Here we go, it's a scatter plot of numbers in Table 16-1 in the FY '07 Analytical Perspectives,. Help me out here.
Where the heck is everyone coming up with this "out-of-control-drunken-sailor" song and dance?
Posted on 10/06/2006 10:19:40 AM PDT by West Coast Conservative
The federal budget estimate for the fiscal year just completed dropped to $250 billion, congressional estimators said Friday, as the economy continues to fuel impressive tax revenues.
The Congressional Budget Office's latest estimate is $10 billion below CBO predictions issued in August and well below a July White House prediction of $296 billion.
The improving deficit picture _ Bush predicted a $423 billion deficit in his February budget _ has been driven by better-than-expected tax receipts, especially from corporate profits, CBO said.
McGovern? Is that the lib who's finally discovering that lowering business taxes might spur a better economy?
Here's a link from an article by him in the LA TIMES May 2006 titled "The End Of More"...
http://www.latimes.com/news/opinion/commentary/la-oe-mcgovern22may22,0,5962975.story?coll=la-news-comment-opinions
May 22, 2006 GEORGE S. MCGOVERN, nominee for president in 1972.
Thanks; I always knew I liked that guy...
I can't believe the President's senior citizens drug program adds anywhere near this much to the deficit.
Can anyone validate this number?
I can't believe the President's senior citizens drug program adds anywhere near this much to the deficit.
Can anyone validate this number?
The following table is from page 108 of the 2006 Annual Report of the Medicare Trustees, found online at http://www.cms.hhs.gov/ReportsTrustFunds/downloads/tr2006.pdf:
Table III.C17.—Operations of the Part D Account in the SMI Trust Fund (Cash Basis)
during Calendar Years 2004-2015
(billions of dollars)
-------------------------------------------------------------------------------
Income Expenditures
------------------------------------------ -------------------------
Transfers Interest Adminis-
Calendar Premium General from and Payments trative
year income revenue States other Total to plans expense Total
Historical data:
2004 — $0.4 — — $0.4 $0.4 — $0.4
2005 — 1.1 — — 1.1 1.1 — 1.1
Intermediate estimates:
2006 5.0 46.2 $7.0 $0.1 58.3 57.5 $0.7 58.3
2007 7.5 52.5 7.5 0.1 67.7 67.0 0.7 67.7
2008 10.5 59.8 8.1 0.1 78.4 77.7 0.7 78.4
2009 12.7 65.6 8.7 0.1 87.2 86.5 0.7 87.2
2010 11.9 72.2 9.4 0.1 93.6 92.9 0.7 93.6
2011 14.4 79.5 10.1 0.1 104.1 103.4 0.7 104.1
2012 16.0 88.0 10.9 0.2 115.0 114.4 0.7 115.0
2013 17.7 97.4 11.9 0.2 127.1 126.4 0.7 127.1
2014 19.5 107.7 12.8 0.2 140.2 139.5 0.7 140.2
2015 21.5 119.2 13.9 0.2 154.8 154.0 0.8 154.8
As can be seen, the estimate for the general revenue cost of the Senior Citizen Drug Program (Medicare Part D) was $46 billion in 2006. However, the cost is projected to rise to over $100 billion per year by 2014. In any case, the current $46 billion is less than a fifth of the current deficit. And, as shown in the Treasury figures in post # 102, the total federal debt actually increased by a much higher $574 billion in the fiscal year that just ended.
The table also shows that the premiums collected from beneficiaries pay just a small portion of the cost. They will pay about 9 percent of the cost in 2006, rising to about 14 percent by 2015. The small portion that is paid by states is to make up for Medicaid savings for drug benefits that were covered by Medicaid but will now be covered by Medicare Part D. General revenues pay the great majority of the cost, about 77 percent in 2015.
In my initial post to this thread, I simply pointed out that, while the reported deficit has gone down to an estimated $250 billion, the total federal debt increased $574 billion in the fiscal year that just ended, over $20 billion MORE than it increased during the prior fiscal year. Only after several posts addressed to me (starting with post post #147) contended that "Bush's tax cuts have resulted in higher tax revenues" did I address the fact that there is no evidence of that. I don't believe that I have yet addressed whether tax cuts SHOULD pay for themselves, simply that they DON'T.
