Not.
Just a reminder to people like the ignorant idiots in the Space Politics comments section as to why NASA’s budget is almost certainly going to take a whack from the coming Deficit Commission. It’s not the war, stupid. And note who was in charge of the Congress (and then the White House) when it skyrocketed. Note also that even with the dreaded “tax cuts,” it was declining, indicating that it wasn’t a revenue problem, or at least not one caused by the lower tax rates.
Daveon Says:
August 23rd, 2010 at 11:31 am
“I love that the man on a blog is so much better informed than the people who actually have to take the decisions.”
That is a double edged sword, since there are informed people on the other side of the issue, too, yet YOU claim to know more than they.
It would be interesting to see the costs of Afghanistan on that graph.
Most of TARP has been repaid but we are unlikely to see repayment of any current outstanding bail outs. A GM ipo wont bring in $57 billion. Fanny and Freddie are still in deep and asking for more money (also seem to be largely immune from the financial reform bill recently passed).
When looking at the tax cuts, think of them like having a sale. If you lower the price on an item, you will make less money per unit but make up for it by increased sales volume.
After the sale, you can’t look at the units sold and then say you lost $x per unit compared to your normal price because sales would have been lower under the higher price. You look at how much revenue you made after the sale and compare that to your normal revenue.
A 3 line graph with unemployment, tax revenue, and deficit spending would be better than one that just looks at spending. (Looking for one)
You will see a couple things. Spending increased every year but shrunk as a % of revenue. Revenue rose after 2003 and fell off around 2007. Unemployment dropped in 2003 and stayed near 5% until 2007.
You can’t go back and say that revenue would of risen even more with a higher tax rate because the market conditions would of been different. Unemployment certainly would of been higher, affecting the revenue.
Essentially, there are two choices. Either the tax cuts did nothing to stimulate the economy and things got better on their own or the Bush tax cuts stimulated the economy increasing employment and in turn tax revenue (Bush’s stated strategy).
Revenue is hard to control, it depends on the health of the economy. Spending is controllable.
Bart and Cecil – I do understand sales pricing. What my simple example showed is what level of sales increase would be needed to make up the lost revenue on a volume increase.
Daveon says:
“Hey, and that’s a NICE graph of the cost of Iraq… I wonder what would happen to the numbers if they factored back in the costs of Afghanistan and ran it back to 2001 like the CBO report referenced does…
You guys do make me chuckle.
Oh please! The left was howling in rage at Bush’s “off budget war” and the various other accounting gimmicks the Republicans used to hide the true cost of the war. I believe the chart is attempting to show that even when you include the so called off budget expenses of the war that the yearly deficits still don’t compare to anything that Obama has done thus far. Accounting gimmicks and declared off budget items aside, they still show up in our end of year debt total as reported by the Bureau of Public Debt That number is what we owe regardless of how the bean counters push the piles around.
If your chuckling at us, you must be slapping a knee over the $6.3 trillion in liabilities of government-controlled Fannie Mae and Freddie Mac that the Obama administration has declared off budget.
Yep, he’s guffawing like a regular jackass.
Chris,
It gets tricky.
There is no “lost revenue.” Tax revenue went up after 2003.
You could argue that revenue would have increased even more with a higher tax rate but in order for that to happen, unemployment would still need to drop.
The greatest correlation is between tax revenue and unemployment. Unemployment goes down and tax revenues go up and vis versa.
So, the crux of the problem is what caused the drop in unemployment? Was it the tax cuts stimulating the economy or the economy healing itself?
The “lost revenue” seems to come about by assuming that the drop in unemployment and the overall improvement of the economy from 2000-2007 was totally unrelated to the Bush Tax Cuts.
It would be interesting to see what this graph looks like, except with accurate numbers.
The total federal debt outstanding went up by more than half a trillion dollars per year ever since 2002, not by less than $400 billion (and certainly not by less than $200 billion!) There are a couple popular tricks (e.g. “if we swiped the money from Social Security receipts it doesn’t count!” or “if it was in an off-budget appropriations bill it doesn’t count!”) that might have been used to fudge the numbers. I’m not sure which was used, nor who (CBO? American Thinker?) did the fudging.
The explosion in debt also clearly begins before Obama is even elected, with our first trillion-dollar fiscal year ending 9/30/2008. Not that that excuses the atrocious subsequent 1.9-trillion-dollar fiscal year, of course, but it does force the interpretation to be a little less simplistic.
