US Budget Deficit

[Robot_Arm]

@Sam_Stone

This is the biggest problem facing the world - not global warming, not terrorism. The big problem is the demographic collapse in the developed world, leading to aging populations, exploding entitlements, a reduction in the number of working age people supporting retirees, and the requirement for destabilizing levels of immigration to prevent a complete demographic meltdown.

Can we have some sort of cap-and-trade legislation on children?

@Kimstu

Republicans and their apologists try to paint the budget crunch as a bipartisan problem,…

I’ve never heard any prominent Republican admit to any share of culpability regarding the debt. All the ones I hear still blame it on the tax-and-spend Democrats.

[Kimstu]

@Robot Arm

I’ve never heard any prominent Republican admit to any share of culpability regarding the debt. All the ones I hear still blame it on the tax-and-spend Democrats.

Well, for them it’s not about trying to have an honest discussion or come up with policies that work: it’s about trying to get their flock safely back into the fold. They’ve got to get their voters good and scared of those crazy Democrats with their $3.8 TRILLION BUDGET OMG!!!1!

Everything else takes a back seat to the marketing strategy. It’s sad, because some of their supporters have some useful ideas that we could potentially discuss, like Sam Stone’s point about raising retirement ages for Social Security (which, btw, is already happening, but that and other entitlement modifications certainly have a place on the table).

But what’s the point? You have a useful discussion and come up with some things you can agree on, and even admit (as you and Sam just did) that your overall pragmatic ideas on the issue may not be that far apart in general. And then what happens? The next time any such thread pops up, back comes Sam with the same old alarm-and-despondency talking points from the right-wing noise machine, blaming the Democrats and liberals under an ass-covering cloak of judicious bipartisanship, and blatantly overlooking all the lousy choices made chiefly by the people he’s been urging us to support for the last ten years.

They don’t want to actually fix anything (though I would probably exempt Sam himself and other sincere conservatives from this charge, since I think they really would like things to be better and just can’t admit to themselves what self-serving fucks they’ve hitched horses with for the sake of the conservative/libertarian cause). They just want to scare the sheeple enough that they can get back into power and go on with their robber-baron act. This nebulous doomsaying is just part of their viral marketing strategy.

[Sam_Stone]

@DanBlather

According to thissite in 2007 Canada’s govt expenditures were 48% of GDP. By comparison, in the US Federal spending is < 20% of GDP. Of course the US does spend more as a percent of GDP than the economic powerhouses of Cameroon, Armenia, the Philippines, Brazil, Haiti, Cambodia, and Bangladesh.

That data must be very old. The last time we had a government that size was in 1995. It’s also very wrong when it comes to the U.S, because U.S. government spending is about double what you just claimed.

This Graph is a lot more illuminating. Canada’s government spending is almost identical to the U.S.'s at this point, and I believe with Obama’s latest budget your government just became bigger.

The image of Canada as a socialist happy place to the North is about 30 years out of date. Compared to the U.S., Canada has lower business taxes, lower capital gains and dividend taxes, no inheritance tax, and a less progressive tax system since a portion of our tax revenue comes from a national sales tax. We also have the lowest government debt in the G8. It used to be second highest. We lowered it not through raising taxes and the size of government, but by simply holding the growth of government below GDP growth and providing a stable investment climate and reasonable tax rates.

You guys like to use Canada as an example when it comes to health care - how about using us as an example for how to get your fiscal house in order?

[Chief_Pedant]

From this taxpayer’s perspective, the one-two punch of Mr Bush and Mr Obama have been the perfect storm. I don’t see anything but financial disaster, and I’ve pretty much given up worrying about it.

Mr Bush was anything but a fiscal conservative, and probably too slow to understand what he was doing anyway, whether from an economic or global politics perspective, and his horrible foreign policy (especially his invasion of Iraq) definitely squandered money and lives for nothing.

Now we have Mr Obama, the community organizer who knows even less about economics and who basically thinks people are driven by niceness and fairness and are basically responsible. This is the kind of naive approach that extends loans to those too incompetent to even understand basic arithmetic and then blames “predatory lending” for extending those loans, apparently surprised that Wall Street would find a way to package up bad mortgages into financial instruments.

