# "The Rapidly Shrinking Federal Deficit" **URL:** \ **Category:** Great Debates\ **Created:** [April 12, 2013, 12:05am UTC](https://boards.straightdope.com/t/the-rapidly-shrinking-federal-deficit/655454 "2013-04-12T00:05:54Z")\ **Posts on this page:** 20\ **Page:** 4
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [April 14, 2013, 12:31pm UTC](https://boards.straightdope.com/t/the-rapidly-shrinking-federal-deficit/655454/61 "2013-04-14T12:31:21Z")
> [@adaher](#): > > We still haven’t established that you identified the baselines correctly. From what I understand, what was appropriated in year 1 is the baseline for year 2. > > Actual spending did go up by 20-30% in many departments, and pulling out one particular accounting definition of the spending doesn’t change that. Great, so now you’re trying to say that you were always talking about a current services baseline when it is shown that the stimulus didn’t make a permanent increase in the discretionary budget of Federal agencies. Except you’re still wrong. Plus your Wikipedia cites are shit: I showed you the actual budget in the OMB link. Your Wiki links are lousy with factual errors, but you still want to believe them because… they confirm your error? Is that it? ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [April 14, 2013, 12:45pm UTC](https://boards.straightdope.com/t/the-rapidly-shrinking-federal-deficit/655454/62 "2013-04-14T12:45:22Z")
[http://www.whitehouse.gov/sites/default/files/omb/budget/fy2014/assets/hist08z7.xls](http://www.whitehouse.gov/sites/default/files/omb/budget/fy2014/assets/hist08z7.xls) Energy-outlays nearly tripled Education-peaked at nearly 50% above 2008 levels in 2010 ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [April 14, 2013, 1:12pm UTC](https://boards.straightdope.com/t/the-rapidly-shrinking-federal-deficit/655454/63 "2013-04-14T13:12:23Z")
> [@adaher](#): > > [http://www.whitehouse.gov/sites/default/files/omb/budget/fy2014/assets/hist08z7.xls](http://www.whitehouse.gov/sites/default/files/omb/budget/fy2014/assets/hist08z7.xls) > > Energy-outlays nearly tripled > Education-peaked at nearly 50% above 2008 levels in 2010 Outlays are not “baselines.” I’ve said this at least four times so far. BA is “new spending authority.” Budgets request BA. ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [April 14, 2013, 1:24pm UTC](https://boards.straightdope.com/t/the-rapidly-shrinking-federal-deficit/655454/64 "2013-04-14T13:24:17Z")
So if outlays go down, even though the baseline went up, that’s not a budget cut? ---
**Author:** ![NotfooledbyW](https://avatars.discourse-cdn.com/v4/letter/n/f475e1/32.png) [@NotfooledbyW](https://boards.straightdope.com/u/NotfooledbyW)\ **Post date:** [April 14, 2013, 2:00pm UTC](https://boards.straightdope.com/t/the-rapidly-shrinking-federal-deficit/655454/65 "2013-04-14T14:00:20Z")
> [@adaher](#): > > Not at all. All taxpayers will be hit, because there are numerous little taxes(such as on tanning beds) that will affect everyone at some point. I’m sure John Boehner is concerned about that one. You said 'all taxpayers would be hit. All taxpayers don’t use tanning beds. Can you think of any more examples of oppression of **all** the taxpayers coming out of making sure Insurance companies no longer deny coverage to pre-existing conditions? And also prodding deadbeats who can afford health insurance but who wish to dump the cost on those of us who do pay health insurance so they don’t have to, on the rest of us? If you must go down that broad general tax oppression route, then you must list all the benefits that the ACA provides for **all** tax payers such as forcing Insurance providers to quit spending their premium income on non-benefit activities. It brings them closer to the overhead that Medicare implementation operates under. I’ll cite the following: > [@](#): > > Medicare Has Lower Administrative Costs Than Private Plans. - According to the Kaiser Family Foundation, administrative costs in Medicare are only about 2 percent of operating expenditures. Defenders of the insurance industry estimate administrative costs as 17 percent of revenue. > [http://healthaffairs.org/blog/2011/09/20/medicare-is-more-efficient-than-private-insurance/](http://healthaffairs.org/blog/2011/09/20/medicare-is-more-efficient-than-private-insurance/) I’d rather see forcing private corporations cut down on the operating and administration costs because that drives health care costs down for everybody including John Boehner if he wished to use a tanning bed service and to buy his cigarettes. > [@adaher](#): > > And taxes aren’t the only cost of the ACA. If you’re young and healthy, you’re paying bigtime to subsidize the older and sicker. Then there’s the extra