Need some answers about the national debt

In the comments in the Bookwormroom about liberals one common theme is that liberals cannot and will not argue from the facts.  I was planning to write a post about the national debt when I came across this web page.  Here is a liberal with facts.  For the most part, the discussion is pure, class-envy, rich-bashing, demagogic, liberal pap.  But the facts that are expressed in the charts are not so easy to dismiss. 

It is true that the national debt exploded under Reagan and the Bushes.  Either lowering taxes did not result in the expected increase in income, or the Congresses (Democrat and Republican) and Presidents (all Republicans) wildly overestimated the effect and overspent like crazy people.  By the way, the comments on post-WWII are interesting as well.  It is undeniable that the late 40s and the 50s were, despite a couple of recessions, a time of explosive growth, even though (and correct me if I’m wrong on this) marginal income tax rates were much higher than they are today.  Granted, other taxes like state income and sales taxes, and social security were lower, but still . . . 

This raises a number of interesting questions.  In light of the fact that the national debt increased so dramatically under Republican presidents, why should we expect Republicans to come any closer to getting a handle on that debt than Obama is doing?  Given that, as the charts demonstrate, the national debt is rapidly increasing even as a percentage of our national income, when do we reach the point of no return where merely paying interest on the debt makes addressing the problem impossible?  This problem has been put off temporarily by historically low interest rates.  But those won’t last forever.  Where does the government go to file for bankruptcy?

And, finally, to the point I intended to write about before I found that site.  What does it say about American that we have allowed this debt to exist?  We are piling up debt our children will have to pay for.  If we had simply stolen our children’s credit cards, gone on a spending spree and given the cards back for the children to pay for, it would have been considered immoral.  Why is it not equally immoral to do the same thing as a society?  Yet I rarely hear the national debt discussed in moral terms.  The discussion is all about the interpretation of the facts and what, if anything, can be done.  It seems that no one is willing to draw a line in the sand and say this must stop!  We cannot and will not as a society do this to our children!  I think that’s shameful. 

Of course, I shouldn’t just blame America.  It seems that every Western society has gone the route of living beyond its means.  What is it about our human nature that apparently not only allows us, but compels us, to harm our children in this way?  Are we really that selfish?

As to all of the above, especially the answer to what happened under recent Republican presidents, I look forward to your ideas.

Be Sociable, Share!

Comments

  1. BrianE says

    “In light of the fact that the national debt increased so dramatically under Republican presidents, why should we expect Republicans to come any closer to getting a handle on that debt than Obama is doing?”- DQ
     
     
     
    I think this is incorrect. The deficit increased under Democrat congresses.
     
     
    Fact. Democrat congresses consistently spent more than the budgets Reagan proposed.
     

    “On average, Congress spent 2.8% more than Reagan asked for, while the cumulative (yearly compounding rate) was a whopping 24.5% more. If the budget in 1989 had been 24.5% smaller (i.e., 280 billion dollars) there could have been a surplus of about 130 billion dollars instead of a deficit. This is equivalent to a constant compounding increase of 2.8% every year during the 8 budgets above and beyond the previous year’s spending. If anyone still thinks that is not a significant amount, they should ask themselves whether a balanced budget in 1989 would have been significant.
    If the cumulative column is not clear, visualize it as the acceleration of spending beyond what Reagan asked for. A 10% increase each year beyond what he asked for, for example, compounds to 1.1^7, or 1.95, which is 95% more, as opposed to 1 + 0.1*7 = 1.7, or 70% that some would say is the correct figure. In other words, each increase carries with it the excess spending from the previous year(s). It’s also the same kind of math that causes programs with mandatory spending increases, no matter how small, to balloon after a few years. It’s called geometric progression. For a nice graph of such a function, look at the growth in U.S. debt since 1974.”
     
     
    http://www.presidentreagan.info/reagan_budgets.cfm

  2. BrianE says

    “I think this is incorrect. The deficit increased under Democrat congresses.” I should have added during the Reagan years.
     
     
    During the Bush years is a different matter, since Republicans controlled Congress from 2003 through 2005. During the period Republicans allowed spending to grow, though not as much as one might think given the growth of the economy.
     
     
    Had the fed or congress done something to slow the overheated housing market, we would have probably gone into recession, but not to the extent we have. I don’t know who was gaming who, but the deficits were coming down during the second Bush term. The continued stimulation to the economy was unsustainable. Keynes is rolling over n his grave.
     
     
    I suspect the increased spending under the Bush years, was the price paid to get the Democrats to go along with the two wars.
     

  3. says

    Bush said he was cutting the deficit in half in 2004. The statistical graphs showed it was the truth. Around 2003-2004, it was decreasing substantially by a few hundred billions. Then it suddenly increased from 2006-2008 when the Democrats took over.
    So I tend to agree with the general gist of what BrianE said.
     
    DQ, why do you often take Leftist mantra as fact rather than separate out the causal variables on their own? Unless you have the base data, simply taking somebody else’s interpretation of the data, which you have not seen, is not a wise move.
     
    Correlation is not causation. To find the causes, you’re going to have to do more work.

  4. says

    http://www.forecast-chart.com/graph-federal-deficit.html
     
    Find things like that. When you see years cut off to avoid showing a drop for Bush2 or when charts show total debt when they are talking about deficits, just so they can show a smooth curve, you might want to check up on 101 statistics.
     
