He probably could easily do it *and* all the stimulus, by cutting the bloated military budget, were we living in a sane country.

the ratio of debt to GDP (we're still under 50 percent, which ain't bad, considering all the spending that's been going on; at the end of World War II it was substantially above 120 percent)

That sounded wrong to me, but after dredging up MONTHLY STATEMENT OF THE PUBLIC DEBT OF THE UNITED STATES JANUARY 31, 2009 , I concluded that Sec. Reich must take the Fedguv debt to be about 6,400 billion dollars rather than about 10, 650 billion dollars -- overwhelmingly by exclusion of what the Treasury calls the "Government Account Series" of "Intragovernmental Holdings." That little trifle of 4,300 billion dollars can hardly be anything but what the vernacular would call "Social Security and Medicare."

The prestidigitator can count it in or leave it out to suit himself, but let everybody resolve not to let him get away with leaving it out when he wants to make "THE national debt" look smaller but reckoning it in whenever he wants old folks’ pensions and medical services to seem better assured.

Taking annual GDP to be 14,500 billion dollars, the debt-to-GDP ratios are roughly 73.4% and 44.1%.

Happy days.

In my view, it's a no-brainer. The FY09 deficit will likely be on the order of $1.6 Trillion*. So he's promising to whittle the FY12 deficit down to $800 Billion. Maybe they miss by a little bit, and it's $900 Billion. That seems do-able, while still spending a fair amount of money.

Besides, I think the real goal is to hold off the inflation hawks for a little while, and get a little breathing room for spending now, by making this (empty?) promise for the future. Maybe he can keep gold from going to $2,000 this year, for example.

(*Didn't the OMB already project a FY09 deficit of $1.0 Trillion, before Obama was even inaugurated and we started working on the (first) stimulus package? That's where I'm getting my $1.6T guestimate, anyway.)

-- ARG

Didn't raising taxes and cutting spending worsen the depression? I mean seriously HISTORY people.

Am I misreading Mr. Reich, or is he saying that he doesn't think the economic crisis will turn around by the end of President Obama's first term?

That's not a very heartening prognosis for re-election regardless of what President Obama does with the budget deficit.

Is this political ammunition/motivation for early and serious health care reform?

We have to do it now or we'll never reduce the deficit by 2012.

The era in which we live -- 6 billion people, global communications, multinational markets, etc -- is extremely complex. It's hard to understand just how complex it all is, and the lure of simple solutions have tremendous emotional pull.

I think the amount of confusing information is overwhelming most of us, and that in and of itself leads to frustration. And then frustration leads to bad decision-making.

Step 1: try to figure it out and be less frustrated.
I'm not sure how much progress we're making on Step 1.

So it's not clear how we get to Step 2, which would be a more realistic discussion of how much money is actually needed.

JMVHO.

mike from arlington makes a good point. the specifics of obama's deficit reduction plan doesn't drain anything from demand that the economy needs:

- letting bush tax cuts for the wealthiest expire, including estate tax (major revenue raiser)

- reducing iraq spending and hopefully defense spending in general (major cost reduction)

- reducing a select few wasteful subsidies or programs

Letting the tax cuts expire may decrease luxury spending, hedge fund investment, or VC investment but I think it'd be a drop in the bucket and not necessarily a bad thing.

Also, it seems that the spending on climate change and healthcare will be coupled with revenue raisers. Isn't that a more sustainable structure that still stimulates? For example, if the government auctions carbon credits they plan to use some of that money to invest in the clean tech sector and also to help consumers handle the increased energy costs. You build and nurture an extremely necessary industry and simultaneously stimulate demand for efficient and sustainable technologies and products. if it's fiscally responsible, it's even better

Speaking of cutting back on spending...

This is a bit off topic but does relate to spending.

It sounds like something big is being planned right now in America.

I don't know if people saw the energy summit that was going on in DC I assume. I was watching it late last night on C-SPAN. There were members of renewable energy and climate change subcommittee members, Salizar, Chu, Pickens, Bill Clinton, Al Gore, Pelosi, leaders from other countries and numerous others.

They were speaking of creating a new nation wide energy grid to not only connect our new sources of renewable energy from wind farms in ND and off the east and west coasts and geothermal, but also replace the existing grid and allow ways for people to plug into this new grid from their own homes, allowing them to generate their own electricity through solar panels and sell energy back to the grid at competitive prices.

Chu had ideas to solutions to account for fluctuations in wind by using some sort of new battery technology. He also outlined the variations of standards between the various grids, the eastern, western and Texas grid and how some sort of agreement is going to have to get settled first. The Gov. of NY was pointing out how some new Federal initiative or mandate will have to be drafted to avoid having planning tied up in the states for years as to where the new electrical grid will be located since nobody wants wires around their house.

They were explaining how people were behind the highway system because they understood how having access to these large roads would allow them to get around quicker, transport goods more efficiently, etc. They mentioned the same approach should be used with this energy grid, explaining to people as I previously mentioned, individuals could plug into this grid, purchase and sell energy, creating entrepreneurship by individuals creating their own energy.

Anyways, the way these people were talking, sounded like it was going to happen. I wish I had more details and could provide a more technical breakdown of their discussions but much of the technology was beyond my knowledge.

It was pretty interesting stuff to say the least. Maybe someone with more knowledge on this stuff could write something up.