Posted on 08/10/2005 11:15:11 AM PDT by SierraWasp
BULLETIN >> U.S. FEDERAL DEFICIT SHRINKS TO $53 BLN IN JULY
"I know what you're saying about Reagan. He used to blame the Congress for the spending."
It takes two to tango. Point I was trying to make was due to cuts during Yimmities years on military needs, Regean had to spend a lot more during his years, and the Congress went along with it, to get our military up to snuff. After all we had to at least stay equal with the Russians. So the end result was, with not cutting back on social programs, added spending was incurred to rebuild our military. That was all I was saying.
Basically I think you are right. The SS IOU's are not held by the public. They are in that file cabinet in West Virginia President Bush referred to in his Social Security statements. The debt that you see quoted on "debt clocks" and in the news is all of the debt public and trust fund combined.
Just to elaborate a little further too on our governments number keeping. The numbers they use in almost all government statistics are "massaged". Our budget deficits do not reflect the true shortfall for our budgets. Inflation is understated using "hedonic adjustments". An example of such an adjustment is a laptop you bought today is 2x as powerful from the laptop you bought 5 years ago due to faster processing, more memory, etc. The government statistically adjusts the price of new laptop down to reflect these "improvements". The problem with this adjustment is you the consumer still paid the sticker price of the new laptop... not the adjusted price in the CPI. Another thing they do with the CPI is called substitution. The theory behind this is if an item gets to expensive (say steak), the consumer will choose an alternative (say chicken). The government CPI statistically adjusts now for substitution even though the price of steak has continued to rise. There are other manipulations that go on with the CPI besides these examples. Another government number that is manipulated is employment. The government uses a "birth/death" creation of small business in the employment statistics. Basically this is a statistical guess at the number of jobs created or lost due to small businesses in the reporting period. It is another massaged number.
If inflation and unemployment calulations stayed constant going back over history, today's published numbers would be waking the population up to the economic difficulties we face. I don't think they will be kept hidden much longer.
Ostrich Optimists flame away.
Thanks for the kind words. But you are much too modest; your posts were excellent (especially the one with the Scrooge McDuck-Goofy analogy).
I have enjoyed your posts today.
Absolutely. The tax cuts were tiny, but like all tax cuts, they do have an incentive effect. It's like if you start paying double time for all overtime instead of time and a half---watch the overtime hours go up.
Right, and that's why Net National Product (NNP), which subtracts repatriated profits as well as capital consumption, is a much better measure for gaguing the financial health of a nation.
You're also right about Clinton. He just got lucky about productivity and oil. Plus the captial market bubble inflated revenues, gaving the illusion of fiscal health.
At any rate, don't delude yourself, we're in big fiscal trouble. Both in the government sectors and private sectors, we are in debt and unfunded liabilities up to our ears. The situation we have today is unprecidented if you look at the ratio of our net obligations to our net national income (NOT GDP, which for reasons I posted earlier is a lousy measure of financail health).
You have to remember the surpluses we had in FY99 and FY00 were the result of many companies cooking the books, a NASDAQ market that went up 150% from late 98 to early 2000. The capital gains and income taxes that came in those years that were unrealistic. Had we just had a very good period of 30% increase we still would have been about even without counting the money borrowed from Social Security.
It's just amazing when you look back at Clinton's 2nd term. We had 3 chances to get Bin Laden, didn't do it. We knew ATTa was here and they let him go in 2000. The corporate corruption was rampant, and he told us Iraq had WMD's, we bombed them and then let it go. UN Oil for Food was going on during this period. The Chinese missile technology was passed. The North Korean nuclear bad deal, etc. ALL THIS IN CLINTON's 2nd Term and the REPUBLICANS have let the RATS blame it all on BUSH. Disgusting!!!!!!!
That was the only halfway readable chart I could find googling. If you have a better one, feel free. Point is, clearly, the deficit has been going in the wrong direction for about as long as GW has been in office.