    Clinton’s budget surplus was a result of Republican and Democrat pissing on the military, denying them training fuel and munitions. When Bush recovered the nation from 9/11 and kicked the military in gear, all those surpluses were turned back to the military, plus whatever they were spending to boost new tech, R/D, body armor, combat operations, fuel, etc.
     
    People need to start thinking for themselves and start their own research, that’s about my view.

  5. Larry Sheldon says

    What happens when you analyze the facts replacing “Democrats” v. “Republicans”
    with “Big Government nanny-state Progressives” v. “Constitutional Conservatives”?

  6. SADIE says

    I’ll have to leave the heavy lifting to those that have a fuller grasp of monetary policies coupled with global/regional politics. I know that we don’t live in a vacuum and that how money is invested, managed and manipulated outside of the US also leaves us vulnerable. Europe’s investment into socialism, China’s manipulation of the Yuan, Africa’s political corruption of its oil reserves. I am sure I am missing additional vital examples. An excessive amount of  exported US dollars have funded futility internally and externally.

    Maybe any and all questions should be directed to the IMF – they certainly hold more sway than any political party in my opinion. The acronym PIGS seems ever so accurate.


    http://biggovernment.com/publius/2010/11/26/preview-for-us-debt-turmoil-fears-sweep-europe/#more-200721
     

  7. says

    And, finally, to the point I intended to write about before I found that site.  What does it say about American that we have allowed this debt to exist?
     
    It means anybody serious about the problem would be for amending the Constitution to stop deficit spending, completely. Which Leftist or Democrat do you know that complains about the deficit, but isn’t interested in amending the Constitution to prevent deficit spending?
     
    That Democrat is a hypocrite.
     
    It basically goes down to something like this.
    When an amendment to amend the Constitution to make it unconstitutional to spend more than the government takes in tax revenues, will you vote up or down.
     
    Those that vote down, are usually going to be Democrats and their helpers. Bush2’s problem is that he kept trying to treat Democrats like friends or people he could convince. Didn’t happen. Obama’s problem is that he labels people as enemies that aren’t enemies. At least, not enemies of the US.

  8. says

    Brian, taking a cumulative total is wholly illegitimate.  If I consistently make 1% more than you do for 10 years I still make only 1% more than you over all, not 10% more.  If your stats are correct, then Congress averaged 2.8% more, not a significant part of the problem.  Both Congress and the President wanted far more than the income would support.

    Also, please compare the chart you provided (and the one Y-man linked to) with the chart my link pointed to:

    http://www.gpo.gov/fdsys/pkg/GPO-CDOC-107sdoc18/pdf/GPO-CDOC-107sdoc18-1-12-4.pdf

    This chart, from the government printing office, tells a very different picture.  Your numbers obviously include substantial spending that is not included in these numbers.  How do you account for the differences?

    Can anyone else help ferret out the truth here?

  9. BrianE says

    From a Cato Institute Tax Bulletin, August 2003:


    “…Bush has been a big spender across the board. Total real outlays will increase about 15.6 percent under Bush (FY2001–04), but increased just 6.8 percent under Reagan (FY1981–84). Both increased defense substantially, but Reagan cut real nondefense discretionary outlays by 13.5 percent compared to a 20.8 percent increase under Bush.


    Of course, presidents share the federal purse strings with Congress, making it difficult to assign responsibility for budget outcomes. But one way to evaluate fiscal priorities is to compare budgets as originally proposed by Reagan and Bush. In each of Bush’s three budgets, he has proposed increases in total federal outlays above baseline levels. In his FY2002 budget, he asked for $43 billion over 10 years to “reform” education and $153 billion over 10 years to “reform” Medicare. He got his big education increase, and his FY2004 budget pushed up his Medicare request to $400 billion. By contrast, Reagan proposed that spending be reduced to below baseline levels. In his first budget plan, he proposed cuts of $41 billion for FY1982, or about 5 percent of baseline outlays.2 His second budget for FY1983 proposed an additional cut of 5 percent.3 He targeted both discretionary and entitlement programs for cuts, including health care, welfare, food stamps, student loans, housing, and education. Reagan did not get all the cuts he wanted, but he did push for subtractions from the baseline, not additions as Bush has pushed for.


    Spending by Department


    Presidents Reagan and Bush both inherited defense budgets that with regard to nondefense spending. While Reagan attacked the “destructive pattern of runaway spending,” as he called it in his second budget, Bush has expanded a wide array of “compassionate” welfare state programs.

    The Overall Spending Record


    Figure 1 compares the percentage change in real or inflation-adjusted spending over the first three budgets of Reagan and Bush, incorporating the recent mid-session review estimates. The figure shows that Bush has been a big spender across the board.


    Total real outlays will increase about 15.6 percent under Bush (FY2001–04), but increased just 6.8 percent under Reagan (FY1981–84). Both increased defense substantially, but Reagan cut real nondefense discretionary outlays by 13.5 percent compared to a 20.8 percent increase under Bush.


    Of course, presidents share the federal purse strings with Congress, making it difficult to assign responsibility for budget outcomes. But one way to evaluate fiscal priorities is to compare budgets as originally proposed by Reagan and Bush. In each of Bush’s three budgets, he has proposed increases in total federal outlays above baseline levels. In his FY2002 budget, he asked for $43 billion over 10 years to “reform” education and $153 billion over 10 years to “reform” Medicare. He got his big education increase, and his FY2004 budget pushed up his Medicare request to $400 billion.