We already have proof that amateurs are in charge of economics. We spent a fortune bailing out the financial industry and we seem totally surprised that the financial industry has congratulated itself with another round of bonuses. For Wall Street it’s like stealing from the blind and stupid.

We are projecting a deficit which approaches 75% of GNP by 2020. We have a long history of over-optimistic projections (!). We have a long history of spending now and deferring payment to the next round of politicians. We are a living example of the tragedy of the commons.

We aren’t going to fix profligate spending by taxation. We tax income and not wealth, and there is no mechanism to change that. The top 1% for adjusted gross income earn 20% of the income and pay 40% of the federal income taxes, which is equal to the entire amount paid by the bottom 90% by AGI. There isn’t anyone left to tax, and every taxing body all along the line is asking for more taxes; it’s not as if only the Feds plan to raise taxes.

We are reaching the natural end of a cycle that begins with the concept that the public can vote themselves funds from a public coffer, and that permits the public to borrow money to put in the coffer.

Crunch all the numbers you want and talk to me in 2025. We are broke. We are about to get vastly broker. Go ahead and tax me some more; I’m fortunate enough to be in that tiny percent. It ain’t gonna help.

[penultima_thule]

@Ruminator

Most likely, the USA would just default on its debt. The “default” would involve USA playing games such as late payments, stretched payments, swapping maturities, etc.

From superpower to banana republic in one fell swoop.

Current thinking is that the unthinkable is a 5-6% chance.

US T-bonds are considered essentially risk free and the USD is still the reserve currency for international trade. Lose those bedrocks and the consequences are dire. Default, even at the perifery would stimie the capacity for US governments and corporations to borrow at AAA rates. The dampening effect on the economy would last decades.

[SenorBeef]

@Kimstu

They don’t want to actually fix anything (though I would probably exempt Sam himself and other sincere conservatives from this charge, since I think they really would like things to be better and just can’t admit to themselves what self-serving fucks they’ve hitched horses with for the sake of the conservative/libertarian cause).

Why are you grouping conservative and libertarian here? Who were the libertarian members of the Bush administration?

The problem is that the Bush administration was very anti-libertarian.

[Mr_Smashy]

@DanBlather

By comparison, in the US Federal spending is < 20% of GDP.

You’re way off

This coming year Federal spending will be 44.67% of GDP.

[Mr_Smashy]

Chief, outstanding post, #44.

[Hentor_the_Barbarian]

@Kimstu

Your MO in these discussions, Sam, is to combine a superficially grave and sober tone with large vague claims of terrible danger, intended to scare people into thinking that your assessment and your proposed solutions must be reasonable. You gave us quite an impressive spiel along those lines when you were stumping for the Iraq invasion on the grounds that we couldn’t afford to risk the threat from Saddam Hussein’s WMD. I don’t think you can wonder that the credibility of your courageous-Churchillian-realism-in-the-face-of-looming-disaster shtick is a little bit impaired at this point.

Well said! Let’s not forget that Sam Stone was one of the biggest champions of the Bush economy on these boards. Sure, he may be able to cite a quibble or two here or there, but his overall support was crystal clear. How he has credibility on economic issues is perplexing to me.

To wit:

@Sam Stone

Actually, the only thing that has really worked is to put Republicans in the Legislative Branch and Democrats in the White House. Divided government, with the purse strings controlled by Republicans who oppose Democrat policies, is the only thing that’s ever caused the growth of government to slow down. Recent history has taught us that whenever either party gains control of all branches of government, the stops come out and the spending goes wild.

This is complete bullshit! Complete partisan bullshit. We’ve done this discussion before on these boards. But let’s do it again.

Here’s a breakdown of deficits and surplusses by president, with nicely interpretable figures making the supremacy of Democratic presidents on this matter entirely clear:

http://home.adelphi.edu/sbloch/deficits.html

Here’s the author’s summary: “Again, Republican Presidents seem to rack up the big debts, at least in my lifetime. Democratic Presidents tend to be “troughs” in the above graph, relative to their Republican successors and predecessors.”