However, now that you've raised that issue, I will say that I think that tax cuts should either be paid for via spending cuts or alternate tax hikes (as would be required under PAYGO) or there needs to be a very clear rationale given and debated about why the cost cannot be currently dealt with and/or what benefit future generations will receive from the unpaid-for spending to justify our loading them with higher debt and interest payments. For example, it was obviously worth it for the U.S. to spend what was needed to win World War II. However, it is worth noting that we have never given ourselves a tax cut during any war until Bush's recent tax cuts.
We should be able to agree that Kennedy's tax-cuts left America with a much better economy than the one the Republican's gave us, just like today's economy is much better than it was under Carter before Reagan's tax-cuts. I guess I'll go with the idea that my keeping my own money does not make me poorer, and that it's the taxes that must be justified, not the tax-cut.
As I say at my posting at http://home.att.net/~rdavis2/taxcuts.html), I've done little analysis of the effect of the Kennedy tax cut but I will concede that the top marginal rate of 91% before that cut seems oppressive. Regarding Reagan's tax cuts, I saw no strong evidence that they permanently affected the GDP one way or the other. Also, any perceived benefit has to be weighed against the higher debt and interest payments that it left to future generations.
I'm proud to say I voted for McGovern because he told the truth more than Nixon did. It was that same principle that made me vote for Bush and Dole. I go for principle, not politics. I just filled out my absentee ballot and got it ready for Monday's mail --I voted for increased Republican control of congress to keep taxes low, and I voted for Democrat control of the county offices so I can keep getting my absentee ballots in the mail.
I likewise tend to vote for the candidate who seems to be more truthful. However, I don't think that the Bush administration has been very truthful when it comes to the effect of its tax cuts. For example, an article from the Center on Budget and Policy Priorities titled CLAIM THAT TAX CUTS “PAY FOR THEMSELVES” IS TOO GOOD TO BE TRUE: Data Show No “Free Lunch” Here states the following:
In recent statements, the President, the Vice President, and key Congressional leaders have asserted that the increase in revenues in 2005 and the increase now projected for 2006 prove that tax cuts “pay for themselves.” In other words, the economy expands so much as a result of tax cuts that it produces the same level of revenue as it would have without the tax cuts.
President Bush, for example, commented on July 11, “Some in Washington say we had to choose between cutting taxes and cutting the deficit…. that was a false choice. The economic growth fueled by tax relief has helped send our tax revenues soaring.”[1] Earlier, in a February speech the President stated, “You cut taxes and the tax revenues increase.”[2] Similarly, Vice President Cheney has claimed, “it’s time for everyone to admit that sensible tax cuts increase economic growth and add to the federal treasury.” [3] And Majority Leader Frist has written that recent experience demonstrates, “when done right, [tax cuts] actually result in more money for government.”[4]
A big problem with the "tax cuts pay for themselves" argument is that it negates the need to identify and scrutinize the costs and benefits of the policy. The fact that current taxpayers get more money in their pocket is a very obvious benefit. The fact that revenues will be somewhat lower requiring some plan to compensate for them seems likewise obvious. In any case, I commend you for being willing to discuss tax cuts honestly, admitting that they have both costs and benefits. Thanks.
If the deficit is $250 billion, and the estimated expenditure out of general revenue is $46 billion (thanks to Remember), the answer is 'no'.
Excellent summary!
Excellent summary!
Thanks, but it's Remember we need to applaud. I'm deeply grateful that he's got the integrity to state what he believes. He said "tax cuts should either be paid for via spending cuts or alternate tax hikes". He added "I don't think that the Bush administration has been very truthful" and he gave as an example the statement "economic growth fueled by tax relief has helped send our tax revenues soaring" quoted by Center on Budget and Policy Priorities
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What Others Say About the Center
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Remember, I'll follow your example and state my beliefs too.
