Did The Bush Tax Cuts Reduce Federal Tax Revenue ?

Recent debates over the economic and fiscal impact of the Bush tax cuts indicate that Republicans still haven't learned the lessons of the Bush years.

Both Mitch McConnell and Jon Kyl have recently said that the Bush tax cuts did not reduce overall federal tax revenue and thus could not be said to have contributed to the federal budget deficit.

Are they right ?

Bruce Bartlett, a former Domestic Policy adviser to President Reagan who became a strident critic of the Bush Administration’s economic policies, says that they’re absolutely wrong and that the actual data shows that revenue did go down after the tax cuts went into effect:

Now, it’s not necessarily a bad thing that tax revenues went down. However, considering the fact that, during this same period of time, the Bush Administration and Congress were pursuing policies that were increasing spending, it would seem that this was precisely the wrong thing to do.

The Heritage Foundation’s Brian Riedel completely misses this point in his column today in the Wall Street Journal:

Entitlements and other obligations are driving the deficits. Specifically, Social Security, Medicare, Medicaid and net interest costs are projected to rise by 5.4% of GDP between 2008 and 2020. The Bush tax cuts are a convenient scapegoat for past and future budget woes. But it is the dramatic upward arc of federal spending that is the root of the problem.

In terms of future deficits, this is largely correct. The budget deficits that will unfold during the Obama Administration and the years afterward are largely attributable to the policies President Obama has implemented. However, the deficits that existed during the Bush Administration — which resulted in a doubling of the National Debt from January 2001 to January 2009 — were largely the result of the disconnect that Riedel, McConnell and Kyl are failing to see here.

There’s nothing wrong per se with tax cuts that reduce tax revenue. Quite honestly, less money in the hands of the Federal Government is generally a good thing. However, a policy of tax cuts that result in lower tax revenue combined with massive increases in entitlement and other forms of spending is economic stupidity. Until Republicans recognize that, they’re not really much better than the Democrats on this issue.

FILED UNDER: Economics and Business, Taxes, US Politics
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. Brummagem Joe says:

    “The budget deficits that will unfold during the Obama Administration and the years afterward are largely attributable to the policies President Obama has implemented.”

    Not really. At least 70% of the current deficit is the consequence of policies enacted during the Bush admin or new debt contracted during that period. Wars previously off the books , increases in discretionary spending, the prescription drug benefit and tax cuts account for most of the deficit. Given that you can lay a sizeable chunk of responsibility on the Bush admin for the recession which was in it’s sixth quarter when Obama took office it’s not unreasonable to lay a lot of the cost of ameliorative measures taken by the current admin on Bush too. Perhaps you’d like to give us a summary in the current and projected budgets of items that are exclusively, or even largely, attributable to the present admin’s policies.

  2. sam says:

    “However, a policy of tax cuts that result in lower tax revenue combined with massive increases in entitlement and other forms of spending is economic stupidity. Until Republicans recognize that, they’re not really much better than the Democrats on this issue.”

    I don’t think the Republicans give a damn about deficit reduction if this means repealing an old tax cut or forgoing a new one.

  3. And I don’t think Democrats give a damn about deficit reduction it this means cutting spending and the size and scope of the Federal Government

  4. sam says:

    As someone pointed out, the difference between Democrats and Republicans is that the former are willing to institute programs and raise taxes to pay for them; the latter are willing to institute programs.

  5. Brummagem Joe says:

    Doug Mataconis says:
    Monday, July 19, 2010 at 11:16
    “And I don’t think Democrats give a damn about deficit reduction it this means cutting spending and the size and scope of the Federal Government”

    So how would you explain the fact that the cost of govt shrank during the Clinton administration and he’s the only recent president to leave a surplus whereas during both the Reagan and Bush presidencies it increased massively? And how’s that summary of budget increases solely attributable to the Obama admin coming along?

  6. grampagravy says:

    I love it! Bush spent 8 years giving away the farm to his “base,” the economy was tanking while Obama was still just a candidate, and the GOP spin machine wants us to believe that Obama and Social Security are the bad guys?
    Good luck with that!