mandates, those all raise the price of insurance. I don’t know what you are talking about ‘extra mandates’ ‘raising the the price of insurance’. Again if that happens it is for some. More people have access to lower rates for insurance. Young and Healthy do have accidents and sudden onset of disease. Or if their parents or some older family member find themselves without insurance, it can be a burden on the kids to take care of mom and pop if they have not made it to Medicare age. You know, help out so mom and pop don’t have to sell their paid for home to pay for cancer treatment etc. And we are talking about ‘costs’ of the ACA being charged or scored by the CBO as a cost to the Federal Government. I’m not sure where the young people being forced to subsidize older folks comes into the picture. How about we all are subsidizing the uninsured right now and paying high compensation to the private companies directors to operate the system? QUOTE=adaher;16192487] As for Sean Hannity, the CBO is not God. They estimate costs in a fair way, but that does not mean they are always right. In fact, they are always wrong. that’s the nature of estimates, they are always off, sometimes by a little, sometimes by a lot. What was Medicare supposed to cost again? Oh yeah, $9 billion by 1990. That wasn’t the CBO, but supporters of Medicare liked to cite that as a “fact” back then too. time to learn some humility when it comes to estimates rather than tarring those who think those estimates wrong as liars. [/QUOTE] Hannity is unreasonable and dishonest when he brings up cost and dismissess revenue and cost saving measured that are all included in the plan. His dumb audience do not have the ability to do research to find out that the plan is cuts cost to the government over time and is paid for. What was George W Bush’s Medicare Prescription Drug deal that was not paid for at all which I believe Obama care fixes somewhat? Bush not only changed the law that added to the deficit but he cut taxes during wartime on top of imposing a costly change to Medicare which has done damage to all of us in one way or another. That is why Hannity is lying. It is leaving out half the truth when he attacks the ACA. You may score half a truth as the truth. I score it as a lie. As far as the CBO not being god. They are closer to god than Sean Hannity will be on the matters that they are charged to do. And Hannity is not sending the message that the CBO is off by a percent here or a percent there.. He is spreading the word that Obama Care is off by Trillions in the way he half truths the data to his audience. That is wrong. I am sorry to see an intelligent person defend him. QUOTE=adaher;16192487] What was Medicare supposed to cost again? Oh yeah, $9 billion by 1990. That wasn’t the CBO, but supporters of Medicare liked to cite that as a “fact” back then too. time to learn some humility when it comes to estimates rather than tarring those who think those estimates wrong as liars. [/QUOTE] As I have been saying. Sean Hannity is not presenting data or scientific data to back up the lie in his presentation. He is leaving out the cost reduction aspect and the revenue aspect and his listeners are swallowing it in big gulps because they generally do not like liberals, Democrats and Obama. That is lying. You can make up excuses and try to put lipstick on that pig, but it is still a pig. ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [April 14, 2013, 2:13pm UTC](https://boards.straightdope.com/t/the-rapidly-shrinking-federal-deficit/655454/66 "2013-04-14T14:13:53Z")
> [@adaher](#): > > So if outlays go down, even though the baseline went up, that’s not a budget cut? What do you mean “baseline” in that question? Do you mean BA? I ask because you keep changing your argument, so I need to be clear on your terms. ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [April 14, 2013, 2:35pm UTC](https://boards.straightdope.com/t/the-rapidly-shrinking-federal-deficit/655454/67 "2013-04-14T14:35:05Z")
> [@NotfooledbyW](#): > > What kind of reasoning is this? There are two basic ways for a family budget to go broke. One is total non-fiscally conservative behavior by one or both of the adults in the marriage or family arrangement. Perhaps the dependents can run a family budget amok but whatever the case how does Shagnasty claim to be a fiscal conservative and then not give a rats ass about behavior that is opposite what a fiscal conservative supposedly believes in. > > The second way a family is forced to spend way beyond its means and lose control of its budget is some type of catastrophe such as sudden job loss or health issues not covered by insurance. For Shagnasty to not give a rats ass about families suffering a