I go for original quotes; Bush's statement was from here and he went on to talk about how debt dropped as % gdp. The closest he got to a misstatement was "this year's deficit will actually come in at about $296 billion. (Applause.)" I say he's not in Nixon and Clinton's league just because he projected a deficit of $296 billion when in fact it turned out to be only $250 billion.
But all that is tangential. The core of our disagreement is with whether a tax-cut can or should be justified
The idea that a tax-cut needs a reduction in spending assumes that all borrowing is wrong. That's child-like, unless we're Muslims and are forbidden to borrow. To say a tax-cut needs an alternate tax assumes that the size of government cannot be reduced. The main reason I disagree is because I consider that we are owners of the government and that taxes are the cost we pay to have it. Whenever a reduction in cost is available it is simply seized, and it's just not a matter that needs justification. The time that we need to justify something is when we consider a new payment for a new purchase.
As you know, the Center on Budget and Policy Priorities article was pointing out that "the President, the Vice President, and key Congressional leaders have asserted that the increase in revenues in 2005 and the increase now projected for 2006 prove that tax cuts 'pay for themselves.'", not that their estimate for the deficit was off. On this count, their quote from Bush seems accurate. However, I am always careful about checking information that comes from any of the "think tanks". If you prefer, following is an excerpt on the same topic from conservative columnist Bruce Bartlett, in a National Review Online article:
Interestingly, the Bush administration is making the supply-side argument much more loudly than the Reagan team ever did. In a January 7 speech, President Bush said his proposal would increase growth enough to raise federal revenue: “That growth will bring the added benefit of higher revenues for the government — revenues that will keep tax rates low, while fulfilling key obligations and protecting programs such as Medicare and Social Security.”
A few days later, Vice President Cheney echoed this view in a speech before the U.S. Chamber of Commerce. Said Cheney, “The president’s growth package will reduce the tax burden on the American people by $98 billion this year, $670 billion over the next 10 years. But the actual impact on the deficit will be considerably smaller than the static projections, because the president’s package will generate new growth, it will expand the tax base, and thus increase tax revenue to the federal government ultimately.”
Lastly, White House Press Secretary Ari Fleischer had this to say on January 8: “The entire package the president does believe will lead to growth, which will over time grow the economy, create additional revenues for the federal government, and pay for itself.”
But all that is tangential. The core of our disagreement is with whether a tax-cut can or should be justified
The idea that a tax-cut needs a reduction in spending assumes that all borrowing is wrong. That's child-like, unless we're Muslims and are forbidden to borrow.
Likewise, one could say that it's wrong and child-like to selectively pick out quotes from a person's statement so as to misrepresent their position. You stated above that I said "tax cuts should either be paid for via spending cuts or alternate tax hikes". Following is the full paragraph that I wrote with the section you excerpted in italics:
However, now that you've raised that issue, I will say that I think that tax cuts should either be paid for via spending cuts or alternate tax hikes (as would be required under PAYGO) or there needs to be a very clear rationale given and debated about why the cost cannot be currently dealt with and/or what benefit future generations will receive from the unpaid-for spending to justify our loading them with higher debt and interest payments. For example, it was obviously worth it for the U.S. to spend what was needed to win World War II. However, it is worth noting that we have never given ourselves a tax cut during any war until Bush's recent tax cuts.
I'm sure that you understand that the or clause following the section you excerpted was given as an alternative. However, you made no reference to that alternative and implied that I was against all borrowing.
To say a tax-cut needs an alternate tax assumes that the size of government cannot be reduced. The main reason I disagree is because I consider that we are owners of the government and that taxes are the cost we pay to have it. Whenever a reduction in cost is available it is simply seized, and it's just not a matter that needs justification. The time that we need to justify something is when we consider a new payment for a new purchase.
If we need to justify a new payment for a new purchase then we also need to justify the arbitrary cutting of a payment for a past purchase. That's what the tax cut represents. As I'm sure you know, there has been no "reduction in cost" in our federal government. On the contrary, the cost of government as grown faster under Bush than under any president since Lyndon Johnson. If we can't cut the costs when we have just rewarded ourselves with tax cuts, when will we be able to cut them?