Now, here’s the wiki page on Presidents versus party control of congress:

Divided government in the United States

As you will note, the years in office for each Democrat and party control of congress is as follows:

Clinton: 2 unopposed/6 opposed
Carter: 4 unopposed/0 opposed
LBJ: 5 unopposed/0 opposed
Kennedy: 3 unopposed/0 opposed
Truman: 6 unopposed/2 opposed
FDR: 12 unopposed/0 opposed
Wilson: 6 unopposed/2 opposed

What has worked, in this case specific to the deficit, is electing Democrats. Period. Control of congress and the White House entirely by Democrats is historically associated with superior control of the federal deficit. It’s right there in the numbers.

The same is true for pretty much any other economic indicator you care to select, by the way.

[DanBlather]

@Mr_Smashy

You’re way off

This coming year Federal spending will be 44.67% of GDP.

That is a crappy site dedicated to a political viewpoint. The name itself is bullshit, making it look like it’s some sort of govt site when it’s not. It’s like the Franklin Mint. The figure of 20% of GDP is one I’ve seen at several neutral sites. Like usual, conservatives seem to see a need to lie to make their point.

[Chief_Pedant]

@Chief_Pedant

We are projecting a deficit which approaches 75% of GNP by 2020. We have a long history of over-optimistic projections (!).

Correction: Should be “publicly held debt” not “deficit.”

Current deficits are running about 10% of GDP; Federal spending (in round numbers) about 25% of GDP (3.8 Trillion/14.5 Trillion)

A sustainable number for deficits over the long-term is in the 3% range.

[Sam_Stone]

@Hentor_the_Barbarian

Well said! Let’s not forget that Sam Stone was one of the biggest champions of the Bush economy on these boards. Sure, he may be able to cite a quibble or two here or there, but his overall support was crystal clear. How he has credibility on economic issues is perplexing to me.

Really? How about you go back and see what I said about Bush’s spending. Go read what I said about the prescription drug entitlement. Go read what I said about his steel tariffs.

The only reason I wound up defending Bush on here so much was because the arguments against him were often so daft - like people claiming that the 2001 recession was the worst since the depression, and all that. But I’m sure in your head it all just blended into, “Defense of Bush! Right wing whackjob!”

[Happy_Fun_Ball]

@Sam_Stone

I don’t think we do, on the points raised. However, I still believe that simply raising taxes will not fix the deficit in the long run, as history has shown repeatedly around the world. The countries which have gotten their fiscal houses in order have generally done so through spending cuts.

Have a look at this graph, which breaks government spending down into domestic, military, and mandatory. You can see exactly what happened in the first years of the Clinton administration - domestic spending rose a little bit, but military spending collapsed. That was the ‘peace dividend’. Domestic spending started to be reduced after the Republicans took control of Congress.

But really, we’re almost picking nits, because the devil is in the big blue line at the top - entitlements. They’re exploding out of control, and they’re about to get much worse. And frankly, both parties are to blame for this - we’ve known for decades that entitlement spending has to be controlled or the government will be in a world of hurt. And yet what does George Bush do? Create a new prescription drug entitlement. Democrats and Republicans have always pandered to old people, because they have a ton of political clout. And there’s about to be a lot more old people. <snip>

In your graph, what is “mandatory”? What are “entitlements”? I have downloaded the data from the CBO and the OMB and I don’t see where you have pulled this category from. I did create this graph from the OMB data (specifically by combining this excel document with this excel document - I will email my combined excel document complete with graphs to any interested party) and I do see growth in the human resource super-function; is this what you are plotting? (Look at the big spike in the physical resource super-function due to the either the Housing and Economic Recovery Act of 2008 or the Housing Assistance Tax Act of 2008 - I am not sure which). I have broken this down into sub-functions in this graph. It looks like all our problems are due to Medicaid (which is what I assume health stands for) and Medicare. Is this what you are calling entitlements?

@Chief_Pedant

From this taxpayer’s perspective, the one-two punch of Mr Bush and Mr Obama have been the perfect storm. I don’t see anything but financial disaster, and I’ve pretty much given up worrying about it.

