Dec01
Where The Debt Comes From
on December 1, 2012 at 10:27 amIt’s the spending, stupid. And not the war spending.
As Glenn’s emailer notes, it started to skyrocket right after the Democrats took over Congress in 2007. Before that we were on track to a balanced budget. The fiscal crisis would have certainly caused a spike in the deficit with reduced revenues, but absent the insane economic policies of the first two years of the Obama administration, the economy would have bounced back just as sharply as it dropped, as it does in most other recessions.
It’s Bush’s fault so shut up.
You completely ignore the part of your own graph that shows the budget going from surplus to deficit in 2001 under Republican control.
You mean in the wake of revenues falling from the aftermath of the dotcom bubble bursting, that recessiony-sounding thing? Phbtth!
No, the revenues started falling from the Bush Tax cut that Alan Greenspan warned against. Most of the “wealth” of the dotcom boom was in future stock options and paper profits which only generate tax revenue when they are realized.
As a side note, you do know the Great Recession started in 2007 when the housing bubble burst? This graph would be more informative if you included a line for GDP. But then it wouldn’t server your partisan propaganda purposes
No, the revenues started falling from the Bush Tax cut
No, it was from declining capital gains revenue in the wake of the dotcom burst.
As a side note, you do know the Great Recession started in 2007 when the housing bubble burst?
I agree with this part. But it’s worth noting that the related stock market drop correlates with the degree of certainty on Intrade that Obama would be elected president in 2008.
But the revenues went up till 2007, which was after the tax cuts had taken effect.
Something else took place in 2001 that hurt the economy, on Sept. 11. An event more likely to be repeated under the backwards foreign policy of the current regime.
Actually Mr’s Gerrib and Matula the chart clearly shows a downward trajectory begun BEFORE Bush took office.
But that little fact just doesn’t coincide with your agenda now does it?
the chart clearly shows a downward trajectory begun BEFORE Bush took office.
I bet Titus can tell you the day of that peak.
Because Bush inherited the failed economic policies from the past 8 years of Bill Clinton. 5 trillion dollars in debt and the deregulation of the mortgage industry. You see though, Bush was a real leader and didn’t blame his predecessor like a true gentlemen President.
That’s because its Bravo Sierra. The outlays doesn’t included debt servicing. The national debt increased YOY during the faux surplus years. +2.4% in ’99, +0.3% in ’00, and +2.3% in ’01. The last true surplus year was in 1957 and 1956 during the Eisenhower Administration (-0.8 % and -0.6% YOY respectively). The alleged surpluses of Kennedy and Johnson were faux surpluses as well.
Both the D and R machines have good reasons to assume that the voters can’t do math. Fifty five years of history bear that out.
The 50 years prior to 1960 saw twelve recessionary periods and two world wars. There were 17 true-surplus budget years during that period.
Face it, the people leading this nation no longer fear debt the harbinger of national doom the way those of the Lost Generation and earlier did.
It’s amazing how people bite the Administration propaganda. I saw an old friend late on Thanksgiving, and he said something like, “thank god that crazy man Romney didn’t get in so Obama can keep working on fixing the mess Bush made of the economy.”
I said, “After four years you really believe that Obama has had no influence on the economy?!!”
Response, “Bush was one of the stupidest presidents ever, did you ever hear him talk! And anyway Obama could have done more if it weren’t for [the Republicans in Congress]” (OK so I filled in the bracketed part but I knew that was coming.
This is enough to make me believe that we should have a republic, not a democracy. Oh wait, we used to….
What I see is a long-term growth trend for Federal spending of about 5 percent per year — maybe a bit faster than we can grow the economy and hence something we need to deal with.
What I see is a gradual recession from 2000-2003 followed by a recovery resulting in first a decline in tax receipts and then vigorous growth in government receipts.
Then I see receipts declining with a recession that probably started as early as 2007 but took a dive in 2009.
I see a sharp increase in government outlays, which probably has to do with the about 800 billion TARP and about another 800 billion for the Stimulus. I see the government spending plateauing at the “new normal” owing to not wanting put put people out on the street during an economy that hasn’t recovered, together with a big gap in tax receipts, also owing to an economy that hasn’t recovered.
To the extent that it is “the spending”, I see a big jolt of spending that hasn’t sparked a recovery combined with lagging tax receipts because, again, the economy hasn’t recovered. The story I see here is not so much that “government spending is out of control” but that for whatever reason, Bush giving tax breaks to rich people, Obama not approving the Keystone Pipeline, the economy has not recovered.
The data don’t seem to support “blame Bush for this, blame Obama for that”, and I don’t see any evidence of tax rates doing one thing or another, but I see evidence for a very slow recovery that is not catching up with what we want to spend on government. I see it as a revenue problem, but you need to “grow the pie” in order to have a “pie to split up” to serve social needs.
“The data doesn’t support…” Hmmmm…I think we can blame Bush for increasing educational and prescription drug spending while not securing the means to pay for it, and we can blame Obama for spending nearly a trillion dollars in stimulus money on cronyism rather than shovel ready jobs. I am not a fan of Keynesian economics but it appears that it could work to the extent that the federal dollars are actually spent on infrastructure for a limited period of time.