By the way, you mentioned above that Bush "went on to talk about how debt dropped as % gdp". Actually, he talked just about the deficit as a % of GDP. The gross federal debt (the one at $8.5 trillion) is continuing to increase as a % of GDP. Following are the numbers:
FEDERAL DEBT AT THE END OF FISCAL YEAR: 1990-2011
(as percentage of GDP)
Federal Social
Gross Public Foreign Gov't Security Medicare GDP
Year Debt Debt Debt Accounts Debt Debt ($bil)
---- ------- ------- ------- -------- -------- -------- -------
1990 55.9 42.0 7.7 13.9 3.7 1.9 5735.4
1991 60.6 45.3 8.0 15.3 4.5 2.1 5935.1
1992 64.1 48.1 8.6 16.1 5.1 2.2 6239.9
1993 66.2 49.4 9.0 16.8 5.6 2.3 6575.5
1994 66.7 49.3 9.4 17.4 6.1 2.2 6961.3
1995 67.2 49.2 10.9 18.0 6.6 2.0 7325.8
1996 67.3 48.5 12.7 18.8 7.1 2.0 7694.1
1997 65.6 46.1 14.9 19.5 7.7 1.8 8182.4
1998 63.5 43.1 14.1 20.4 8.5 1.8 8627.9
1999 61.4 39.8 14.0 21.6 9.4 2.0 9125.3
2000 58.0 35.1 10.9 22.9 10.4 2.2 9709.8
2001 57.4 33.0 10.0 24.4 11.6 2.4 10057.9
2002 59.7 34.1 11.6 25.6 12.8 2.6 10377.4
2003 62.6 36.2 13.5 26.3 13.7 2.6 10805.5
2004 63.7 37.2 15.9 26.5 14.2 2.4 11546.0
2005 64.3 37.4 16.8 27.0 14.7 2.4 12290.4
2006* 65.3 37.2 28.1 13030.2
* estimated
The 2006 debt numbers are based on U.S. Treasury numbers from http://www.publicdebt.treas.gov/opd/opdpdodt.htm. All other numbers and sources are at http://home.att.net/~rdavis2/debt07.html.
We can agree that government borrowing, taxing, and spending can be good. How about we set a preferential target ranges for debt, revenue, and spending. I suggest we look at historical numbers (going back say, 50 or 100 years) for public debt, federal revenue, and federal spending all % gdp and then see if we like the trends. I'm willing to start crunching numbers now.
Are we together on this?
Here we go, it's a scatter plot of numbers in Table 16-1 in the FY '07 Analytical Perspectives,. Help me out here.
Where the heck is everyone coming up with this "out-of-control-drunken-sailor" song and dance?
Help me out here.
Where the heck is everyone coming up with this "out-of-control-drunken-sailor" song and dance?
I've likewise looked at debt numbers from the FY '07 Budget and can post a graph with some additional data. The data comes from tables 7.1, 10.1, and 13.1 in the FY '07 Historical Tables and, being from the same budget, seems to agree exactly with the data in your scatter plot. Following is the graph:
The actual numbers and sources are at http://home.att.net/~rdavis2/debt07.html. The blue line in your graph looks to correspond with the blue line in my graph from the peak debt in 1946 though 2005. That is the debt held by the public and does not include the monies that have been borrowed from the trust funds, especially the Social Security trust fund. The green line in my graph is this debt plus the monies borrowed from Social Security and the red line is the gross federal debt (the debt which is currently about $8.5 trillion) which includes the monies borrowed from all of the trust funds. As can be seen, these latter two measures of the debt are rising much more rapidly than the debt held by the public.
According to page 9 in the Summary of the 2006 Annual Social Security and Medicare Trust Fund Reports, Social Security is projected to start paying out more than it takes in (excluding interest) in 2017 and will have cashed in all of its bonds by 2040. Hence, it seems to me that we should be more concerned about the gross federal debt (red line) or at least the debt including what is owed to Social Security (the green line).
