Discussion in 'Politics and Current Affairs' started by noah way, Jun 6, 2011.
Running in the red: How the U.S., on the road to surplus, detoured to massive debt
the surplus was a smoke and mirrors effect. all they did was borrowed more money than they spent and called it a surplus. This country has been running in the red since 1938, and once 1986 rolled around, the interest on the debt would not be possible to cover even of all money made (country-wide) were to be taxed at 100%.
None of the money paid into the federal "income" tax has ever been put toward the principal of the loans, it only goes toward the interest and will NEVER be paid off.
The US had a debt to GDP ratio of 120% after WWII that was effectively brought down to 32.5% under Truman, Ike, Kennedy, LBJ, Nixon and Carter.
Reagan, followed by Bush I, drove the deficit up to 66.3% of GDP by the end of Bush's term.
Clinton reduced the debt from 67% to 57%. Semantics aside, the surplus was revenue above spending, which was used to reduce the debt.
Bush II added $4.5+ trillion to the deficit with a combination of tax breaks for the rich ($400 billion / yr.) and multiple wars ($300 billion / yr.) which pushed the debt to over 69% of GDP.
It is interesting to correlate tax policy with the national debt. When tax rates on high incomes were substantial, we were able to radically reduce the debt. When taxes on the wealthy were slashed (Reagan, Bush II), the debt skyrocketed.
You really need to go past the headlines to understand the data you have pointed out. As always, there is more to the situation than can be summed up into a one sentence sound bite.
The debt skyrocketed under Reagan/Bush-I because defense spending went through the roof. Cutting taxes initially decreased revenue but actually increased it quite a bit a couple of years down the road due to increase in economy but not nearly enough to make up for the spending increase.
Clinton tax increases increased revenue because they were relatively minor and the economy was on a bounce from the '92 recession then due to the internet bubble. Just the capital gains taxes off the stock market in 1996 to 2000 were substantial. The bulk of Clinton's debt reduction came from a cut in military and welfare spending.
Bush-II reduced taxes hoping they would increase economic activity and pay for themselves over time. That did not happen initially because of the recession after 9/11 and later because of the fundamental change in economic climate due to a convergence of factors: Post 9/11 the US became hostile to foreigners who were a big economic driver for the tech industry. The internet and a huge increase in communication capacity made outsourcing tech jobs to other countries possible. The fall of the USSR meant many states that lived off Soviet and US subsidies had to bring their economic houses in order and became viable technical and manufacturing economies. China undertook major policy changes after Tianamen Square. All of these changes took a decade and half to fully take effect putting these economies in a position to compete with the USA for jobs and win due to their lower standard of living. All these factors took a major and permanent bite out of the US economy which led to reduction in the tax base and not an expansion, which is what a tax reduction counts on to increase revenue.
The bottom line is that in a perfect reversal of the situation, while Clinton was able to avoid any of the down sides of a tax increase due to the timing of unrelated factors, Bush failed to realize any of the benefits of a tax cut due to the timing of unrelated factors.
And while the revenues did not increase, the $350B/year drag due to the war made things a lot worse. In addition to that, domestic spending increased substantially due to the enhanced government control over the citizens in the name of security.
Couple that with more tax cuts on the wealthy and here we are. The Bush Tax Cuts are as much if not more of a drag on the economy as the wars in the Middle East.
I agree that there are many factors, some built up over generations, some that are immediate and uncontrollable (OPEC) that influence global economics.
But there are also sound and unsound economic policies. The article cites Bush for using the Clinton surplus for tax breaks instead of deficit reduction with the intent of improving his chances in the 1994 election.
I wasnt aware that Bush ran in 1994 (a non-election year)....... and I wasnt aware it was possible to use "surplus" that didnt supposedly even exist until 1996-1998 to slash taxes with the hopes of being elected in 1994
must be hard for whomever wrote the article (or someone else) to keep facts straight when theyre being made up on the fly
Oops, my mistake, meant 2004 ... thanks for noting the error. The rest of the data stands.
Since you are hammering the other poster for a clear typo, I think you are fair game to be hammered for your factual errors. You statement that Bush did not run in 1994 is factually incorrect. You statement the 1994 was a non-election year is also factually incorrect. Bush did run in 1994, which was an election year.
In 1994 Bush ran for the governor of Texas and won.
No... on a cash basis there were 4 years of true surpluses... 2 not including the trust fund surpluses.
Budget of the United States Government: Historical Tables Fiscal Year 2012
1) after 2 years of stagnant revenue it grew basically what it did before Regan
2) Reagan had a huge payroll tax increase ( as well as a gas tax increase and many closed loopholes) Check out on the link above what happened to off-budget ( trust fund ) surpluses several years into Reagans administration.
Isn't amazing that when you look at a graph that shows more spending by Republican presidents and more income by democratic presidents it turns out to be just luck?
Once again people, it's not a revenue problem, it's a spending problem. And if the Bush tax cuts cost so much money, please explain this:
Revenue collections hit record high in April - Business - Personal finance - Tax Tactics - msnbc.com
"For the first seven months of this budget year, which began Oct. 1, revenue collections and government spending are at all-time highs."