Mr Bush was anything but a fiscal conservative, and probably too slow to understand what he was doing anyway, whether from an economic or global politics perspective, and his horrible foreign policy (especially his invasion of Iraq) definitely squandered money and lives for nothing.

Now we have Mr Obama, the community organizer who knows even less about economics and who basically thinks people are driven by niceness and fairness and are basically responsible. This is the kind of naive approach that extends loans to those too incompetent to even understand basic arithmetic and then blames “predatory lending” for extending those loans, apparently surprised that Wall Street would find a way to package up bad mortgages into financial instruments.

We already have proof that amateurs are in charge of economics. We spent a fortune bailing out the financial industry and we seem totally surprised that the financial industry has congratulated itself with another round of bonuses. For Wall Street it’s like stealing from the blind and stupid.

We are projecting a deficit which approaches 75% of GNP by 2020. We have a long history of over-optimistic projections (!). We have a long history of spending now and deferring payment to the next round of politicians. We are a living example of the tragedy of the commons.

We aren’t going to fix profligate spending by taxation. We tax income and not wealth, and there is no mechanism to change that. The top 1% for adjusted gross income earn 20% of the income and pay 40% of the federal income taxes, which is equal to the entire amount paid by the bottom 90% by AGI. There isn’t anyone left to tax, and every taxing body all along the line is asking for more taxes; it’s not as if only the Feds plan to raise taxes.

We are reaching the natural end of a cycle that begins with the concept that the public can vote themselves funds from a public coffer, and that permits the public to borrow money to put in the coffer.

Crunch all the numbers you want and talk to me in 2025. We are broke. We are about to get vastly broker. Go ahead and tax me some more; I’m fortunate enough to be in that tiny percent. It ain’t gonna help.

Nitpick: the National Debt will be 77% of GDP, not the deficit. If you look at this graph, produced from the same data linked above, is expected to stabilize after the recession at about 3% of GDP. This is actually lower than it was during much of Reagan’s presidency.

As far as taxing income and not wealth, we need to treat capital gains as income and tax them. I know people feel like this is double taxation, but let’s elimnate corporate income taxes (which are rife with loopholes anyway) and just tax the capital gains at decent rate. The whole Republican canard that this will stifle US ecomomic growth I just don’t buy for a couple of reasons:
[ul][li]People will still invest the money; what else would they do with it? Paying a marginal tax of ~30% is better than not getting any return and paying no tax.[/li][li]People are investing their money right now, but not in the US economy. Growth in manufacturing, technology, jobs, etc… is happening in China, India, Brazil, etc… I invest in a couple of companies that are busy outsourcing their labor to cheaper markets. I have no problem with this, but not taxing me so I can invest more money in this endeavor just seems counter productive to me.[/li][li]Why not tax capital gains and then just turn it around and invest it in small business development and education right here in this country. That way the growth I have in my Ford stock because of the growth of the Chinese auto market will actually spur economic development here in the US instead of China.[/ul][/li]
Finally, I completely agree with you regarding spending. We do need to reduce it and we need to increase taxation. Let’s get out of this hole. I disagree with you characterization of Presidents Bush and Obama as a one-two punch, I really feel that we can lay the blame of our current situation at the feet of Presidents Reagan, Clinton, and George W. Bush. Or more specifically, at the feet of both the legislature and the administrations over these years. I blame Reagan and Bush for cutting taxes while greatly increasing spending, and I blame all three for de-regulating the financial and housing markets and getting us into this recession. President Obama might get on my shit list too, but it’s too soon. He inherited this mess and is following Keynesian economic theory to get us out. This may or may not work, but there is nothing unsound or irresponsible about the policy in my opinion; many economists of the conservative Chicago school are behind his efforts. As far as President Obama increasing “entitlement” spending, I think we need to wait and see what he does. Hopefully he will not be a second George W. Bush.

@Mr_Smashy

You’re way off

This coming year Federal spending will be 44.67% of GDP.

Well, it looks like the problem is really spending at the state and local level. Using your cite, the federal spending has been pretty stable at 20% of GDP since the 1950s (this matches my data from the OMB in this graph). State spending has increased from 3% to 10% of GDP during this time while local spending has gone from 5% to 12%.