Still, I agree that the talk of our "out-of-control-drunken-sailor" spending is overstated. The following table shows receipts and outlays as a percentage of GDP since 1990:
RECEIPTS BY SOURCE, OUTLAYS, GDP, AND SELECTED TAX RATES: 2000-2005
(percent of GDP^)
Top
Individ Corporate Social Excise Total Total Marginal FICA
Year Income Income Insurance Taxes Other Receipts Outlays Rate^ Rate^
---- --------- --------- --------- -------- -------- -------- -------- -------- --------
1990 8.14 1.63 6.63 0.62 0.98 18.00 21.85 28.00 7.65
1991 7.88 1.65 6.67 0.71 0.86 17.78 22.31 31.00 7.65
1992 7.63 1.61 6.63 0.73 0.89 17.49 22.14 31.00 7.65
1993 7.75 1.79 6.51 0.73 0.77 17.56 21.44 39.60 7.65
1994 7.80 2.02 6.63 0.79 0.84 18.08 21.00 39.60 7.65
1995 8.06 2.14 6.61 0.78 0.86 18.45 20.69 39.60 7.65
1996 8.53 2.23 6.62 0.70 0.80 18.89 20.28 39.60 7.65
1997 9.01 2.23 6.59 0.70 0.77 19.30 19.57 39.60 7.65
1998 9.60 2.19 6.63 0.67 0.87 19.96 19.16 39.60 7.65
1999 9.64 2.02 6.70 0.77 0.89 20.03 18.65 39.60 7.65
2000 10.34 2.13 6.72 0.71 0.95 20.86 18.43 39.60 7.65
2001 9.89 1.50 6.90 0.66 0.85 19.80 18.52 39.10 7.65
2002 8.27 1.43 6.75 0.65 0.76 17.86 19.38 38.60 7.65
2003 7.35 1.22 6.60 0.62 0.71 16.50 19.99 35.00 7.65
2004 7.01 1.64 6.35 0.61 0.68 16.29 19.86 35.00 7.65
2005 7.54 2.26 6.46 0.59 0.66 17.52 20.11 35.00 7.65
The actual numbers and sources are at http://home.att.net/~rdavis2/recsrc.html. As can be seen, outlays have risen from 18.43% of GDP in 2000 to 20.11% of GDP in 2005. During that same period, total revenues dropped from 20.86% of GDP to 17.52% of GDP. Hence, while outlays did rise 1.68% of GDP, revenues dropped about twice that at 3.34% of GDP. Of course, only a part of that drop was due to the tax cuts. Still, there's no way that the growth in the debt can be blamed strictly on spending. Revenues dropped (due partially to the tax cuts) and there was no corresponding drop in spending.
bttt
What level of debt % gdp do we say is good?
Why do we say that any one range any better than some other range?
Answering the question is not easy, because years of experience have shown that the safe and easy tack is just sitting back and complaining about those who try to get any work done --but there I go again posting things that we both already know.
I mean, imagine someone saying that the current level (plus or minus a couple %) is good because this is what worked in the '90's. Like, if it was good enough for the 90's it's good enough for the '00's. Of course, that would mean that we'd need to increase the debt a little to bring it up to the level of the '90's, but there I go sitting back and complaining. I need to try something daring by thinking up a better debt target/justification of my own...
Not easy is it?.
Why do we say that any one range any better than some other range?