catastrophe demonstrates a lack of compassion for his fellow man. > > That is bad enough, but then Shagnasty attempts to compare the financially troubled household model to the Federal Government whereas Shagnasty also claims no concern about the behavior of the past president and Congress that led the Federal Government to its current high deficit condition. > > How does Shagnasty compare a family to the Federal Government when we all know that a family’s budget is run by the couple who many times are joined in holy matrimony for life. Kids don’t vote every four years for whom they want their mommy and daddy to be. > > Likewise the governed of the country as a whole do not put trust in one person for life and expect them to manage money quite ‘fiscally conservative’ in the exact appropriate manner that they have decided is best for them. > > There are many competing interests in the Federal Budget that all have a say. > > It is silly to think that a president of the USA can run a country and manage a budget just like a typical family household. > > A president can manage a budget as best he can with what he inherits coming into office. Or he can blow it. > > But it sure matters what the president before him and the Congress before him did and the make-up of the Congress that the electorate has forced him/her to work with. > > And it matters if he starts his term in the midst of a huge recession. > > How many more times will we have to see this quaint little fairy tale posted? The analogy is poor. It’s not like the kids electing parents. It’s more similar to the parents voting every 2 years on a Trust Company to manage their finances. The Trust Company, to be responsible, still needs to keep the family budget in balance. As Shagnasty said, the basics are the same. Sure the government can borrow amounts of money a family could not. A family cannot force an employer to increase its salary (taxation), nor can if affect the value of its holdings by complex financial tools (QE). But the basics are the same: Neither families nor governments can consistently, year after year spend more money than they take in without eventually going broke, or at a very minimum squander vasts amount of wealth by servicing that debt. These interest payments on the debt gain us nothing. When we pay our taxes, a substantial portion of that goes to: NOTHING. It simply pays interest on what was borrowed and spent years ago. The family analogy isn’t perfect, but it’s close enough to illustrate basic points about fiscal management. ---
**Author:** ![NotfooledbyW](https://avatars.discourse-cdn.com/v4/letter/n/f475e1/32.png) [@NotfooledbyW](https://boards.straightdope.com/u/NotfooledbyW)\ **Post date:** [April 14, 2013, 3:03pm UTC](https://boards.straightdope.com/t/the-rapidly-shrinking-federal-deficit/655454/68 "2013-04-14T15:03:50Z")
> [@jtgain](#): > > The family analogy isn’t perfect, but it’s close enough to illustrate basic points about fiscal management. It is a bogus analogy. Close enough? How is it close? Once someone learns math they understand the point that if you spend more money than you take in it is not a good thing. But it takes a bit more sophisticated thought to understand the concept of investing for a ROI means sometimes you go into debt to achieve a positive result over the long run. Even with the family budget analogy one could say that borrowing their way out of previous debt is a better idea when you can refinance for a very low rate. The trouble is the folks who may need to borrow their way out of fiscal crisis cannot borrow money. The fed Govt can. ---
**Author:** ![NotfooledbyW](https://avatars.discourse-cdn.com/v4/letter/n/f475e1/32.png) [@NotfooledbyW](https://boards.straightdope.com/u/NotfooledbyW)\ **Post date:** [April 14, 2013, 3:18pm UTC](https://boards.straightdope.com/t/the-rapidly-shrinking-federal-deficit/655454/69 "2013-04-14T15:18:40Z")
> [@jtgain](#): > > But the basics are the same: Neither families nor governments can consistently, year after year spend more money than they take in without eventually going broke, or at a very minimum squander vasts amount of wealth by servicing that debt. And the point is the Democratic Party “family” with Obama at the head, is not in favor of “year after year spending more money than they take in” The Black Sheep in the family, libertarians and Republicans disagree on how the issue gets resolved. We just had an election. On this issue specifically.. The Democratic half of the ‘family’ prevailed. In part, raising revenue on those who have been living high on the private and public sector hog since Reagan, with a brief 4% disruption during the Clinton Years, is the way the kids have decided to go. Sequestration is in effect. The spending issues have been and will be addressed. Your characterization that Obama and Democrats are not concerned about the debt is out of touch with reality. The analogy is therefore also flawed for suggesting that false implication. The last Dem President was Bill Clinton. The Dem side of the family has a record to run on. Every Republican in Congress told Clinton that raising taxes on Job Creators would destroy jobs and the economy. Do you recall what the result was after Dems raised those taxes on the top brackets? ---