[Happy_Fun_Ball]

@DanBlather

That is a crappy site dedicated to a political viewpoint. The name itself is bullshit, making it look like it’s some sort of govt site when it’s not. It’s like the Franklin Mint. The figure of 20% of GDP is one I’ve seen at several neutral sites. Like usual, conservatives seem to see a need to lie to make their point.

Meh. It is actually combining Federal, State, and local. When you manipulate the site to just show Federal, it is about 20% and appears to be accurate. I don’t know where they get their state and local data.

@Chief_Pedant

Correction: Should be “publicly held debt” not “deficit.”

Current deficits are running about 10% of GDP; Federal spending (in round numbers) about 25% of GDP (3.8 Trillion/14.5 Trillion)

A sustainable number for deficits over the long-term is in the 3% range.

Yeah, the deficit was projected to be about 12.9% of GDP in 2009 due to the recession’s impact on revenue and the various stimulus packages. It is projected to fall back to the 3% level by the OMB and the CBO by 2012. So it looks like in the long term it is sustainable, right?

@Sam_Stone

Really? How about you go back and see what I said about Bush’s spending. Go read what I said about the prescription drug entitlement. Go read what I said about his steel tariffs.

The only reason I wound up defending Bush on here so much was because the arguments against him were often so daft - like people claiming that the 2001 recession was the worst since the depression, and all that. But I’m sure in your head it all just blended into, “Defense of Bush! Right wing whackjob!”

Yeah, you were against his economic policies, I did go back and check. But you seemed to be an apologist on just about everything else: foreign policy, homeland security, etc… Anyway, I just don’t get your support for the Republican Party. It seems to me that, since Nixon anyway, they have always been much more liberal in their economic polices than the Democrats. Sure, Presidents Reagan and G. W. Bush cut taxes, but they increased spending like crazy too. President George Bush Sr. was much better in the area and actually was financially conservative. Voodoo economics indeed. Anyway, with this fact, and the fact that the Democrats tend more to Civil Libertarianism (with the exception of gun rights) than the Republicans makes me wonder why you guys (Sam, Chief, etc…) support them. The Republicans talk a good game about smaller government, but the Democrats seem to to a better job in this area.

[Robot_Arm]

@Sam_Stone

The only reason I wound up defending Bush on here so much was because the arguments against him were often so daft - like people claiming that the 2001 recession was the worst since the depression, and all that. But I’m sure in your head it all just blended into, “Defense of Bush! Right wing whackjob!”

Reminds me of a great quote from Yes, Prime Minister:

GEOFFREY: But I wouldn’t recommend it. Not at this stage. Things might get out. We don’t want any more irresponsible ill-informed press speculation.
JAMES HACKER: Even if it’s accurate.
GEOFFREY: Oh, especially if it’s accurate.

[Mr_Smashy]

@L. G. Butts

In
Well, it looks like the problem is really spending at the state and local level. Using your cite, the federal spending has been pretty stable at 20% of GDP since the 1950s (this matches my data from the OMB in this graph). State spending has increased from 3% to 10% of GDP during this time while local spending has gone from 5% to 12%.

Perhaps so. But whether it’s Fed or S/L or money that flows from the Fed to S/L (grants, UI, CMS, Ed, etc), it’s long term trouble.

Check out figure 2, it’s long-term unsustainable.

[Hentor_the_Barbarian]

@Sam_Stone

Really? How about you go back and see what I said about Bush’s spending. Go read what I said about the prescription drug entitlement. Go read what I said about his steel tariffs.

The only reason I wound up defending Bush on here so much was because the arguments against him were often so daft - like people claiming that the 2001 recession was the worst since the depression, and all that. But I’m sure in your head it all just blended into, “Defense of Bush! Right wing whackjob!”

Oh really? Search " Bush economy " for poster= Sam Stone:

This is literally just a very small sampling. It’s not even a “best of” since it was such a target rich environment.

Note that the last one I’ve quoted here is the OP of an attempt at an “in your face” thread started by **Sam Stone{/b] entitled “How’s the ‘Bush Economy’ doing now?” How is the Bush Economy doing now, Sam?