"The Congressional Budget Office said that it now expects the deficit for all of 2007 to total between $150 billion and $200 billion. That would be a significant improvement from last year’s deficit of $248.2 billion, which had been the lowest imbalance in four years."
Kind of puts into prospective the astounding amount of money this president is spending. We are now running deficits of $1.5 TRILLION!!!!
2007 was 161 billion
2008 was 459 billion
and 2009 was 1.414 trillion (due to the stimulus)
2010 was 1.294
obama wants 1.6 trillion for 2011
bushes total for 8 years is @ 2-2.5 trillion, too much
i am counting the stimulus on obama
obama for less then 3 years is 3+trillion
now this article
National Debt Up $3 Trillion on Obama's Watch - Political Hotsheet - CBS News
puts 4.9 trilion on bush
did bush spend too much? yes. he should have vetoed some of the spending bills.
did clinton balance the budget? yes, 1998-2001, but the house was republican from 1995-2005, and the senate from 1995-2001.
he didnt have a choice
U.S. Federal Deficits, Presidents, and Congress
has some interesting historical info
My point in using that article was to dismiss this talk of tax cuts being one of the reasons we are running such high deficits. That is complete nonsense and that's why I posted it. I also happened to quote a line from the article and bolded it for emphasis about spending being too high. You could post all the stats you want about spending...I AGREE!!!!
The fact is, after the 2003 Bush tax cuts, revenue to the general treasury soared to RECORD LEVELS. Period...end of story.
So once again, we have a SPENDING PROBLEM, not a revenue problem. Why is this so hard to grasp?
It's only a spending problem when you don't have revenue. If there was more revenue, there wouldn't be a spending problem. If there was less spending, there wouldn't be a revenue problem. It is one and the same thing. Why is that so hard to grasp?
Cutting taxes (revenue) does not generate revenue (taxes). It simply reduces revenue. this has been debunked repeatedly. Revenue increases that are supposedly the result of tax cuts have actually been the result of massive deficit spending. The technical name for this is "Reaganomics", which was - until Obama got elected - the Republican mantra.
Total debt 1979 (before Reagan): $826 billion
Total debt 1988 (Reagan's last year): $2.857 trillion.
Total increase in debt: 346%
Total debt 1999 (before Bush): $5.656 trillion
Total debt 2008 (Bush's last year): $10.024 trillion.
Total increase in debt: 177%
source: US Treasury
So-called "fiscal conservatives" point to tax cuts and say they increased revenue, ignoring the deficit spending that actually generated the tax revenue. They ignored spending deficits until Obama got elected. And they're still demanding more tax cuts.
Reagan Policies Gave Green Light to Red Ink
"The fiscal shift in the Reagan years was staggering. In January 1981, when Reagan declared the federal budget to be "out of control," the deficit had reached almost $74 billion, the federal debt $930 billion. Within two years, the deficit was $208 billion. The debt by 1988 totaled $2.6 trillion. In those eight years, the United States moved from being the world's largest international creditor to the largest debtor nation."
1980 revenu 517bill, 2008 2.5tril
1980 590, 2008 2.98
again almost 5 times
revenue is increasing
exception was 2001-1004, but its rebounded
take spending back to 2000, or even 2003 levels and the budget is balanced
current budget is 1.5x 2002 budget, yet revenue is o nly marginally higher
this is the problem
there is no revenue problem
the problem is they raise spending faster then the revenue goes up
1980 revenu -
Both links support my data, which is also available at US Treasury.
You are reading the CBO tables wrong. Look at the "on-budget" column for deficit spending. Also, you can't really blame Obama for 2009, which was Bush's budget.
nope obama asked bush for it, therefore its his, bush was a lame duck, had he not signed it obama would have
the link supports my data as well
it clearly shows cutting taxes raised revenue
and that spending outgrew revenue growth
we have a spending problem
Are you serious?? So if a family making $75K a year but are spending $100k a year, that's a revenue problem??? I guess you can say it is in some warped way of thinking...or is it the entitlement thinking? Maybe you believe the gov't is entitled to more of our money to cover their ridiculous spending.
I'm done with this circular argument. I'd like to know at what point do we have a spending problem in your view, since that's obviously not a problem today. And at what point have we been taxed enough to satisfy this spending binge?
Oh, and BTW, most of this spending is unConstitutional. Or I am having a hard time grasping that as well??
come on man, there are too many rich people out there, if they get to keep anything its a revenue problem
Nothing warped about it. It is perfectly logical.
If the family made $100k a year there wouldn't be a problem. Therefore it is a revenue problem.
If they only spent $75k a year there wouldn't be a problem. Therefore it is a spending problem.
It goes both ways. It makes no sense to look at spending *without* looking at revenue.
And maybe I don't. I didn't mention any beliefs in my post.
"Entitlement thinking" is not about people who have paid into medicare and social security all their working lives thinking that just maybe they should get some benefit from that, or that there should be some support for them if things go wrong.
"Entitlement thinking" is the idea that the rich are privileged and shouldn't have to pay taxes (or ever go to jail, or participate in any shared sacrifice, etc.)
All this time I'm talking about how spending and revenue go hand-in-hand, and now you dismiss spending and want to know how it's a revenue problem?
Good grief is right - it's BOTH.