In 1935 when SS was enacted the average life expectancy was 66, so there was an average payout of 1 year. It is now 77 so average payout is 12 years. In 1935 as I recall it was 16 workers for every one beneficiary, now it is 3 workers for every one beneficiary and will get worse in the future. As bad as it is for SS, Medicare is worse. Cost containment efforts to date have failed and hard choices exist for the future. As an example, should “We the People” pay for someone who is 85 year’s old to have cataract surgery (that was a real question with my grandfather)? Or how about a liver transplant? We have been a country driven to have the best care possible, but perhaps that is not the best result possible. As an example, 2 years ago, my dad had a stroke that was not diagnosed for 4 hours. When he went to the hospital we asked for an MRI to assess the damage. The hospital refused because they said that it did not make a difference unless done within the first 4 hours. We were livid and felt mistreated – should the hospital changed their policy to make us feel better? These are the tough questions we need to address in the future.

    • Sinan

      Looks like you never met a defense budget that did not meet your criteria for saving our nation from some enemy or another. I wonder why the other nations of the world never seem to see as many enemies as we do? They certainly don’t spend anywhere near as much as we do defending themselves from all those horrible enemies out there. Could it be that they refuse to live in fear and do not run around scared to death whenever a nation decides to kick out a dictator and put in a socialist? I refuse to live in fear. I refuse to pay more than all the other nations combined just so someone like you can feel safer because we are armed to the teeth. We can decide that 200 billion a year is plenty enough money folks. All we have to do is stop living in fear of an enemy that does not exist.

      • Traveler

        I sure didn’t read Think’s post the way you did. He/she only pointed out the larger perspective, and that’s what we all should being paying attention to. Your focus on military outlays and enemies, while justified in many respects, is truly a minor part going forward (assuming that we get out of AF-Iraq soon). Not to mention, kind of irrelevant considering the terrorism of the right that is about to cost us as bad as the both wars ($100B per year).

        Got to keep your eye on the big picture dude. No point in squabbles like your post. Just makes you look petty.

        • Sinan

          I am old enough to have bought a copy of the 1976 defense budget when I was in college and being disgusted with the amount of money we spent even then. His argument is about as old as WW2. Ike knew this argument was going to be made and warned us. We do not need to spend this amount of money every year on killing machines. We have very few real enemies and because we have turned into a nation that would rather create jobs in markets dealing in death, we forgot how to do anything else. The ROW does not see the danger because it DOES NOT EXIST.

    • sparse

      think4yourself-
      “but to blame our current debt and deficit entirely on the military would not be correct” and it would not be the position i recall taking.

      i describe the military spending as the *driver* of the deficits/debt. obviously, any money we spend can be labelled “the problem,” but looking at the charts, the years during which we spent the most on the military are the years during which we went the most in debt.

      as to your point, that national defense is the first duty of government, i agree. that is clear, but it does not mean we need to spend more than the rest of the world combined to have an adequate defense.

      the figures: “Military spending is approximately 650B per year (more if you count Homeland Security, etc.) Add in the last ten years of war and related expenses and you can add about 100B per year to that.”

      yes, but then you have to also add another 100B that we spend on veterans of past wars, and if you are being really honest about it, assign a percentage of the debt service that covers the part of the debt that is represented by military spending. you are approaching or surpassing 900B per year at that rate to cover our total military expenditures.

      i think there is room to cut there without becoming total pacifists.

      but my main point was that we tend to see military spending as sacrosanct, as a case of “of course we do that”. it just seems crazy to me that we would spend any money on keeping a military base in guam while we cannot pay our bills at home.

  • booch221

    The WSJ is owned by the same guy who owns Fox News.

    Of course it’s unfair and unbalanced.

    What did you expect?

    • John Q

      Actually, the WSJ editorial page opinions were always absurdly right wing (although they did also offer columns by more sensible folk).

      Just look back to 1914, when the Journal attacked Henry Ford’s paying his workers $5 a day by calling his action “an economic blunder, if not a crime.”

      If you listen to Limbaugh or Hannity long enough, you’ll hear them encourage their listeners to get their information(?) from the propaganda outlets that they say are “on our side”, including The Washington Times, WorldnetDaily.com, and yes, the WSJ editorial page. ( I’ve heard almost the identical phraseology from each of them at different times.)

  • TerryF98

    It’s not just the WSJ that lies and spouts propaganda.

    The giant slug in front of a gold microphone said this today.