Also note that in each thread where these quotes are taken from there are dozens of people pointing out that Sam was selectively interpreting stats, selectively looking at only a small time-frame, taking information from very biased sources, making pretty dubious interpretations, and occasionally outright misrepresenting things. Also, sometimes they pointed out that he is Canadian.

So, you poor, poor quail, forced into defending Bush against the mean misguided liberals, let’s take a look at your efforts:
http://boards.straightdope.com/sdmb/showpost.php?p=4840928&postcount=2

@Sam Stone

Not really. The economy is firing on all cylinders right now. Job creation, GDP growth, productivity, home sales, durable goods, you name it - just about every key measurement of economic performance is near 20-years highs. Even the deficit is coming down faster than expected - it may be reduced by 100 billion dollars after the new tax revenues are counted.

However, this is an election year. So expect these numbers to be spun by Democrats, because they need the economy to look bad to win. So here’s the ‘talking points’:

http://boards.straightdope.com/sdmb/showpost.php?p=4841499&postcount=27

U.S. GDP growth is projected to increase faster than Europe, by about 2 percentage points. The European average for unemployment is about 8.8%. Canada’s unemployment rate just went UP to 8.4% from 8.2%. Canada LOST 20,000 jobs last month (again, this is not jobs created - immigration, but aggregate jobs). The U.S. economy is currently outperforming every economy on the planet as far as I know.

But you guys feel free to complain about how terrible it is, and how flawed Bush’s policies are. Keep trottting out that hoary old statistic about how there has been a net job loss since Bush took office - if there still is by election day, which is debatable. Because you know, it’s pretty much all you’ve got. By any HONEST measure, the economy is doing very well right now.

http://boards.straightdope.com/sdmb/showpost.php?p=8172552&postcount=10

The U.S. is not unique in this. Canada’s personal savings rate is zero or even slightly negative. Another way to look at it is less ominous - some economists feel that the savings rates have dropped in Canada and the U.S. not because of the various administration policies, but precisely because we have such strong economies and so much growth. People don’t feel the need to save as much when the economy is strong, unemployment low, incomes increasing, and overall wealth increasing. It’s a measure of confidence just like consumer spending, only this confidence is for the long haul.

http://boards.straightdope.com/sdmb/showpost.php?p=8174059&postcount=28

Those of us in our 40’s and older remember earlier times. I started working in the late 1970’s, and let me tell you, this economy is awesome compared to then. When I entered the work force, unemployement was around 10%. Today it’s less than 5%. Interest rates were pushing 20%. People had mortages that didn’t even pay all the interest - their equity was going down each month.

http://boards.straightdope.com/sdmb/showpost.php?p=8211745&postcount=55

I remember when people on this board were posting about the economy all the time. Remember the 2 million jobs lost after 9/11? We never heard the end of it. Now jobs are being created like mad, and have been for several years. And wages are going up at a pretty good rate.

Bush spreads the Good Economic News

http://boards.straightdope.com/sdmb/showpost.php?p=8215830&postcount=63

What, you think the good economy is just happening now?

The U.S. is currently in the 20th consecutive quarter of economic growth.

The White House has released an Economic Fact Sheet. I didn’t spot any falsehoods in it. The numbers are sourced to the CBO, the Bureau for Labor Statistics, and other accepted mainstream sources. Let’s run down some of the facts:
That’s not quite at Bill Clinton’s pace (22 million over 8 years), but better than most other 2-term administrations. And Bill Clinton had the big tech bubble.

This represents 41 consecutive months of job growth. So it’s not exactly a new thing.
4.5% is very close to full employment, and some economists are saying that it could go a little lower.
According to this page, the last business cycle in the '90’s under Clinton actually had an overall wage decrease.
This one is important - when you add up wage growth plus tax cuts, the average person has seen take-home pay increase almost 10% in the last six years. During the 8 years of the Clinton administration it only went up about 7%.