Actually, that graph looks to be correctly showing the deficits and surpluses in current dollars. Following are the total receipts, outlays, and deficits/surpluses in current dollars, as given in the 2006 U.S. Budget:
RECEIPTS, OUTLAYS, AND SURPLUSES OR DEFICITS(-) (billions of dollars) Total Total Unified Year Receipts Outlays Deficit ---- -------- ------- ------- 1980 517.1 590.9 -73.8 1981 599.3 678.2 -79.0 1982 617.8 745.7 -128.0 1983 600.6 808.4 -207.8 1984 666.5 851.9 -185.4 1985 734.1 946.4 -212.3 1986 769.2 990.4 -221.2 1987 854.4 1004.1 -149.7 1988 909.3 1064.5 -155.2 1989 991.2 1143.8 -152.6 1990 1032.0 1253.1 -221.1 1991 1055.0 1324.3 -269.3 1992 1091.3 1381.6 -290.3 1993 1154.4 1409.5 -255.1 1994 1258.6 1461.9 -203.2 1995 1351.8 1515.8 -164.0 1996 1453.1 1560.5 -107.5 1997 1579.3 1601.2 -21.9 1998 1721.8 1652.6 69.2 1999 1827.5 1701.9 125.5 2000 2025.2 1789.1 236.2 2001 1991.2 1863.0 128.2 2002 1853.2 2011.0 -157.8 2003 1782.3 2159.9 -377.6 2004 1880.1 2292.2 -412.1 2005* 2052.8 2479.4 -426.6 2006* 2177.6 2567.6 -390.1 2007* 2344.2 2656.3 -312.1 2008* 2507.0 2757.8 -250.8 2009* 2650.0 2882.9 -232.9 2010* 2820.9 3028.2 -207.3 *estimated Source: Budget of the United States Government, FY 2006, Historical Table 1.1
As can be seen, the deficit topped $200 billion in 1983, 1985, and 1986 and the surplus topped $200 billion in 2000, same as the graph. In any case, following is a graph showing the deficit/surplus as a percent of GDP:
The sources and actual numbers can be seen at http://home.att.net/~rdavis2/def06.html.
Thanks, and it's right on topic. My favorite is the showing the burden of public debt on the economy.
As I mentioned before, that graph is extremely misleading. The following table shows the items that you're looking at plus the deficit:
DEBT, DEFICIT, RECEIPTS, AND OUTLAYS (percent of GDP) Gross Public Total Total Unified Year Debt Debt Receipts Outlays Deficit --------------------------------------------------- 1992 64.1 48.1 17.5 22.1 -4.7 1993 66.2 49.4 17.6 21.4 -3.9 1994 66.7 49.3 18.1 21.0 -2.9 1995 67.2 49.2 18.5 20.7 -2.2 1996 67.3 48.5 18.9 20.3 -1.4 1997 65.6 46.1 19.3 19.6 -0.3 1998 63.5 43.1 20.0 19.2 0.8 1999 61.4 39.8 20.0 18.7 1.4 2000 58.0 35.1 20.9 18.4 2.4 2001 57.4 33.0 19.8 18.5 1.3 2002 59.7 34.1 17.8 19.4 -1.5 2003 62.4 36.1 16.4 19.9 -3.5 2004 63.7 37.2 16.3 19.8 -3.6 2005* 65.7 38.6 16.8 20.3 -3.5 Gross Public Total Total Unified AVERAGES Debt Debt Receipts Outlays Deficit --------------------------------------------------- Clinton 94-01 63.4 43.0 19.4 19.5 -0.1 Bush 02-04 61.9 35.8 16.9 19.7 -2.9 02-05* 62.8 36.5 16.8 19.9 -3.0 * projected Source: 2006 U.S. Budget, Historical Tables 1.3 and 7.1
The averages appear to pretty much agree with the averages that you plotted. On average, the public debt was 43 percent under Clinton and 36 percent under Bush. However, the average deficit was nearly zero under Clinton and 3 percent under Bush. What gives?
A closer look at the debt shows that Clinton inherited a public debt of 49.4% of GDP and, during his term, it came down to 33% of GDP. Bush then inherited that 33% of GDP debt and it is projected to rise back up to 38.6% of GDP this year. What you have shown is that, if a President inherits a debt level that is 16.4% of GDP below that inherited by his predecessor, the debt is likely to average a lower percent of GDP even if he runs significantly larger deficits. Bush's policies have helped cause receipts to drop from 19.8% to 16.8% of GDP and outlays to rise from 18.5% to 20.3% of GDP. As a result, his tax-cut and spend policies have caused the balance to drop from a 1.3% of GDP surplus to a 3.5% of GDP deficit. This, in turn, has caused the public debt to rise from 33% to 38.6% of GDP and the gross debt to rise from 57.4% to 65.7% of GDP. No surprises there.
The flaw in your reasoning is that you are basically comparing apples and oranges. The debt is a result of the receipts and spending under all previous presidents. The only thing that is effected by a specific President's policies is NEW debt, that is deficits. How can you blame Clinton for the high level of debt that existed when he took office? Likewise, how can you credit Bush for the less debt (as a percent of GDP) that existed when he took office? The answer, of course, is that you can't. If you want to judge the effect of a President's policies, you need to look at the DEFICIT, not the DEBT.