    “The revenue enhancement canard is a big deal to Democrats, so let’s address it. Let’s not lose the war of words here. The American people should know that there is not going to be any capitulation on the English language. A lie is a lie. Charts and graphs can prove that tax rates reductions enhance revenue. Tax cuts create revenue. Particularly in an economy like ours. A balanced approach would require tax cuts, the only proven way to raise revenue and create jobs. It’s a little late for this, perhaps an opportunity lost, but I’m throwing it out there anyway.

    Throw it out there. Put some tax rate reductions — you want to raise revenue? That’s how you do it. The Democrats are talking up raising revenue, raising revenue, revenue enhancements. Give it to them with tax cuts. Put it in there.”

    And I can just imagine all the RW tools that post here nodding along with him. Amazing.

  • TerryF98

    Breaking.

    Boehner delays bill, does not have votes. Chaos, ineptitude, could not organize a piss up in a brewery, incompetent. Got the first bill wrong by 50% and cant pass this POS. Laughing my ass off.

    Offered a $4 Trillion reduction by Obama, can’t pass one with less than a trillion in cuts.

    To paraphrase a famous quote, “Mr Speaker I knew Nancy Pelosi and you are no Nancy Pelosi”

    “WASHINGTON — House GOP leadership announced abruptly on Thursday evening that they were suspending a vote on Speaker John Boehner’s (R-Ohio) debt ceiling proposal, signaling in the process that the GOP lacked the votes to pass the package.

    The news came just minutes before party leadership was set to hold a 5:30 p.m. vote on the proposal, which would cut roughly $915 billion in spending over the next ten years but only raise the debt ceiling through the end of the calendar year. “

    • TerryF98

      WSJ Speaker Boehner is meeting with Republican “no” votes. Some say they won’t budge; others say they’ll pray on it.

      LOL.

      • sparse

        from the wsj:
        The latest naysayer is Rep. Tim Scott, (R., S.C.), who joined two colleagues in the House chapel, listening to Christian music on his iPad as he entered.

        “I think divine inspiration already happened,” Mr. Scott said. “I was a lean no. Now I’m a no.”

        so much for praying on it. how’s that “hell no” thing working for ya, mr. speaker?

    • valkayec

      Has anyone noticed the twitter feed here on FF? There’s a lot of pushing the Tea Party GOP House to accede to Boehner. The fear, obviously, is great and stark that his plan won’t pass the most radical members of his caucus. The GOP bought this lemon and now they’re finding it’s too sour for their taste. I don’t necessarily feel sorry for them, but I do feel sorry for the country.

      As often as possible I read every editorial from PIMCO’s El Erian or watch his interviews. He’s one of the smartest guys out there, in my opinion. His WaPo editorial in today paper exhibits his frustration and anxiety with the way DC is working and what he perceives must be done to revive the economy and the country. Yet, the Tea GOP is rapidly running in the opposite direction. The news outlets and radio pundits that pervert the news, provide false punditry, and all the rest has done immeasurable harm to the country’s overall economic health and competitiveness. They’ve preyed upon Republicans and right leaning independents by providing false information to the point that even sound, sensible ideas from El Erian are dismissed with scorn or worse.

      Yet, as this circus plays out it seems the GOP is losing favor. Comment sections in the last two days are trending towards GOP disfavor. And that’s putting it mildly. Obama’s numbers may be down because he’s not solved this situation (think Reagan-O’Neill), but more and more are seeing the Tea Party GOP as willing to bring on another recession or worse.

      I welcomed John McCain’s WSJ op-ed today and his twin speeches on the Senate floor. It’s well past time the GOP realized they’ve catered to a dangerous, ignorant fringe movement and dumped them.

  • armstp

    “The strict demands of the paper’s ideology…”

    Actually, 20 years ago the paper did not have a “political ideology” and was moderately business conservative.

    Now the WSJ is a piece of crap. There is no more business journalism. It is all political journalism and one-side at that.

    I dropped my subscription last fall. I will never go back.

    Actually, every single Republican president since Eisenhower has increased debt per GDP during their term and every single Democratic president since Eisenhower has decreased debt per GDP. Look it up. There is no history of fiscal discipline under Republican presidents, only under Democratic presidents.

    The Journal’s editorial board lost any sense of honesty or objectivity the day Murdoch arrived.

    They ruined one of the great newspapers of all time.

    I heard things are not going so well over at the WSJ. I heard the numbers are falling and there could be some buyers remorse from a financial stand-point.

    • valkayec

      I was just today wondering the same thing. Has subscriptions gone down since Murdoch took over? The WSJ along with Barron’s were the dailies that most business people read for business news. The editorial pages might be skimmed but were fairly moderate, leaning to the conservative side, but could be ignored. Since the paper has been taken over by News Corp., I wonder if the business reporting – as stated by someone earlier in the this thread – has gone far enough to the right that they’ve lost readership and thus advertising. Biz leaders are not stupid. They’re not going to spend money on less than accurate biz news.