    By contrast, Reagan proposed that spending be reduced to below baseline levels. In his first budget plan, he proposed cuts of $41 billion for FY1982, or about 5 percent of baseline outlays.2 His second budget for FY1983 proposed an additional cut of 5 percent.3 He targeted both discretionary and entitlement programs for cuts, including health care, welfare, food stamps, student loans, housing, and education. Reagan did not get all the cuts he wanted, but he did push for subtractions from the baseline, not additions as Bush has pushed for.


    Presidents Reagan and Bush both inherited defense budgets that they believed were inadequate for the threats facing the nation, and both presidents sought and won big increases from Congress….”
     
     
    http://www.cato.org/pubs/tbb/tbb-0308-16.pdf
     
     

  10. BrianE says

     
    It is probably best to assume that any government figures are a misstatement of fact.
     
    Real Accounting Fraud
    by Thomas J. DiLorenzo

    “…There is no such thing as real accounting in government, of course, since there are no profit-and-loss statements, only budgets. Conse-quently, there is no way of ever knowing, in an accounting sense, whether government is adding value or destroying it. All we know is that the budget grew by a certain amount, for some ostensible purpose. And government is constantly lying to the public about how much of the public’s money is being spent and what it is being spent on.

    As Gene Epstein has reported in Barron’s, during the Clinton administration, vast sums were transferred from the Social Security and Federal Highway Trust Funds to the budget so that Clinton and the Republican Congress could take “credit” for balancing the budget. Any corporate CEO who raided his employees’ pension fund and put the money in the company coffers so that the bottom line would look good and he could earn himself a fat bonus would end up in prison.

    The federal government practices what it calls “baseline budgeting,” whereby federal agencies announce that they wish to increase their budgets by, say, 10 percent a year, and if they only increase them by 5 percent that is called a 5 percent budget “cut.” There can be no better example of accounting fraud than calling a budget increase a cut.

    The General Accounting Office, Congressional Budget Office, and other federal agencies also use “static analysis” when analyzing and reporting to the public on tax policy changes. That is, they assume that taxation has no effect whatsoever on economic behavior. So, if we have a $10 trillion economy, and impose a flat 75-percent income tax, these “authoritative” sources will announce that the IRS expects to collect $7.5 trillion in revenues, each year, ignoring several hundred years of economic theory and practice.

    Perhaps the biggest accounting scam perpetrated by the state has to do with various governmental “off-budget enterprises.” As James Bennett and I wrote in our 1983 book, Underground Government: The Off-Budget Public Sector, for well over a century federal, state, and local governments have responded to citizen demands for tax, expenditure, and borrowing restraint by paying lip service to the demands while at the same time setting up the subterfuge of off-the-books government enterprises.


    At the federal level of government there is a shady operation known as the Federal Financing Bank (FFB), which operates out of a small room in the US Treasury Department. With the help of the Treasury’s printing presses, the FFB loans money to federal agencies but the loans do not appear on the budget lines of the agencies as increased spending. When the agencies pay back the loans (if they ever do), federal government “accountants” make it a point to count it as a reduction in spending. Thus, even though the existence of the FFB causes an increase in federal spending, what gets reported in the federal budget is a decrease in spending. “
     
    http://mises.org/freemarket_detail.aspx?control=395
     
    DiLorenzo is a econ prof at Loyola College.
     
     
     

  11. says

    http://www.washingtonpost.com/wp-dyn/content/article/2010/11/25/AR2010112502215.html
     
    “Retiring baby boomers, who will live longer on average than any previous generation, will have a major impact on government spending. This year, the combined expenditures on Social Security, Medicare and Medicaid are projected to account for 45 percent of primary federal spending, up from 27 percent in 1975. The Congressional Budget Office projects that annual entitlement spending could triple in real terms by 2035, to $4.5 trillion in today’s dollars. Defense spending is similarly unsustainable, and our tax code is riddled with special-interest provisions that have little to do with our broader economic prosperity. Overly generous tax subsidies for housing and health care have contributed to rising costs and misallocation of resources. “

  12. says

    DQ, your link only goes up to 2002. That specifically excludes the years in which Bush halved the deficient spending per annual year.
     
    And you find this not all troubling, yes?
    This video/article was written around a month ago.
     
    Yet…


    Clinton would have paid off most of the $1 Trillion WWII debt that Reagan scared us with to get elected. And Bush II (and his supply siders) would have run up only $3.8 Trillion — not $6.1T, which is what actually happened under Bush II.
     
    Has this statement ostensibly backed up by cooked up data and graphs that only go to 2002 for Bush II’s administration.
    I don’t know about you DQ, but I wouldn’t call this “fact based”, even for a LibProg.

  13. BrianE says

    DQ,
     
    Compare your chart with the one in the “Supplemental Appropriations in the 1980’s”, a CBO document, page 12 Table 1.
     
    http://www.cbo.gov/ftpdocs/66xx/doc6629/90-CBO-009.pdf
     
    I don’t know what the discrepancy is, but I’m willing to give it a guess.
     
    Let’s compare 1984. According to the document you linked to, Reagan requested $576 billion and the “appropriations enacted” was $559 billion, which seems counter to my contention that congress passed budgets that exceeded administration requests.
     