Of course, that's not a trivial question. To some degree, it depends on the nature of the debt. Few people would question the 122% of GDP (looking at the gross federal debt) that we ran up to win World War II. However, to run up the debt to 122% of GDP to simply fund additional consumption would be a very bad idea. Hence, an initial estimate for a sustainable level of debt might be somewhere between the 1981 low of 33% of GDP and the 1996 high of 67% of GDP. The trouble is, we are quickly approaching the retirement of the Boomers and every long-run projection that I've seen estimates that the debt will rise far beyond this range. For example, the following graph and table show long-run budget projections from Table 13-2 on page 185 of the FY '07 Analytical Perspectives:
LONG-RUN BUDGET PROJECTIONS OF 2007 BUDGET POLICY: 2000-2080
(Percent of GDP)
-------------------------------------------------------
2000 2010 2020 2030 2040 2060 2080
-------------------------------------------------------
Receipts........... 20.9 17.9 18.9 19.4 20.0 21.3 22.4
Outlays............ 18.4 18.9 19.4 21.6 23.6 28.2 36.1
Discretionary.... 6.3 6.1 5.6 5.6 5.6 5.6 5.6
Mandatory........ 9.8 10.8 12.4 14.4 15.7 17.8 21.0
Social Security 4.2 4.2 4.9 5.8 5.9 6.1 6.4
Medicare....... 2.0 2.8 3.7 5.0 6.1 7.9 10.4
Medicaid....... 1.2 1.5 1.9 2.1 2.3 2.8 3.3
Other.......... 2.4 2.3 1.9 1.6 1.4 1.1 0.9
Net Interest..... 2.3 1.9 1.4 1.5 2.3 4.7 9.4
Surplus/Deficit (-) 2.4 -1.0 -0.6 -2.2 -3.6 -6.9 -13.7
Primary Surplus/Def 4.7 0.9 0.9 -0.6 -1.3 -2.1 -4.2
Debt Held by Public 35.1 37.5 26.2 28.8 43.3 88.6 177.4
Additional numbers and sources can be found at http://home.att.net/~rdavis2/pro2007.html. As can be seen, the debt held by the public is projected to reach 177% of GDP by 2080. That is well above the peak reached at the end of World War II and, unlike then, there is no evidence of a major positive event (like the end of the war) to bring the debt back under control. For that reason, I think that we should be doing everything that we can to get the debt to drop closer to the prior 33% of GDP post-war low before the Boomer retirement gets fully underway.
What we know about America's debt/deficits is that the levels we got now are fine. It's the future we want to look at. OK, Paul Krugman and his Center on Budget and Policy Priorities can slant "every long-run projection" into a stinking pile of doomandgloom/votedemocrat rants. Analytical Perspectives is a little better, and as with everything from the gov't we always need to 'trust and verify'. That's something that can only be done with recorded measurements. There's no way to 'trust and verify' a future projection.
You and I are smart guys, we can do our own projections, and neither of us are able see anything that's actually ever happened in the past that could give us any reason to object to present policy now.
What we know about America's debt/deficits is that the levels we got now are fine. It's the future we want to look at. OK, Paul Krugman and his Center on Budget and Policy Priorities can slant "every long-run projection" into a "stinking pile of doomandgloom/votedemocrat rants".
I said that "every long-run projection that I've seen estimates that the debt will rise far beyond this range [33% to 67% of GDP]" and you turn that into a "stinking pile of doomandgloom/votedemocrat rants". Can you provide a link to a single credible projection that suggests that the debt will NOT rise far beyond this range? Remember that the gross federal debt is already at 65.3% of GDP.
The only positive long-run projections I've seen are based on very optimistic assumptions. For example, the following graph shows recent projections from the Congressional Budget Office for the federal debt held by the public:
The graph shows projections under six scenarios. A detailed listing of the assumptions for these scenarios are listed at http://home.att.net/~rdavis2/cbopro05.html. Scenarios 4, 5, and 6 project "higher revenues" based on the assumption that individual income taxes follow current law. This assumes that the 2001 and 2003 tax cuts expire in 2011 as scheduled and that policymakers do not modify the Alternate Minimum Tax, causing revenues to rise from the then current level of about 17.5% of GDP to 23.7% GDP by 2050. I'm sure that you are not in favor of allowing the tax cuts to expire so that leaves scenarios 1, 2, and 3. Of these, only scenario 3 appears stable. However, it projects "lower spending" based on Medicare and Medicaid spending per enrollee growing at the same rate as per capita GDP. This is substantially slower than the excess cost growth of 2.9 percentage points that Medicare has experienced since 1970 or even the growth of 1.9 percentage points observed since 1990. Scenario 3 also assumes that discretionary spending, including defense, grows at the rate of the CPI.
This last scenario is not impossible. However, it seems that we should be preparing to deal with the most likely scenarios, not the most optimistic. If you can find a more optimistic projection for likely scenarios, please post a link to it. I promise not to call it a "stinking pile of pollyannish/voterepublican blather"!