  7. Paul L. says:

    I believe that the pre-2003 tax cuts were “targeted tax cuts” for only the middle class & poor.

    http://www.heritage.org/Research/Reports/2007/01/Ten-Myths-About-the-Bush-Tax-Cuts
    Myth #4: Capital gains tax cuts do not pay for themselves.
    Fact: Capital gains tax revenues doubled following the 2003 tax cut.

  8. Brummagem Joe says:

    Paul L. says:
    Monday, July 19, 2010 at 11:57

    “Myth #4: Capital gains tax cuts do not pay for themselves.
    Fact: Capital gains tax revenues doubled following the 2003 tax cut.”

    It’s not a myth. Of course capital gains revenue rocketed when they cut the tax by 25%, but it’s largely a “one off” effect that atrophies over time. And the benefit accrues almost exclusively to the highest income group since about 33% of all liquid assets (stocks, bonds etc) are owned by 1% of the country and 90% of them are owned by 10% of the country. You’ll really have to apply some scepticism when it comes to Heritage propaganda, after all they’re entirely funded by the aforesaid 1%.

  9. sam says:

    “I believe that the pre-2003 tax cuts were “targeted tax cuts” for only the middle class & poor.”

    Don’t think so (though some of them were)[“a href=”http://taxesandgrowth.ncpa.org/news/are-the-bush-tax-cuts-working”>Are the Bush Tax Cuts Working

    Major Provisions of the Tax Cuts

    The 2001 Economic Growth and Recovery Tax Act, by far the largest of the three tax cuts, was intended to provide tax relief to individuals, families and businesses, thereby stimulating economic growth enough to recover from the recession (which ended in November 2001). Some provisions of that bill include the following:

    *Rebate checks were sent to taxpayers in the amount of $300 per individual and $600 per married couple.
    *Personal income tax rates dropped from 39.6, 36, 31, and 28 percent to 35, 33, 28, and 25 percent, respectively.
    *The child tax credit increased from $500 to $600 (effective 2001), and will increase to $1,000 by 2010.
    *The standard deduction for married couples increased to equal twice that of single taxpayers.
    *The estate tax would be repealed in 2010.
    *Contribution limits for various tax-favored savings accounts (for retirement, education, etc.) were increased.

    The Jobs and Growth Tax Relief Reconciliation Act of 2003 accelerated many of those provisions and cut tax rates on dividends and capital gains-small-business equipment write-off amounts were also increased:
    *Effective 2003-2008, the maximum tax rate on qualified dividends will be 15 percent (formerly, dividends were taxed at the same levels as ordinary income).
    *The rate on long-term capital gains from sales after May 6, 2003, dropped from 20 percent to 15 percent.
    *Many small businesses can instantly deduct 100 percent of most new and used business assets (up to $100,000).

  10. sam says:

    Does everybody agree that maybe the 2001 tax cuts were justified at that time, but with the launching of two wars, maybe not so justified in their continuance? The page I cite above puts the total of the Bush tax cuts at $1.3 trillion — the combined costs of the Iraq and Afghan wars are pretty close to that now.

  11. Paul L. says:

    Sam in your statement
    For The 2001 Economic Growth and Recovery Tax Act

    *Personal income tax rates dropped from 39.6, 36, 31, and 28 percent to 35, 33, 28, and 25 percent, respectively.

    http://www.truthandpolitics.org/top-rates.php
    Top US Marginal Income Tax Rates
    2000 39.6
    2001 39.1
    2002 38.6
    2003 35

  12. Brummagem Joe says:

    sam says:
    Monday, July 19, 2010 at 12:15

    “Don’t think so (though some of them were)”

    The vast majority of the benefit went to high income earners. I can’t remember the exact numbers but something like 70% of the benefit went to the top 20% of tax payers, not surprising since high earners are paying most of the taxes but the benefit was completely disproportionately aimed at the wealthy while the middle class got peanuts and has substantially contributed to growing income inequality which is at late 1920’s levels where the top 1% of the country receive around 23% of its income while back in the sixties it was around 8%

  13. Steve Verdon says:

    Given that you can lay a sizeable chunk of responsibility on the Bush admin for the recession….