    According to the CBO document I linked to, “total budget authority” in 1984 was $949 billion. Quite a difference. This included supplemental appropriations, but according to the document, that only accounted for $21 billion.
     
    I suppose part of the difference would be whether the numbers included total budget (on budget and off-budget) versus on-budget spending. I wonder what “appropriations enacted” means? Is this the amount of money that the administration actually spent? If that’s the case, the number might not be a congressional budget figure at all.
     
    I do know Reagan was not spending all the money congress appropriated, which led to court battles and by 1986, a federal court stripped the administrations ability to withhold spending.
     
    “The rule concerning deferrals was shaken in 1983 when the Supreme Court struck down the legislative veto in INS v. Chadha. The veto by one house of Congress was now no longer available to disapprove deferrals. Initially, the Reagan administration agreed not to abuse its veto-free deferral power. But after 1985 the administration began using deferrals aggressively to meet deficit targets imposed by Gramm-Rudman. Members of Congress and private parties went to court to challenge the president’s deferral authority.
    In 1986 a federal district judge decided that the president’s deferral authority under the 1974 law was no longer available. The judge concluded that the history of the statute demonstrated that Congress would have preferred no statute to one stripped of the one-house veto. That decision was upheld by an appellate court in New Haven v. United States (1987). Those decisions limited presidential deferrals to routine managerial actions, a policy that Congress in 1987 enacted into law. As federal deficits climbed in the 1980s, lawmakers were under pressure to delegate greater authority to the president to curb spending. The result was the Line Item Veto Act of 1996.”
     
     
    http://www.enotes.com/major-acts-congress/congressional-budget-impoundment-control-act

  14. BrianE says

    I found this buried in the middle of a US Treasury Fact Sheet “Taxes”. It pretty much says it all.


    “Between 1986 and 1990 the Federal tax burden rose as a share of GDP from 17.5 to 18 percent. Despite this increase in the overall tax burden, persistent budget deficits due to even higher levels of government spending created near constant pressure to increase taxes.
     
    http://www.ustreas.gov/education/fact-sheets/taxes/ustax.shtml
     
    This reinforces a previous post that demonstrated historically that for every new dollar of revenue the federal government receives, spending increases $1.17.
     
    We’re DOOMED, people.

  15. BrianE says

    Since the subject is debt, chew on this:
     
    “According to the recent Office of Management and Budget’s estimated Budget of The U.S. Government, deficits are projected to be $1.449 trillion in 2010, $1.173 trillion in 2011, $939 billion in 2012 and around $1 trillion per year into the foreseeable future. And these figures continue to be revised upward. Adding these figures to the upcoming debt maturities, the U.S. will have to refinance approximately $4.369 trillion in 2010, $2.034 trillion in 2011, $1.647 trillion in 2012 and well over $1 trillion per year thereafter. We will save the “Who will finance this massive debt?” question for a later article (along with “What Can Investors Do About It?”). The point is this is a potentially serious problem waiting to explode.

    Possible outcomes include default, restructuring, devaluation (inflation), higher tax rates, or some combination of these. Economic prosperity, higher savings rates and increasing foreign investment could also solve this problem, but we shouldn’t rely on these, particularly in a questionable global economic environment where foreign investors are becoming increasingly worried about the U.S. dollar. If that wasn’t enough, a change in the world reserve currency status of the U.S. dollar during this troublesome period could potentially cause a worldwide depression.”
     
    http://seekingalpha.com/instablog/589999-nathan-kawaguchi/56374-u-s-government-debt-the-ultimate-subprime-loan-part-1
     
    We ARE doomed if we can’t recognize and deal with the cause of these deficits. We can’t cut spending enough, or raise raxes enough to deal with this problem. Our only hope is growth, spurred by a revival of the American economy. That can only occur if we are realistic, which means reducing regulatory burdens and exploiting national resources.
     
    Oh, and consign to hell the idea of baseline budgeting.

  16. says

    I’m trying to make sense of all of this, but I need a question answered to start.  Which years to we credit to which presidents?  For example, Bush served through the beginning of 2009, so the budget for 2009 was set by the time he left office.  Does that budget belong to him or to Obama? I’m guessing the answer willbe pretty messy, with, for example, Obama changing the 2009 budget when he took office & throwing off the stats.  Anyway, how should I evaluate the charts?

  17. says

    Y-man, I’m a bit confused by your claim that Bush halved the deficit in his last 2 years.  Your own chart (see #4 above) says the deficit jumped from 1.1%of the GDP to 3.2% of the GDP in 2008, which is clearly a Bush year.  Please explain. BTW, that chart also fully supports the liberal view that the deficits were lowest (indeed, there were surpluses) under Clinton, and the rather obvious fact that thing have gone rapidly out of control since Obama took office.

    Brian’s chart at #11 seems to say that both Reagan and Bush were dreadful, but Bush was even more dreadful.  Am I reading that right?

    Brian, I suspect you are right, we are doomed. But, we can’t even evaluate that until we have the facts.  It’s an old saw that figures don’t lie, but liars figure.  Still, there is an objective truth in all these numbers somewhere, and we shouldn’t give up looking for it.

    Meantime, I’m convinced that we will not make any progress toward resolving the problem until we accept that it is morally wrong to do this to future generations.  Until we have the will to stop overspending, we will not find a way to stop. 