      • armstp

        I have heard that the numbers are down, although they would claim they are up. I am not sure if it is people that are not happy about the politics. I suspect the numbers are down for three reasons: continued erosion of newspapers period, they are trying to be like the NYT, but that is completely moving the paper away from a business news focus and third people are fed up with the political coverage.

        Murdoch paid an aweful lot of money for Dow Jones and increasingly people are saying it was not worth it. It was an ego buy that did not make a whole lot of financial sense.

  • TerryF98

    They need to rename it the “Wall Street Joke”.

  • valkayec

    Did anyone pick up on the news today about Ohio Rep. Johnson, head of the House Republican Study Group, about to lose his safe seat? Ohio has to eliminate to two districts. Because of his refusal to go along with Boehner – and his aide emailing Tea Party groups asking them to demand their reps to vote no – the Ohio state GOP plans to redraw to district to make it more competitive with the hope that he’ll lose.

    • dubmod

      Mainstream Republicans hate the Tea Party, why would’nt they? They are about to destroy the party.

  • dubmod

    Businessman, capitalist, entrepreneur NOT a Republican. Why are we even discussing the Republican Party in the context of being a business party? They are a joke!

  • valkayec

    Here’s something that every person and family needs to know: a default will pull $130 Billion immediately & directly out of the economy without ever touching how much private businesses will contract as a result of higher interest rates and uncertainty.

    Isn’t it well past the time for everyone with any intelligence and concern for our country and our economy to fight back against this craziness? Isn’t it time to write op-eds in local papers, post info on blogs, speak out in public forums, and everywhere else? We have an economy to save, people!

  • Rossg

    So I read the WSJ editorial. The writer says the, in 1965 defense spending was 7.4% of GDP, and 42.8% of overall outlays. While in 201 these numbers were 4.8%, and 20.1%, respectively. Can David Frum, or anyone, explain how this does not mean that defense spending for 2 or 3 wars is not the crux of the problem?

  • Frumplestiltskin

    Boehner’s bill has gone down to be revamped to another rerun of cut, crap, and balance.

    America: July 4, 1776 to August 2, 2011
    It was a good country while it lasted.
    The funniest thing will be hearing all these Republicans who said that Boehner has compromised so much in putting forward this bill and that Democrats just had to take it…tomorrow will scramble to make this all Obama’s fault for not totally caving with cut, crap, and balance and that the next bill that Boehner puts forward is really the only bill that can save America.
    It is a pity Boehner is not pro America, he could have ended this tonight by bringing in Pelosi and Hoyer and getting a variation of the Reid bill passed, at worst they could do the McConnell bill and cut the budget later.

    • Another Matt

      Did you see Jennifer Rubin’s post tonight?

      http://www.washingtonpost.com/blogs/right-turn/post/why-no-vote-tonight/2011/03/29/gIQABiJ8fI_blog.html

      ====================================================
      A House aide just e-mailed me: “Buckets of crazy.” That’s as good an explanation as any as to why Speaker of the House John Boehner (R-Ohio) won’t be able to hold a vote tonight on his debt-ceiling bill. The burn-the-building-down set is weakening, but the speaker is still short on votes.

      A more optimistic take came from a senior House leadership advisor, who told me that some key members had asked to sleep on it. There is sometimes a point in a negotiation (which is what this is) when it is counterproductive to push on. As the advisor explained: “The speaker was not going to force a midnight vote. We’re not going to do that on something this big.”

      Outside of Congress, some of the most aggressive conservatives were urging Congress to make a deal. Even extreme rightwing bloggers will have a hard time casting conservative lightning rod Ann Coulter as a “squish.”(She told Fox News host Sean Hannity that it was time to get this done.)

      There are a couple of benefits to drawing this out (although I have no indication whatsoever from conversations with half a dozen House Republican offices this evening that the delay is attributable to anything other than difficulty in rounding up the votes). First, Boehner will certainly have a strong argument that nothing OTHER than this bill can get through the House before August 2. And second, as time slips away, there is less and less time for the Senate to come up with an alternative that can pass both houses by August 2.

      The smart money is still on the eventual passage of the Boehner bill. But it’s not going to happen without extracting every last drop of patience from the American people, not to mention the media covering one of the most agonizing votes in recent memory.

  • Bunker555

    I have called the WSJ the Wall Street Urinal for four years now. Murdoch and his cronies have destroyed this great paper, and taken Barron’s down with it. Murdoch’s Fixed Business is a Tea Con show and is fast becoming a Tea Bagger show as they can’t get any traction against CNBC.