**Author:** ![6079smithW](https://avatars.discourse-cdn.com/v4/letter/6/db5fbb/32.png) [@6079smithW](https://boards.straightdope.com/u/6079smithW)\ **Post date:** [April 14, 2013, 4:32pm UTC](https://boards.straightdope.com/t/the-rapidly-shrinking-federal-deficit/655454/70 "2013-04-14T16:32:19Z")
> [@](#): > > 1. Lower spending. On a 12-month average basis, federal outlays have fallen by a total of 4% in the past two years, the first decline in nominal dollar terms over a comparable period since the demobilization from the Korean War in the mid-1950s. What’s a “12-month average basis”? ---
**Author:** ![NotfooledbyW](https://avatars.discourse-cdn.com/v4/letter/n/f475e1/32.png) [@NotfooledbyW](https://boards.straightdope.com/u/NotfooledbyW)\ **Post date:** [April 14, 2013, 4:58pm UTC](https://boards.straightdope.com/t/the-rapidly-shrinking-federal-deficit/655454/71 "2013-04-14T16:58:44Z")
> [@6079smithW](#): > > What’s a “12-month average basis”? The average of Federal outlays (spending) for a twelve month period. Take the total of the 12 month period from start to finish and divide by 12. ---
**Author:** ![6079smithW](https://avatars.discourse-cdn.com/v4/letter/6/db5fbb/32.png) [@6079smithW](https://boards.straightdope.com/u/6079smithW)\ **Post date:** [April 14, 2013, 5:12pm UTC](https://boards.straightdope.com/t/the-rapidly-shrinking-federal-deficit/655454/72 "2013-04-14T17:12:58Z")
> [@NotfooledbyW](#): > > The average of Federal outlays (spending) for a twelve month period. Take the total of the 12 month period from start to finish and divide by 12. Okay, thanks. Basically, it’s a 12-period, monthly, moving average. That seems like a legitimate smoothing mechanism. April 2011 was 2 years ago, and “nominal spending,” i.e., unadjusted for inflation, is now (April 2013) 4% lower, using a 12-period monthly moving average. That April 2011 moving average would include the March 2010 spending number. All of those monthly numbers have to be skewed by the one-time stimulus spending, so perhaps not as impressive as it initially sounds. ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [April 14, 2013, 6:18pm UTC](https://boards.straightdope.com/t/the-rapidly-shrinking-federal-deficit/655454/73 "2013-04-14T18:18:16Z")
> [@NotfooledbyW](#): > > The last Dem President was Bill Clinton. The Dem side of the family has a record to run on. Every Republican in Congress told Clinton that raising taxes on Job Creators would destroy jobs and the economy. > > Do you recall what the result was after Dems raised those taxes on the top brackets? We’ve discussed this in other threads so there is no reason for another explanation of how Clinton was the recipient of the rise of what is arguably the greatest technology man has known: the internet. And when that bubble fizzed, the economy returned to normal. But are you somehow suggesting that tax increases are good for the economy? It seems to be what you are saying. However, all economists know that taxes (all of them) create market imperfections and that the free market would be better without any of them. However, they are a necessary evil and we can disagree about who and how much everyone should pay. But you can’t seriously suggest that higher taxes lead to a better economy. If the Dems believe that perpetual deficits are bad and they don’t want them, could they at least propose a budget that quits borrowing money at some time in the future? I think we all agree that we have to borrow money in lean times, but we borrow money in ALL times. Yes, even under Clinton and since 1969 our debt has increased each and every year. I’m all for Keynesian-type borrowing, but there is never the flip side of the coin. Never. And Obama hasn’t proposed any such thing. ---