  18. says

    Your own chart (see #4 above) says the deficit jumped from 1.1%of the GDP to 3.2% of the GDP in 2008, which is clearly a Bush year.
     
    2003-2006 isn’t his last 2 years. 2006-2008 would be his last two years and while under a Democrat House.
     
    Please explain. BTW, that chart also fully supports the liberal view that the deficits were lowest (indeed, there were surpluses) under Clinton
     
    And it supports my view that Clinton’s deficits came from destroying and looting the military infrastructure by starving the military of training money and supplies. The “chart” doesn’t support any thing, DQ. Haven’t you realized that by now. Data can be made to say whatever I, or anyone else, makes it say. It’s like a magician’s trick. The rabbit didn’t fly out of the hat. The magician made it appear to do so. And like so many other tricks, DQ, the object isn’t what is “magical”. It’s just a sleight of handle. Yeah, the hat exists. Yeah, what came out exists. But did A cause B or did the magician make you think A caused B? The data is true. The interpretations from the data, not so much. The liberal view is not that deficits were lowest under Clinton. The LibProg view is that Clinton can erase the debt and the surpluses are proof that this is good for nation. How destroying the US military and looting a bunch of other stuff while hiding it as government surpluses is good for America, is left unexplained.
     
    Brian’s chart at #11 seems to say that both Reagan and Bush were dreadful, but Bush was even more dreadful.  Am I reading that right?
     
    No, I tend to interpret his points to be more like the government is full of deception and Libs are more adept at using government to deceive than you or anyone else you know, DQ, could. So it’s a cautionary tale to not take people’s stories like they are fact or truth. It’s just like a witness statement, DQ. Whether it is true or false doesn’t really matter. What matters is the judge’s interpretation and the jury’s interpretation. Doesn’t Book often talk about activist judges on this venue.
     
    that it is morally wrong to do this to future generations.
     
    The Left supports child raping Polanski and sends more troops to Afghanistan while diddling and fiddling until more Americans die there without approving the actual strategy that the generals had already created and tested.
    You expect morality out of these people? Gonna have to wait awhile. Not enough people have suffered yet for “morality” to appear on the Left.
     
     

  19. says

    Carter, like Obama, canceled a lot of defense projects, not just spending in budgets. This actually permanently destroyed a lot of things and wasted a lot of money. Meaning, if it took 500 million to start up a defense R and D project and every year, for 5 years, it took up 50 million in operating costs, once you cancel it, you have essentially wasted 750 million dollars. Because it will take around that much to restart things. All the people who knew the stuff, are off to work somewhere else and can’t be recalled.
     
    Which is what Reagan and Bush 2 had to do. Restart things and get the military back on track, from when Carter/Clinton had cut them off at the knees. That is a lot of spending, at least relative to what was going on before. This was combined with a lot of economic goodies Congress wanted, plus welfare and the pyramid scheme called SS.
     
    Hey, at least Social Security has the right initials for what it is.
     
    In general, DQ, adjectives such as “bad” or “worst” have no meaning when it comes to the complexity of government machinations. It’s often always worst than you think it is. But the point is, Reagan was better than the Dems and even Bush, with his education pact with Kennedy, was better than the Dems.
    This is opposite the Leftist mantra that Bush 2 and Reagan and the supply siders are inferior to the Dems. There is no compromise on this issue.
     
    But, we can’t even evaluate that until we have the facts.
     
    Facts won’t do you any good if you can’t interpret what the political dynamic and machinations are all about. It’s all about how you massage the data, not what the factual data is.
     
    When people see a magic trick, they say it is a fact that stuff B came out of origin A cause that’s what their eyes are reporting. The truth is, they have no idea what they are looking at and no idea how to link true cause to true effect.
     
    A Constitutional amendment, by now, is about the only thing that will stop this. Anything else, the government can simply bypass and ignore. Chicago already ignores the 2nd Amendment. So does San Fran.
     
    Btw, Feinstein actually had a concealed permit. She was Mayor of SF. She had a concealed permit. And that’s why SF residents can’t get a concealed permit at all. It’s their “morality” you could say. Equal distribution.
     
    http://www.nndb.com/people/535/000023466/
     
     

  20. BrianE says

    DQ,
     
    You got me all riled up and I forgot to go to your original link.  This is reminiscent of the Hartmann article BW referred to several posts ago. The major difference was at least he could write.
     
    This is more ranting than writing. It would be tough to draw any conclusions or even to establish any facts from this rather jumbled misstatement of, well, of a rather jumbled assemblage of nothing.

    “Reagan got elected by telling the country the debt was “out of control”.
     
    The facts are the deficit did balloon during the Carter administration. His deficits were $71 billion, $59 billion, $82 billion and $85 billion– which exceeded any of the Vietnam war years. The deficits actually started ballooning when the Democrats solidified their control after Nixon fell and during a weak Ford administration. So yes, when Reagan was campaigning, deficits were a concern.
     
    Of course the point the blogger was trying to make was that the deficits shot up under Reagan. But remember, inflation was over 10% and interest rates were also at record levels. Carter ran on the misery index, which averaged 14.9 during the Ford administration. During the Carter administration it rose to 20.27. Those were not good economic times.
     
    When Reagan took office, the fed began fulfilling its charter of controlling inflation. Volcker achieved the goal, which also put us into a deep recession where unemployment was higher than currently. That was the environment Reagan began his administration. Not being a Keneysian, I’m not sure deficit spending does much but move the day of reckoning down the road (so to speak, by which I mean we might be nearing the end of).
     
