The late ‘90s were a boom time like few others -- and not just in America. The unemployment rate was less than 6 percent in 1995, and fell to under 5 percent in 1996.
Nevertheless, after agreeing to Speaker John Boehner's budget proposal, in his address to the people of the United States, the President declared (clip below), "This is an agreement to invest in our country's future while making the largest annual spending cut in our history." Obama continually stressed the need to put politics aside and come together for the benefit of the country.
This, Klein argued, is a mistake. By celebrating spending cuts, Obama and Senate Majority Leader Harry Reid (Klein stated Reid joined in on the "celebration") opened themselves to additional cuts in the future. How can they celebrate cuts now but publicly denounce them later? Additionally, Clinton economists know that now, during the middle of a recession, is not the time to be cutting spending.
Deficits should be low to nonexistent when the economy is strong, and larger when it is weak. The Obama administration’s economists know that full well.While it's a long way out, if the economy does not recover by November of next year, will this kill the Democrats' chances in the 2012 election?