**Author:** ![NotfooledbyW](https://avatars.discourse-cdn.com/v4/letter/n/f475e1/32.png) [@NotfooledbyW](https://boards.straightdope.com/u/NotfooledbyW)\ **Post date:** [April 14, 2013, 6:34pm UTC](https://boards.straightdope.com/t/the-rapidly-shrinking-federal-deficit/655454/74 "2013-04-14T18:34:46Z")
> [@6079smithW](#): > > All of those monthly numbers have to be skewed by the one-time stimulus spending, so perhaps not as impressive as it initially sounds. The attempted request for comment was why do Dems and Obama continually take the blame for the entire deficit disaster from 2009 to the present and that began in 2002 when the annual surpluses achieved by Clinton began the transition to CBO’s projected $1 trillion deficit around the time of Obama’s first inauguration. The fact that the annual deficit that Bush left Obama was 10% of GDP in 2009, but is now projected at 6% this year and down to 4.4% next year is quite impressive considering Obama is being blamed for running up huge deficits and not having any concern about reducing them. Bush took the Clinton surplus that was at least 0% of GDP in 2001 to 10% of GDP at the start of 2009. Obama is taking the 10% of GDP deficit to somewhere near 3% by the end of his second term. I can consider that a decent job by Obama, but compared to his immediate predecessor from the opposite Party it is ten times an impressive accomplishment. But Obama is in no way a reckless big Govt spender based on these numbers and compared to the Republican before him. ---
**Author:** ![Robot\_Arm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/robot_arm/32/18280_2.png) [@Robot\_Arm](https://boards.straightdope.com/u/Robot_Arm)\ **Post date:** [April 14, 2013, 9:55pm UTC](https://boards.straightdope.com/t/the-rapidly-shrinking-federal-deficit/655454/75 "2013-04-14T21:55:30Z")
> [@jtgain](#): > > We’ve discussed this in other threads so there is no reason for another explanation of how Clinton was the recipient of the rise of what is arguably the greatest technology man has known: the internet. And when that bubble fizzed, the economy returned to normal. The economic argument that I hear against tax increases is that they will deter investments; people will be less inclined to risk their money if taxes will reduce their potential gains. And yet internet companies in the '90s attracted huge investments, spurring the economic growth of that period. So yes, Clinton enjoyed a thriving economy during his term, but it was exactly the sort of boom that critics of tax increases say can’t happen. ---
**Author:** ![NotfooledbyW](https://avatars.discourse-cdn.com/v4/letter/n/f475e1/32.png) [@NotfooledbyW](https://boards.straightdope.com/u/NotfooledbyW)\ **Post date:** [April 14, 2013, 11:34pm UTC](https://boards.straightdope.com/t/the-rapidly-shrinking-federal-deficit/655454/76 "2013-04-14T23:34:12Z")
> [@jtgain](#): > > (A) We’ve discussed this in other threads so there is no reason for another explanation of how Clinton was the recipient of the rise of what is arguably the greatest technology man has known: the internet. And when that bubble fizzed, the economy returned to normal. > > (B) But are you somehow suggesting that tax increases are good for the economy? It seems to be what you are saying. However, all economists know that taxes (all of them) create market imperfections and that the free market would be better without any of them. > > (C) However, they are a necessary evil and we can disagree about who and how much everyone should pay. But you can’t seriously suggest that higher taxes lead to a better economy. > > (D) If the Dems believe that perpetual deficits are bad and they don’t want them, could they at least propose a budget that quits borrowing money at some time in the future? I think we all agree that we have to borrow money in lean times, but we borrow money in ALL times. Yes, even under Clinton and since 1969 our debt has increased each and every year. > > (E) I’m all for Keynesian-type borrowing, but there is never the flip side of the coin. Never. And Obama hasn’t proposed any such thing. (A) The fact is Clinton raised taxes on the wealthy and the bubble occurred while the top percent were taxed at higher rates. Perhaps we should have recognized the bubble and raised taxes on the wealthy even more so the downturn would have a bigger kitty in the treasury. (B) ALL Taxes cause market imperfections… Well the market needs to learn how to work around those imperfections. There is always going to be taxes. (C) I’m just making the argument that the right mostly lies about Obama’s record on the economy. Taxes were cut fairly low for the top tiers when Obama took over. Capital Gains low rates for people like the Romneys have been in effect for a decade. We have a miserable unemployment problem. Cutting taxes for the rich to produce jobs does not seem to be the answer anymore. It may have worked when rates were high when Kennedy did it and Reagan did it. But cutting taxes looks like it reached a point of diminishing returns when Bush did it during war time. (D) Who has produced such a budget? (E) The righties are expecting Obama to pull a decade’s worth of irresponsible fiscal policy under Bush during wartime into a deficit reduction plan on their terms and their terms alone. The man has more on his plate than serving the remnants of the Bush Administration. Let’s get over the recession and try to keep the falsehoods about Obama’s record out of the way. The budget deficit is shrinking and that is a start. It would be smaller already and the economy would be recovering better in my view if it were not for Republican obstruction every step of the way. The place to start for Republicans like Sean Hannity would be to stop preaching his false sermon over and over again that Obama Care is exploding the deficit over the next ten years. ---