    Those 70’s deficits seem paltry by comparison, but they were a real concern at the time.
     
    By the way, the misery index under the Reagan administration dropped to average 11.19. As Y has stated, defense spending was cut under the Carter and Clinton adminstrations, which required additional spending by the Reagan and Bush administrations to restore. (Defense being on of the constitutional obligations of the federal government, don’tcha know).
     
    In addition to the poor writing, it’s really just a jumbled mess of misplaced facts.
     
     

  21. BrianE says

    You know what bothers me about this tax cuts caused the deficit mantra is liberals act like the money was stolen from them. Like they are somehow entitled to it.
     
    A little appreciation would go a long way.

  22. says

    Y-man, I’m a bit confused by your claim that Bush halved the deficit in his last 2 years.
     
    If you look at my #3 post again, DQ, you’ll see where the misunderstanding occurred. I didn’t claim it was halved during his last 2 years.

  23. says

    Does that budget belong to him or to Obama? I’m guessing the answer willbe pretty messy, with, for example, Obama changing the 2009 budget when he took office & throwing off the stats.  Anyway, how should I evaluate the charts?
     
    Personally I don’t see why you need to credit them to either one. Bush wasn’t a dictator. Obama isn’t currently a dictator (yet). Given that power is balanced through government, why do you keep insisting that a “year” has to belong to one person as opposed to another?
     
    This is like the cult of leadership where people think One Man is going to do everything and save the nation all by himself. It’s preposterous.

  24. Danny Lemieux says

    I am jumping in a bit late in this excellent discussion, especially with such brilliant contributions by BrianE and Ym, so I am not sure that I can add all that more. Here are a few points:
     
    Ultimate budget authority lies with Congress, although the President must sign off. In Reagan’s case, he faced a Democrat Congress that demanded more-than its pound of flesh in social spending in exchange for Reagan’s (very much needed and ultimately successful military build-up).In Clinton’s case, the election of a Republican Congress put a hard stop to many of Clinton’s social spending initiatives. In Bush’s case, YM is right: after initially incurring a significant jump in deficit spending after the tech-boom collapse and 9/11 (much of it related to the military build-up), Bush’s deficits declined dramatically to about $100 bn before the 2006 Democrat Congress took over, whereafter they rose dramatically (TARP was a factor here, where was a bipartisan decision for a one-time bail-out of the banks).

    You can’t look at nominal debt value, you have to look at debt as a percent of GDP. As the economy grows, so does the debt capacity and I would argue from a financial perspective that it is always good to carry some debt (which is cheaper than equity, for which the national equivalent would be taxation) up to a reasonable carrying capacity, defined as the ability to pay back that debt. The real issue here, however, is that we have far exceeded a reasonable debt capacity. The impending tsunami of social service payments and obligations to an aging entitlement-focused population will overwhelm us, no question about it. The only way that our country will deal with that is by scaling back on the payout of those entitlements, whether by devaluation of the currency, rationing of services (as is currently happening to Medicare patients) or outright haircuts to promised benefit packages.

    The author’s credentials in the link you provided, DQ, should immediately have become suspect when reading his ridiculous description of the Great Depression: the Great Depression was directly attributable to Hoover’s and Roosevelt’s economic micromanagement, a topic about which Roosevelt believed he understood everything and yet knew nothing. What saved us then was that our debt capacity at that time was so much higher (the U.S. had relatively little accumulated debt at that time), which allowed us to incur severe deficits that could eventually be paid back. Not so today.

    Finally, his characterization of Reagan promoting tax cuts for the “rich” so that they would work even harder to earn their filthy lucre betrays a total ignorance of how economics works. The fundamental argument is whether private monies are more contributory to economic growth in the hands of private individuals (the owners of such monies, who invest or spend their own funds, with a keen eye toward cost control and economic gain) or in the hands of government, that spends other peoples funds, with only minimal allowances to cost controls, to feather its own nests and buy votes by enabling the least productive members of our society. Buying votes does not stimulate economies. Amazing, that.

  25. says

    Important to look not just at debt but at what the money raised by the debt is *spent for*. Debt that was incurred to build the Hoover Dam and the Interstate Highway System and to improve the navigability of the inland waterways and to create the air traffic control system…all of these forms of debt created offsetting assets which helped to drive future economic growth and thereby to repay itself. Debt incurred to support transfers to politically-well-connected groups, to expand dysfunctional schools and universities, to fund economically-nonviable projects such as corn ethanol…this kind of debt drives no economic growth and indeed often has the opposite effect.
    There is a reason balance sheets have two sides.

  26. Mike Devx says



    DQ says:
    > Please explain. BTW, that chart also fully supports the liberal view that the deficits were lowest (indeed, there were surpluses) under Clinton

    Ymar responds:
    > And it supports my view that Clinton’s deficits came from destroying and looting the military infrastructure by starving the military of training money and supplies.

    It seems to me that DQ’s question is value-neutral and Ymar’s response is value-laden.  Clinton cut the budget.  And he did so by slashing the military budget.  Almost everyone here would deplore that manner of budget-cutting, but he did cut it – in that area.   He was also the beneficiary of a huge, false tech-boom that crashed at the end of his second term.  And as others have pointed out, he and the House raided Social Security and other fund sources to present the supposed “surplus”, playing accounting games.  Clinton knew how government worked.