After checking it out: these are the CBO’s numbers, as obtained by lumping Social Security receipts and outlays in with the rest of the budget.
Which is understandable in one sense: you can’t talk about government spending without talking about massive entitlement programs. But not in another sense: the only reason SS receipts exceed expenditures is the same reason Treasury bond receipts exceed expenditures, because people are giving the government money that they expect (perhaps overoptimistically, in both cases…) to be paid back for later. If we’re not taking those obligations into account, we could claim the deficit every year is $0!
On the gripping hand, if we *are* taking unfunded obligations into account, there’s no stop light after Social Security. GW Bush added at least $10 trillion to federal obligations with Medicare Part D; I’d be surprised if Obamacare ended up costing any less.
“the only reason SS receipts exceed expenditures is the same reason Treasury bond receipts exceed expenditures, because people are giving the government money that they expect (perhaps over optimistically, in both cases…) to be paid back for later.”
The intragovernmental holdings represent dollars that the gov’t actually spent from trust funds. You can’t very well call it a surplus anymore once it is spent. Therefore, it is added to the total debt. Social Security is already starting to come back around and is asking to cash in those IOU’s. The government is patting down their pockets, looking around a bit, and then asking if they take a credit card. All that public debt that was paid down during the Clinton admin is just going to be put right back in again PLUS INTEREST.
This is also related to why there are so many red flags raised when the gov’t buys back our own treasury bonds. Let’s just say the Fed asks the Treasury to print money to pay for some recovery and reinvestment act road signs. The Treasury prints the money, gives it to the muckety-mucks at the Fed to swim around in, and then packages up the debt that is incurred as financial instruments. 3rd party holding companies then try to push these instruments onto investors who think they can realize a profit if they just hold onto it long enough. But nobody is buying because the interest rate is too low and their faith in our ability to repay is compromised. When nobody picks up those financial instruments the fed comes back around and buys them back from the holding companies. In other words we are using debt to buy our own debt. But the sick thing is the Fed then turns around and claims those financial instruments they just purchases as assets. Which means we use our own debt to somehow legitimize incurring more debt. If you or I tried to run our finances like this we’d have an officer at our door informing us that they are executing a warrant for our arrest. But when our federal gov’t does it we get nothing but shoulder shrugs and, “I guess we underestimated this and misjudged that, oh wells, think of all the great services we provide, Lolzors! When’s our next tee time again?”
Chris Gerrib Says:
What my simple example showed is what level of sales increase would be needed to make up the lost revenue on a volume increase.
No. It didn’t. Go back and read my post again. Concentrate.
Having waded through all of this to this point, could any of you address the points brought by roystgnr?
Especially “There are a couple popular tricks (e.g. “if we swiped the money from Social Security receipts it doesn’t count!” or “if it was in an off-budget appropriations bill it doesn’t count!”) that might have been used to fudge the numbers. I’m not sure which was used, nor who (CBO? American Thinker?) did the fudging.”
Frankly, I was having trouble with the graph, and the numbers here (from roystgnr) need to be ‘splained to someone like me who isn’t a long time fiscal watch dog.
Thanks!
Josh Reiter Says:
August 23rd, 2010 at 5:50 pm
“If you or I tried to run our finances like this we’d have an officer at our door informing us that they are executing a warrant for our arrest.”
That’s true, but only because the government has monopoly power in the printing of money (did someone say Monopoly money?), and the power to send out those officers to enforce it.
The whole thing is a great big shell game. The money isn’t what matters. Money is just the way we allocate the goods and services which we can produce for consumption. What matters is:
A) Productivity – what level of goods and services we can produce
B) Who owns the debt – if we have to send those goods and services out of country for someone else’s benefit
So how long have Enron executives been running the country?
I’d say FDR if I were to guess.
The chart provokes another thought…if there had been no Iraq War, there would have been a continued Iraq Containment Policy. What would have been the cost of the latter?
No one on Earth gives a shit.
The deficits and the recession and the world debt crisis are brought about by war alright — the Russia-Georgia War of 2008 that resulted in oil at $140/barrel that was the spark triggering economic collapse.
Drill here, drill now, and the rest is just details.
Related to all of the above:
http://www.washingtonexaminer.com/opinion/blogs/beltway-confidential/Little-known-fact-Obamas-failed-stimulus-program-cost-more-than-the-Iraq-war-101302919.html