Links are easy. Here's a 1978 link where the cbo announced that Carter's spending hikes would create a budget surplus before 1980! We don't need anyone else's garbage when we create it right here on this thread-- er, you know what I mean.
OK, seriously. Let's cite specific historical monetary/fiscal policies that either worked out well or poorly in the past. Let's keep in mind that our question is whether present policy does or does not lead to disaster. Here're two examples of the kind of work we can do:
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Have there ever been times in the past when America's had higher spending/debt & lower revenue than now, but we proceeded to lower the debt % gdp? What to previous tax-cuts (1962 or 1982) tell us about what to expect with future public debt % gdp? |
Links are easy. Here's a 1978 link where the cbo announced that Carter's spending hikes would create a budget surplus before 1980! We don't need anyone else's garbage when we create it right here on this thread-- er, you know what I mean.
Yes, I think I know what you mean. You mean that you do not intend to waste your time looking for an optimistic projection when you know that a credible one likely does not exist. Instead, you prefer to simply heap disrespect on everyone else's projections, including the most recent ones released by the Bush Administration.
However, since you mentioned Carter's spending hikes, you might be interested in the following table from a recent article in the Economist:
As can be seen, George Bush junior actually beats Carter on spending growth. More interesting, however, is the fact that the annual growth in federal spending per head has been much lower under divided government than under unified government in recent administrations.
OK, seriously. Let's cite specific historical monetary/fiscal policies that either worked out well or poorly in the past. Let's keep in mind that our question is whether present policy does or does not lead to disaster. Here're two examples of the kind of work we can do:
Have there ever been times in the past when America's had higher spending/debt & lower revenue than now, but we proceeded to lower the debt % gdp?
The most recent time was when we lowered the debt from 122% of GDP in 1946 to 33% of GDP in 1981. However, there were some huge differences between that time and now. One difference can be seen from the following graph:
The actual numbers and sources are at http://home.att.net/~rdavis2/outlay07.html. As can be seen, the military spending for World War II was far above anything since. It reached a high of 38% of GDP in 1944! However, the war ended in 1945 and that huge cost immediately abated. Military spending did go back up to 14% of GDP in 1953 due to the Korean War but began a long descent thereafter through 1979 when it reached 4.7% of GDP. Military spending is now an even lower 4% of GDP. Hence, unlike the end of World War II, there is no huge savings to be gained from the war's end. Even if our involvement in Iraq and Afghanistan were the end tomorrow, we would still be running a large deficit.
The second difference, of course, is that we are now within ten years of the beginning of the Boomer retirement. After World War II, however, we were within twenty years of the entry of the Boomers into the workforce. That is a huge difference.
What to previous tax-cuts (1962 or 1982) tell us about what to expect with future public debt % gdp?
Of course, as World War II showed, tax cuts are not the only factor in public debt as a percent of GDP. However, it's worth noting that the public debt as a percent of GDP began rising immediately after the 1981 tax cut, began declining after the 1993 tax hike, and began rising again after the 2001 tax cut.
You lost me on this idea that today's lower amount of debt is somehow worse because of the kinds of things the money is spent on. The boomer explanation is hard for me to follow too, as to why having 20 years of boomers absorbing wealth from the economy as children made the '45 -'70 economy expand, but boomers spending their retirement savings from '10 to '25 will contract the economy.
Maybe you're getting at the need for a massive overhaul of social security; but that's only projected at about 4 or 5% gdp in 2010, no here near what we handled in '43. with the war. I say we're blowing this thing way out of proportion and we can forget about it and play mind reading games like you suggested--
You mean that you do not intend to waste your time looking for an optimistic projection when you know that a credible one likely does not exist.
--but if you feel you know what I'm thinking then you must be a lot more sure of your mind reading than I am. Personally, I have no idea at all what your thoughts are and how long you'll be sure that you know what my intentions are, so I'll wait for you to let me know verbally as to when you want to know what I thought that I was thinking about. That's when I'll probably mention that I think that my link about Carter was funnier than your link about Bush.
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