    While Reagan was president, he and the House slashed taxes, but did *not* slash government spending.  They only slowed its rate of increase.   Of course the deficit ballooned.  Our GDP later exploded and the deficits became smaller by comparison, but they were still large.

    There’s no doubt that Reagan and Bush II presided over large deficits.  To a certain extent they (and their Houses of Representative) hid the problem of the spending in the deficits.  Deficits create some false prosperity in the short term.  Reagan and Bush II were guilty of that – if we make Presidents own what happens under their watch, and do not solely blame the House.

    The lesson I’ve taken away from this is that tax cuts can only get you so far.   To achieve true control of a budget, you must cut spending.  That has never been accomplished in the last hundred years.  And *that* is precisely why we are in such immense trouble.  We’ve gone through several rounds of tax cuts in the last few decades; these tax cuts were *not* accompanied by corresponding spending cuts.  That game can only take you so far.  It cannot continue to work forever.  Spending cuts are equally necessary.  That’s the painful lesson I think we have yet to really accept.

    I give Reagan credit for *trying* to slash spending.  I believe he failed.  That’s the reason for his massive deficits.  He did get his tax cuts,which saved the economy, however.

    Bush II didn’t even try to control spending.

    Going forward from here, I think the lesson I draw is that tax cuts without spending cuts are irresponsible.  Spending cuts are horrifically difficult due to Democrat posturing and Republican spinelessness.  We may well be doomed.  But I’m hopeful that as these dark years spin out, the writing on the wall will be clear to the American People, that our 1oo-hundred-year holiday of free-spending has pushed us to the very brink, and must cease.  If the American People are ready to see the government finally shrink, by seeing its spending drastically shrink, then there will be hope.

    If the American People are not ready, any attempt to slash spending (by fiscal conservatives) will be met by a repudiation at the polls of those conservatives.  Then we will be doomed.  And we will richly deserve our doom and ruin, as a People.  Just as the Greeks deserve their own right now, via their own refusal to face reality today.

  27. says

    Y-man, my apologies for misunderstanding which years you were referring to.  Where was Bush’s veto pen when the Democrates took over Congress?  Perhaps the chart ended at 2002 becuase it was being used to make a point about Reagan who was long since out of office by then.  Or perhaps it was the latest chart of its kind the author could find.  Why must you always assume the worst?

    Brian and Danny, I told you in my original post that the text was so much nonsense.  I’m more concerned about the data than the rich-bashing.

    Danny, nice explanation and more of what I was looking for.  Still, even as a percentage of GDP, the growth of the national debt has continued unabated for many years, with the notable exception of a portion of Clinton’s term.  And, of course, the last two years have been unimaginably bad in that regard.  To what extent does the average person (not the average Tea Party member, the average Joe Blow) understand this?

  28. jj says

    Well, let’s see… Murray, Boxer, Schumer, Pelosi, Reid, Fwank – all re-elected.  So answer your own question: to what extent does the average person understand this?  I think you’d require a microscope to locate the average person’s understanding of this.  Or just about anything else connected with reasonable governance.

  29. Larry Sheldon says

    Where was Bush’s veto pen when the Democrates[sic] took over Congress?
     
    I have not checked my facts here, but my recollection is that when able, Bush is as much a Progressive as any of the others; and, The Democratic Progressives tended to include stuff in bills that Bush could not veto in good conscience with stuff that only a mad man would sign for.

  30. BrianE says

    DQ,
     
    As to the point of your post, I agree it is unconscionable the legacy of debt we are leaving our children. I make it a point whenever I have the opportunity to thank young people that I’ll be enjoying my social security benefits at their expense.
     
    I do that to make a point. Since young people tend to be “liberal”, based on their years of indoctrination in the state sponsored education system, hopefully it plants the thought that all that government largess comes at a price.
     
    While the statist would have us believe the rich can fund our road to nirvana, I believe it’s also unconscionable to think society has a right to their money merely by the power of the ballot. Especially given that nearly half of Americans pay no income tax.
     
    But you did demonstrate the power of propaganda– blame Bush and Reagan,when the cast of characters extends across the government and does nothing to identify the root causes– which Danny L and Mike D have succinctly stated.
     
    My only quibble would be the concept of perpetual debt. I believe that’s inflationary. I understand what you’re saying, and if the money were specifically spent on infrastructure I might agree. But even if we earmark the money for a specific purpose, giving money away in the end just dilutes the value of our currency.
     
    Which raises an interesting point. What the “stimulus” money was actually spent on. Of the $800 billion, some went to “tax cuts” (soundly derided by the statists), only $28 billion was earmarked for highway infrastructure (which does have a multiplier effect). The category of Transportation and Infrastructure totaled $98 billion.
     
    Aid to state governments totaled $48 billion (the majority of which was to keep state employees employed) and $48 billion went to education ($15 billion to pell grants).
     
    http://www.propublica.org/special/the-stimulus-plan-a-detailed-list-of-spending
     
    Why should we have any confidence that democrats will be any better than republicans at wasting our money.
     
     

  31. says

    Personally, I don’t have any confidence in either party, but I think there are more people who want to do what is necessary in the Republican party than in the Democrat party.  And I don’t see a viable third party emerging any time soon.  Do you?