**Author:** ![Fotheringay-Phipps](https://avatars.discourse-cdn.com/v4/letter/f/d9b06d/32.png) [@Fotheringay-Phipps](https://boards.straightdope.com/u/Fotheringay-Phipps)\ **Post date:** [April 15, 2013, 3:35pm UTC](https://boards.straightdope.com/t/the-rapidly-shrinking-federal-deficit/655454/77 "2013-04-15T15:35:28Z")
> [@NotfooledbyW](#): > > IT does not ‘cost’ anything over the long run if the ‘savings’ and ‘revenues’ exceed the up front costs and overall costs. Again, this is nonsense. Revenues are a “cost”. You keep pretending that Sean Hannity was talking about the deficit, when he was talking about taxes, aka revenues. And on the basis of this distortion, _you’re_ calling _him_ a liar. Weird. ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [April 15, 2013, 4:41pm UTC](https://boards.straightdope.com/t/the-rapidly-shrinking-federal-deficit/655454/78 "2013-04-15T16:41:31Z")
> [@jtgain](#): > > But are you somehow suggesting that tax increases are good for the economy? It seems to be what you are saying. However, all economists know that taxes (all of them) create market imperfections and that the free market would be better without any of them. > > However, they are a necessary evil and we can disagree about who and how much everyone should pay. But you can’t seriously suggest that higher taxes lead to a better economy. Taxes, by themselves, do not lead to a better economy. But spending on education, roads, a justice system, etc. absolutely lead to a better economy. When we start constraining investment in these things because of a sizable mismatch between revenues and expenditures, it is probably a much better thing in the long term to increase taxes to have a decently-educated workforce, the infrastructure to move good around, and so on. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [April 15, 2013, 4:55pm UTC](https://boards.straightdope.com/t/the-rapidly-shrinking-federal-deficit/655454/79 "2013-04-15T16:55:49Z")
> [@Robot\_Arm](#): > > The economic argument that I hear against tax increases is that they will deter investments; people will be less inclined to risk their money if taxes will reduce their potential gains. And yet internet companies in the '90s attracted huge investments, spurring the economic growth of that period. So yes, Clinton enjoyed a thriving economy during his term, but it was exactly the sort of boom that critics of tax increases say can’t happen. And there was an Internet long before the bubble. I was on it. What caused the boom was PCs that finally hit a price point where they were affordable to the wide mass of people and even more importantly the buildout of the net with bandwidth and servers. That is what encouraged companies to go on line and then sell on-line. The investment, or the perception that investors could make money on-line, was the reason for the boom. And, as you say, higher taxes did not get in their way at all. IIRC, the budget deal that raised taxes and put the government on a sound footing helped create a climate for investment. I knew plenty of people who went to startups in those days, and not one of them was concerned about their tax bracket going up after they made tons of money. When I rocketed into the next bracket I sure didn’t care either. Anyone who is going to put off investing because of a potential 1-2% more taxes on a massive gain doesn’t have much of a future as a VC. ---
**Author:** ![Honesty](https://avatars.discourse-cdn.com/v4/letter/h/f04885/32.png) [@Honesty](https://boards.straightdope.com/u/Honesty)\ **Post date:** [April 15, 2013, 9:56pm UTC](https://boards.straightdope.com/t/the-rapidly-shrinking-federal-deficit/655454/80 "2013-04-15T21:56:59Z")
Lower taxes means less revenue which means more debt. The Republicans have had a free lunch since 1981, it’s time to raise taxes and stop putting trillions of dollars of tax cuts on credit. [Previous page](https://boards.straightdope.com/t/the-rapidly-shrinking-federal-deficit/655454.md?page=3) [Next page](https://boards.straightdope.com/t/the-rapidly-shrinking-federal-deficit/655454.md?page=5)