And it’s not just the rich that did better:
Now, to trade:
And some other macro indicators:

Seems like a pretty good economy to me.

http://boards.straightdope.com/sdmb/showpost.php?p=8219394&postcount=71

It might also be explicable by actually including Pre-Tax Savings, which are generally not counted in the ‘savings rate’. The big story here might just be the rise of the 401(k) as the primary savings instrument:

http://boards.straightdope.com/sdmb/showpost.php?p=8223877&postcount=88

While no fan of deficit spending, this sort of doomsaying is grossly exaggerating. The estimate for the 2007 deficit is now 172 billion dollars. 2007 GDP is forecast to be about 13.75 trillion, putting the deficit at 1.2% of GDP.

That is a very low number - about half of the 40 year average. Only about 10 years since 1965 have had lower deficits as a percentage of GDP. Five of Clinton’s 8 years in office had higher deficits.

The total U.S. public debt is hoving just below the debt limit for European countries according to the Maastrict treaty - and France and Germany have already violated those. The difference is that the U.S. economy is growing much faster than France or Germany’s, and therefore the U.S. can ‘afford’ its debt much more.

How will the U.S. pay it off? Well, it could be done by holding the line at spending and growing out of it. With the U.S. economy growing at 3% per year, if the deficit rises no further than it is now the total public debt as a percentage of GDP will start to decline rapidly.

http://boards.straightdope.com/sdmb/showpost.php?p=7892401&postcount=40

I’m no fan of deficits, but by historical standards today’s deficit isn’t that big. It’s now projected to come in at 250 billion dollars for FY2006, way down from the earlier estimate of 318 billion. Why? Because government revenues are soaring.

So how does that stack up against historical averages? Have a look at this Deficit graph, in 1996 dollars. 250 billion in 2006 dollars is something like 220 billion in 1996 dollars. It’s been over 400 billion, and many times over 300 billion.

But a more critical number is the deficit as a percentage of GDP. Have a look at this chart: Deficit as % of GDP. The 40 year historical average for the deficit has been 2.3% of GDP. The current deficit is something like 1.9% of GDP, well under the historical average for the modern era. More importantly, the deficit is continuing to fall, while the economy is still growing at over 3%. So as a percentage of GDP, the deficit is dropping fast.

Look, I know Democrats pretty much have to say that the economy is horrible right now. What are they going to do, say it’s great? But we all know they are lying through their teeth. There is no way in hell you can spin 3.5% growth, 6 million new jobs in 3 years, surging revenues, low inflation, unemployment near historical lows, the stock market at record highs, and low interest rates as anything other than great.

It’s true that wages are stagnant on the lower end, but the reality is a lot more complex than a mere number. One of the reason wages are stagnant is because of competition from immigrants, both legal and illegal. They compete for jobs mainly at the lower end. But it’s also true that the standard of living for the lower classes is improving, because they are getting improved benefits, and the goods that make up a large chunk of their disposable income are actually deflating. Food, consumer electronics, and thanks to Wal-Mart, household staples, drugs, clothing, books, toys, and just about anything else they sell. Wal-Mart alone is responsible for knocking several percentage points off the inflation rate, and all that savings goes straight to the poor and lower middle class.

I’ll give you guys points for trying, through. It takes a lot of chutzpah to criticize the economy for having too many jobs available and too low an unemployement rate. Especially after liberal bitched about joblessness for the first few years of Bush’s presidency.

This is not to give Bush credit for all of it, or even the majority of it. But there is no question that we are in a very good economy right now. My business pays very close attention to the economy, and our internal financial guys think we’re doing awesome. And we set records in the last quarter for performance. And unlike governments, corporations don’t blow sunshine up their asses and try to fool themselves - the numbers are important because they dictate what we can expect to sell, and therefore what we can afford to produce. Our hard-nosed green eyeshade types see a very good near future, and an excellent current economy.

http://boards.straightdope.com/sdmb/showpost.php?p=6421860&postcount=1

How’s the ‘Bush Economy’ doing now?

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A few years ago, there were plenty of threads criticising the economic performance of the Bush administration. Lots of threads decrying the loss of jobs, the deficits, the tax cuts, benefiting the rich against the poor, etc.