    Bottom line: Murdoch gives Dow Jones a bad name.

  • rbottoms

    How genteel.

    WSJ: Lying Sacks of Shit.

    • Bunker555

      Frum has put up Gigot’s picture in the headline. Gigot is the biggest lying scumbag in the Murdoch empire.

  • WSJ editorials « Thought du Jour

    [...] Frum, “The WSJ Surpasses Itself“, Frum Forum, 28 July [...]

  • Michael Heath

    Rupert Murdoch didn’t corrupt the WSJ editorial pages which misinform its readers. That’s been easily verifiable since I started reading them in the mid-1980s, even though the straight news section was top-notch.

    Unfortunately the straight news sections appears to have lost the level of talent it used to enjoy. In addition facts that challenge the world-view of its editorial page now get short shrift in the straight news section as well, e.g., the WSJ’s failure to properly report climate science stories.

    • indy

      I loved the news section. read it every morning up to about 3 or 4 years ago. Never read the op ed pages.

  • JimBob

    Well you are right. The WSJ is losing money. It is the online edition that’s beating the New York Times.

  • JimBob

    I’ve been reading the WSJ for 35+ years and I never knew they despised Eisenhower like Frum claims.

    The reason debt went up under Reagan is because Speaker Tip O’Neill refused to cut any spending. Yes Reagan spent money on the defense buildup and proposed cutting in other areas. O’Neill refused so the deficit and debt grew.

    Then under George W Bush the debt took off due to the wars he launched. Wars Frum fully supported. In fact he pretty destroyed his career with the spring 2003 cover story at National Review “Unpatriotic Conservatives. ” He’s been on a downward spiral ever since. Robert Novak one of the Unpatriotic Conservatives had an excellent rebuttal.

    http://www.freerepublic.com/focus/f-news/873923/posts

    Axis of Ego

    http://www.amconmag.com/article/2003/mar/24/00024/

    Clinton and Gingrich get kudos for working together and slowing the growth of spending.

    • TerryF98

      JimBooby is a freeper, figures.

    • jamesj

      “…I never knew they despised Eisenhower like Frum claims.”

      What in the hell are you even talking about? Nothing of the sort is mentioned in the piece above.

      “The reason debt went up under Reagan is because Speaker Tip O’Neill refused to cut any spending.”

      Again, what in the hell are you even talking about? Debt is a relationship between spending and income. That is a matter of fact, not opinion. And you’ve already noted that Reagan and his executive team supported a large military buildup through spending during his term. You conveniently failed to mention Reagan’s tax cuts, which are universally credited with contributing to an increase in the deficit and which Reagan himself had to roll back a bit before he left office on the advice of pretty much every economic adviser he could find.

      “Robert Novak one of the Unpatriotic Conservatives had an excellent rebuttal.”

      Good grief. You are using Robert Novak, the guy who puts covert operations at risk for political reasons, as a reliable source now? Truly amazing. How do you classify your political views? Hopefully not with the term “Conservative”, since you seem to be throwing nonsensical emotionally-driven comments around without any problem.

      • JimBob

        “The debt burden declined most under the presidents the Journal most despises – Dwight Eisenhower, Bill Clinton and Jimmy Carter.”

        methinks you need to improve your reading comprehension.

    • indy

      Jimbob linked to freerepublic. Raise your hand if you predicted it. Ok, not exactly difficult to see coming, but still.

      • JimBob

        That’s the only place where I could find Novak’s reply to Frum accusing him of being unpatriotic.

        Any other questions.

  • lnexus01

    David,

    I think it’s lovely that you’re devoted to reality; I also think that you must be aware that the Republican Party, as it is “becoming”, will kick YOU and those like you OUT.

    Wonder where you’ll end up?

    Wishing you well. Oh, and thanks.

  • Bunker555

    Taken down

  • Daily Links for July 28th through July 30th | Akkam's Razor

    [...] The WSJ Surpasses Itself | FrumForum [...]

  • chrisdornan

    Marvelous this really has to be said by you and other clear-thinking, courageous conservatives.

  • samantham25

    There are a couple of benefits to drawing this out (although I have no indication whatsoever from conversations with half a dozen House Republican offices this evening that the delay is attributable to anything other than difficulty in rounding up the votes). First, Boehner will certainly have a strong argument that nothing OTHER than this bill can get through the House before August 2. And second, as time slips away, there is less and less time for the Senate to come up with an alternative that can pass both houses by August 2. http://finnegansmadrid.com/

  • 37 straight months of UE above 8% - Page 5 - US Message Board - Political Discussion Forum

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