The federal government, heck ALL levels of government, needs to stop spending money it doesn’t have. I am in favor of adjusting our tax code to some extent, but no one has the maturity to evaluate the need nor the effectiveness of outlays and make appropriate adjustments.
Their taxing and spending plans assume certain results but never account for a rainy day, such as a 9/11 event or a war or a recession.
I agree. Most of the QE spending is basically pointless. Infrastructure at least is an investment which causes the economy to recover more quickly once you get out of recession.
Mr. Jiminator, the key to President Reagan’s success was not capping the growth in government spending, it was rekindling the growth of the (largely private) U.S. economy.
Mr. Obama’s failing is not what he is spending as it can be argued that the current deficits are the only thing between us and total meltdown.
Mr. Obama’s failing is in promulgating a miserable “business climate”, for getting the people who could get things done to “go Galt”, more by his threats and jawboning the economy downward rather than specific policies.
One economic linchpin is energy policy. 1 million barrels of oil per day — fully one twentieth of our U.S. domestic oil usage, and Mr. Obama has been holding that up. Has nothing to do with deficits except in the indirect way that if could get energy cheap again as we did under Reagan, this whole thing will turn around.
When I said “the data doesn’t support”, I was looking at the same graph as everyone else. Revenues should be growing, and they are not. The low tax rate regime of the Bush Tax Cuts should be resulting in growing revenues, and they are not, and I blame Mr. Obama’s extreme energy policies.
What it looks like is the economy had started a recovery at the end of ’08 or early ’09 but then something happened to slow it to an almost imperceptible rise. Obama should have been thanking Bush for stabilizing the economy at the handoff and planting the seeds of recovery.
Instead we got anti-business class warfare rhetoric, a leader who refused responsibility, and a soul crushing 4+ years of racial animosity directed at anyone who dared criticize poor performance.
Dot com bubble burst. 9/11. Bush gets elected and does a round of tax cuts. Receipts go down. No surprise there. Spending continues to increase at the same rate as when there was a surplus. Doh.
The economy starts to recover. Then there is the financial crisis starting in 2007. Obama does several rounds of QE and spending continues growing while there is only a marginal economic recovery. No hate for the Republican led Congress uh? Having to rule without a budget is something you usually only see in countries like Poland. It does no wonders for investor confidence. You blame Obama for not curtailing spending but it seems W didn’t do that either.
I remember Democrats going apeshit over.Bush spending but can’t be bothered by Obama adding double to the debt in a mere four years. I think Congress overspent in the Bush years and is doing worse now.
Bush’s policies actually lead to a recovery unlike Obama’s. It is too bad that Bush didn’t work with Congress to keep spending in check.
The propaganda over a congress that is only half controlled by Republicans and only when sworn in in 2011 is remarkable. Obama can’t even get Democrats in the Senate to vote for his budgets. Do you really think the Democrats actions in congress over the last four years have had no effect on reality? We could also talk about how the Democrats acted over the previous eight years.
Here is another interesting chart, government revenues as a percentage of GDP.
http://www.usgovernmentrevenue.com/downchart_gr.php?year=1900_2010&units=p&title=Revenue%20as%20percent%20of%20GDP
Note the steady climb since 1900?
And another one showing the national debt since 1792. Notice the up swing after 1980…
http://www.usgovernmentrevenue.com/debt_deficit_history
Further down you will see the history of deficits since 1900. Note the problems starting in 1980? With the only reverse in the late 1990′s?
Yep, the size of the federal government keeps getting bigger.
Thomas, you clicked the wrong button, “total” (inc. xfer, state and local) instead of federal.
federal.
Thanks George, that makes more sense. I heard the other day revenue as % federal GDP has never been above 25%. This is key, because Obama wants to spend greater than 25% GDP, which history says will no doubt be a deficit. That’s not going over the fiscal cliff, it’s blowing up the car before it makes it to the cliff.
It’s all Bush’s fault and you a raciss.
Well, I think the peak since WW-II was about 21%. There’s an observation called Hauser’s Law which says federal revenue will be about 19.5% of GDP no matter what the marginal tax rates are. The actually bounce around from 15 to 20% of GDP, and you also have to carefully look at inflation adjusted dollars and per capita dollars because the percent GDP can lead to some erroneous conclusions. For example, tax cuts usually lead to a rise in GDP and often an increase in revenue, but will look like decreased revenue on the revenue-as-percent-GDP charts, even though revenue may go up as a result of the tax cut (thinner slice of a bigger pie). That’s kind of the whole point of the tax cut, but statists will point to the percent GDP chart to show that tax cuts decrease revenue even in cases where the inflation adjusted revenue went up. Another problem with soak-the-rich tax shifts is that the income of the rich is highly volatile, very dependent on business, the stock market, and economic swings. Making the government more dependent on such incomes creates greater budget uncertainties.
So what does Hauser know about taxes and GDP anyway? He’s not even that great an actor.
Oh, and here is a chart for USG revenue as a percentage of GDP.