My position at the time was that it was too early to tell. Two years into an administration isn’t enough time to see its effect on the economy. The tax cuts hadn’t been fully implemented. I said at the time that if Bush was elected to a second term, a true measure of his economic policy would be the performance of the economy in his ‘out years’.

Well, here we are in the 5th year of the Bush administration. I’ve been looking at the latest economic indicators, and they look pretty darned good. Specifically:
• GDP growth close to 4% per annum
• Unemployment at 5%
• 3.7 million jobs created in the last two years
• A rapidly shrinking deficit
• Tax receipts up 15% last year, mostly from the rich. This is the biggest annual rise in tax receipts since the early 1980s.
• Business investment up 11% this year
• Low inflation, low interest rates

This despite rapidly rising energy costs which generally act as a brake on the economy.

Especially encouraging is the rapid decline in the deficit, far ahead of original White House estimates. It has been revised downwards by 100 billion dollars just this year alone, and is now forecast to be about $330 billion, which in terms of GDP is almost down to half of its peak a couple of years ago, and far lower than the large deficits in the late 1980’s/early 1990’s.

This last seems to be somewhat of a vindication of the supply-side nature of the tax cuts. Revenues are soaring, and tax rates are low.

So, what do you think? Does the Bush administration deserve credit for maintaining a good economy in difficult times? Have the tax cuts turned out to be not quite the disaster that some predicted?

Yeah. You didn’t want to do that, but we brought that shit on ourselves.

Again, I marvel at how you can be touted as having credibility on economic matters.

[Dick_Dastardly]

That’s an uncannily accurate collection of predictions and commentary right there.

[Voyager]

@Hentor_the_Barbarian

Oh really? Search " Bush economy " for poster= Sam Stone:

This is literally just a very small sampling. It’s not even a “best of” since it was such a target rich environment.
Again, I marvel at how you can be touted as having credibility on economic matters.

Awesome!

Might I note that few people blamed the 2001 recession on Bush. He was hardly in office long enough to have an impact on the economy, and that there would be a recession was pretty much inevitable considering the boom before. So I don’t see why liberals would try to make it sound worse. What people did say was that the recovery, especially in terms of jobs, was much slower than previous recoveries, no doubt due to misguided tax cuts. Not that tax cuts were not useful, they were, but that targeting them towards the rich did not build consumption in an environment of over-capacity. Sad to say the very policy that did not help then is being proposed by Republicans today.

[Happy_Fun_Ball]

Ha! Ouch. Too funny!

Well, he did not like Medicare D when it was passed…

@Sam_Stone

Okay, but seriously…

What in hell is with this prescription coverage for seniors? You know, for the first 20 years I was active in politics, I never heard of this. It was not an issue. No one talked about it.

Now, in the last couple of years, suddenly there’s this huge crisis that the government must step in and fund.

But let’s not forget some simple facts:

1. The nation is getting older.
2. As a group, seniors are the wealthiest people in the country.

Does it strike anyone else as being absolutely INSANE that seniors should get an entitlement like this? As it is, Social Security and Medicare costs are ballooning out of sight, and it’s only going to get worse over the next two decades. Why in hell are we adding this gigantic new expense to the problem?

What we should be looking at right now is a fundamental restructuring of both Medicare and Social Security - to CUT funding. By means-testing it. Since seniors as a group are rich, they can pay for their own damned health care. Social security is trickier, because theoretically they paid into the system with their own money. However, given the chronic under-funding of SS, the fact is that the people who are retiring today are getting a tremendous return on their investment, while people who retire in 40 years will be lucky to get back the money they put in, and would have been much better off in private investments.

So really, Social security is little more than a regressive tax, wherein the poor young working people of the country pay hefty taxes so that it can be spent by the older, wealthy people.

So let’s means-test 'em. Bill Gates can pay for his own false teeth and plastic hip. And I think he can do without the $600/mo or whatever he’ll get when he retires.

As far as drugs go, at the very least we have an opportunity to means-test those before they become another untouchable entitlement. Seniors can pay for their own damned drugs. Those who honestly can’t afford to can apply to the government for relief. Giving free drugs to everyone who hits a magic age is idiotic, unjust, and damned expensive.