  32. says

    Where was Bush’s veto pen when the Democrates took over Congress?  Perhaps the chart ended at 2002 becuase it was being used to make a point about Reagan who was long since out of office by then.
     
    If the point was solely about Reagan, the author would never have mentioned Bush and Bush 2. That’s kind of becomes obvious when you find out he doesn’t have anything to back up his argument, yet groups all these Presidents together as if he does anyways.
     
    If you want to know where Bush’s veto pen was, ask him yourself. He, unlike a Democrat, will actually tell you the truth about his motivations and plans. You think he’s going to tell you that he was supposed to be the Messiah and he knew God’s plan thus he didn’t veto anything?
     
    As for the misunderstanding, it’s not a big thing so don’t worry about it.
     
    Why must you always assume the worst?
     
    Because when studying military history, the art of war, and human psychological vulnerabilities, it was often necessary to assume the worst in order to provide contingencies for disasters. Those that simply expected the best, while planning for the best, would get cold knocked out by unexpected surprises. If things are better than the expected projections, then the problem often solves itself. You don’t have to worry about things that are “better” than your plan had contingencies for. But if you suffer a disaster and your plan did not account for such, then you’re in trouble. Lack of time to react is only one issue.
     
    Larry, you’re probably right, but Bush should have vetoed the bills anyway and forced Congress into some restraint.  The Democrats did not have a veto-proof majority.
     
    You don’t seem to understand Bush’s psychological profile. He’s somebody that worked with Kennedy and helped Kennedy get his No Child Left Behind Act together, and funded it. This is the same Kennedy that keeps stabbing Republicans in the back and enjoying video montages of his car over bridge days. If you think Bush was going to treat actual domestic insurgents here in the US as enemies, just like foreign terrorists, you’d be dead wrong. Bush was not like that. And nobody, including you and me, could convince him to be like that, regardless of whether it was necessary or not.
     
    Oh wait, Kennedy is dead. So I should say “was”. Past tense. Ah hold, doesn’t that also mean Kennedy was a Senator for Life, something you often saw in the Roman Senate during Nero’s reign of terror? Funny that.
     
    Bush should have ignored the UN and went right into Iraq and destroyed Saddam before he ever could plan out an insurgency and stash secret funds for it in the six or so months he was given. Bush also should have finished off the war with North Korea using nukes and a South Korean army invasion. Bush could and should have done a lot of things. But since Bush was leery of abusing executive power, DQ, he didn’t do a lot of the things he could have done. So you take the good with the bad, period. That’s how it is. All the talk and backtalk going on about the war in Iraq would easily have been silenced if Bush did what Obama does and if Bush enacted the War Powers Act right after 9/11. But he didn’t. So unless you think you can handle all of that just so you can get your veto, you’d best not try to change history, especially when you can’t do it given Bush’s character and personality.
    Bush was, is, and will be always more kind and tolerant of America’s domestic insurgency than he ever was of foreign enemies. Regardless of whether that favor is returned or not. Bush, as I said years ago, lacks a fundamental element: ruthlessness. If you want to give Bush that element, be prepared to accept a lot of things you wouldn’t like to have happened, along with the things you liked to have happened.
    While the statist would have us believe the rich can fund our road to nirvana
     
    That’s like believing Kerry, Teresa, and Soros is going to fund your damn retirement. You’d be lucky they don’t shop your organs out in a China backstreet surgeon for some pocket blackjack cash. The truly rich and powerful aren’t going to let you see a dime of their money, period. Any LibProg that tells me the rich is going to fund the peanut gallery and slave plantation workers, is smoking illegal products smuggled in from Venezuela. That’s my view.
     
    They’re not going to “pay” these workers. They’re going to own these workers. Difference.
     
     
     

  33. says

    Btw, I gave people, whatever you call them, plenty of the benefit of the doubt when we were arguing about Iraq and the Un and Valerie Plame’s yellowcake report in 2002 and onwards.
     
    You know what came as a result of that?
     
    They back then: We need more troops. Bush lied and people died. He didn’t want to send in enough troops to get the job done. He didn’t fund enough uparmored humvees and body armor.
    Right afterwards: The Surge won’t work. More troops is Bush being stupid. More troops will die and not get anything done. Bush is spending too much. The deficit is HUGE and GROWING (date 2005-6).
     
    Around this year: The military doesn’t need any body armor or munitions or funding. Let’s just make them pay for their own medical costs.
     
    You expect me, DQ, to now expect better of them? I don’t think so.
     
     

  34. SADIE says

    DQ, The link examines the very same issue you raised plus, plus, plus. I posted earlier, that we do not live in a vacuum -monetary policies are linked. The conundrum is that while America, may or may not fix the handle on our internal problems … the door to Europe is broken.
     

    “Germany cannot keep paying for bail-outs without going bankrupt itself,” said Professor Wilhelm Hankel, of Frankfurt University. “This is frightening people. You cannot find a bank safe deposit box in Germany because every single one has already been taken and stuffed with gold and silver. It is like an underground Switzerland within our borders.


    http://directorblue.blogspot.com/2010/11/krugmans-chickens-come-home-to-roost.html
     
     
     

  35. says

    You cannot find a bank safe deposit box in Germany because every single one has already been taken and stuffed with gold and silver.
     
    Good place to rob.
     
    Btw, did anyone not know that Germany has had far more incidents of Columbine/Vtech type shootings than the US has ever had?

Leave a Reply