Just to be clear, the $143.76 billion surplus is achieved by changing spending for Old-age and survivors insurance(OASI) and Disability insurance (DI) from "Hold even" to "Eliminate". That changes the combined spending from $544.82 billion to zero, changing the deficit of $401.04 billion to a surplus of $143.76 billion. That is, if the government continues to collect FICA taxes but immediately cuts off all current Social Security beneficiaries, including those receiving disability, we would achieve a surplus of $143 billion. To my knowledge, that is NOT the plan for private accounts.
It's amazing how many people think they can balance the budget by cutting say, foreign aid.
On that, I agree. According to the Simulation Game, the total cost for International Affairs is just $31.59 billion, broken down as follows:
International affairs ($31.59 billion) $13 billion ........ International development and humanitarian assistance $9.47 billion ...... International military aid $7.97 billion ...... Conduct of foreign affairs $1.15 billion ...... Foreign information and exchange activities
The following table shows the deficits as a share of GDP from 1940 to 1961 (Eisenhower's budgets were 1954 through 1961) and from 1982 through 1989 (Reagan's budgets):
RECEIPTS, OUTLAYS, AND SURPLUSES OR DEFICITS(-) (percentage of GDP) Total Total Unified Year Receipts Outlays Deficit ---- -------- ------- ------- 1940 6.8 9.8 -3.0 1941 7.6 12.0 -4.3 1942 10.1 24.3 -14.2 1943 13.3 43.6 -30.3 1944 20.9 43.6 -22.7 1945 20.4 41.9 -21.5 1946 17.6 24.8 -7.2 1947 16.5 14.8 1.7 1948 16.2 11.6 4.6 1949 14.5 14.3 0.2 1950 14.4 15.6 -1.1 1951 16.1 14.2 1.9 1952 19.0 19.4 -0.4 1953 18.7 20.4 -1.7 (Eisehower) 1954 18.5 18.8 -0.3 1955 16.6 17.3 -0.8 1956 17.5 16.5 0.9 1957 17.8 17.0 0.8 1958 17.3 17.9 -0.6 1959 16.1 18.7 -2.6 1960 17.9 17.8 0.1 1961 17.8 18.4 -0.6 : (Reagan) 1982 19.1 23.1 -4.0 1983 17.5 23.5 -6.0 1984 17.4 22.2 -4.8 1985 17.7 22.9 -5.1 1986 17.4 22.4 -5.0 1987 18.4 21.6 -3.2 1988 18.2 21.3 -3.1 1989 18.4 21.2 -2.8 Source: Budget of the United States Government, FY 2006, Historical Table 1.1
As a percentage of GDP, the deficit was very high through 1946, the end of the Second World War. However, it reached a maximum of 2.6% of GDP under Eisenhower, less than every one of Reagan's deficits.
Thanks for your posts. Very helpful.
That chart also shows that receipts were higher under Clinton, even tho the supply sider/tax cut ideology predicted the opposite. And now they say the Bush cuts are working because the deficit is less than projected this month, but the chart shows that receipts are down under Bush. I am not shilling for Clinton. I didn't like the guy and didn't vote for him. I'm just trying to understand what is real and true and what isn't. Seems to me the Clinton economic policy was better than either Bush economic policy. Maybe I'm nuts. And maybe they did it at the expense of military preparedness or something else, but I'd like to see that shown with charts and tables and explained by someone credible like 'remember.'
Uhh, what?
That is an excellent point- one that school kids should be made to recite every morning after the pledge. A lot of people don't realize that there's no such thing as "government money". But that's not all. Something else is the fact that there is no such thing as 'government power' and 'government debt'. It's our power and our debt.
Americans are richer and more powerful now-- even after taking into account our private and our public debts. Maybe you're disagreeing because you haven't been as lucky at life's lottery (so to speak) as most people. I don't know your situation, but if this really is the case, don't worry about the public debt because the rest of us will cover for you. Of course, we naturally wouldn't object to your getting on your feet so you could pay taxes like the rest of us; but in the meantime, for heaven's sake the least you could do is stop talking like you want a bunch of tax'n'spending Democrats in office!
A question for you, Huck. What is the decficit as a percentage of Real GDP?
Which is why Greenspan is trying to cool off the econcomy. Inflation would drive that number to about 400 BILLION in the red.
300 billion a year is a lot of money to borrow every year. Isn't it?
I understand that some people are happier with no money and no debt, but I'm much happier with some debt and a huge pile of money. I figure I can always pay off my debt whenever I want and then have no debt and a nice pile of money left over. I realize that you, Huck and others will like whatever you decide to like. I just don't understand why.
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