    This is a load of garbage. President’s ability to influence the economy is at best imprecise and clumsy. I know everyone loves to play the partisan blame game, but its the sign of an intellectual lightweight, IMO.

    At least 70% of the current deficit is the consequence of policies enacted during the Bush admin or new debt contracted during that period. Wars previously off the books , increases in discretionary spending, the prescription drug benefit and tax cuts account for most of the deficit.

    Which either had Obama’s support, he’s continuing or had wide spread support by a number of Democrats. Do try to be honest that the Democrats big beef with the prescription drug program was that it was not big enough. TARP is another policy that the Obama Administration continued as well.

    Moreover, the recession itself has probably been the single largest contributor to the deficit increases. Thus, I find the 70% number rather dubious without at least something to back it up.

  14. Steve Verdon says:

    I can’t remember the exact numbers but something like 70% of the benefit went to the top 20% of tax….

    You like that 70% alot, looks to me like a number you just pull out of posterior…do you have anything to back up these numbers?

  15. sam says:

    @ Paul L:

    “Sam in your statement
    For The 2001 Economic Growth and Recovery Tax Act …”

    Right, the rates were not reduced in one fell swoop, but were gradually introduced. Sorry; I could have made that clearer in my post.

  16. Grewgills says:

    Do try to be honest that the Democrats big beef with the prescription drug program was that it was not big enough.

    The Democrats biggest beef with the prescription drug plan was not allowing Medicare to use its size to negotiate lower drug prices and that has cost us plenty.

  17. The Q says:

    Mr. Verdon,

    What can’t you flat earthers get?

    We tried the “give the rich tax cuts” under Reagan, with the same resutls.

    Clinton and a somewhat rational Repub. congress followed sensible policies which resulted in 3 years of budget SURPLUS at the end of the 90s.

    Or can’t you remember that far back?

    Bush gets in, does away with those prudent economic policies and immediately the predictable result (unless you are blinded by adherence to dogma and cant, which Mr. Verdon you definitely are)…see box above of reduced tax revenue during his admin. to prove your incredibly naive.

    This same dip in revenues occurred when Reagan cut taxes, only to be righted with the 86 tax hikes.

    Also Mr. Verdon,. please look at these quotes regarding Clintons 94 budget: with the dreaded increase of the marginal rate to 38.5%

    “The tax increase will … lead to a recession … and will actually increase the deficit.” Rep. Newt Gingrich (Republican, Georgia)

    Wrong of course…or will you Mr. Verdon argue like a child that somehow it was the Internets that accounted for the economic stimulation?

    Or, Mr. Verdon, remember these quotes from the GOP Greek chorus of economic doom:

    “Clearly, this is a job-killer in the short-run. The impact on job creation is going to be devastating.” Rep. Dick Armey, (Republican, Texas)

    “The deficit four years from today will be higher than it is today, not lower.” Sen. Phil Gramm (Republican, Texas)

    Another idiotic republican statement..this from the a*shole who gave us Gramm Leach Bliley

    “I will make you this bet. I am willing to risk the mortgage on it … the deficit will be up; unemployment will be up; in my judgment, inflation will be up.” Sen. Robert Packwood (Republican, Oregon)

    Mr. Verdon, it is demonstrable that Dem policies, as crazy as it may seem to you flat earthers, can create prosperity. Or did history start for you in 1980?

    Thanks to folks like you who constantly refute facts and data that completely destroy your fictional supply side rationale, we have this stupid debate over and over again.

    I hope in a horrible way, that the GOP gets power in 2010 midterms and completely wastes this country again, for perhaps close minded dogmatists like you will fess up to your mindless commitment to economic folly.

  18. Wayne says:

    The rise or fall of Federal tax revenue is how much total money it takes in not % of GDP or anything like that. The Federal tax revenue was in a sharp decline at the end of Clinton as well as end of 2nd Bush. There was a sharp increase in 2004 for the 2nd Bush as well.

    http://www.heritage.org/budgetchartbook/growth-federal-spending-revenue

    Of course tax policies are not the sole reason for revenue increasing or decreasing. Regulatory policies have an even greater influence on revenues. Creating stifling anti-business regulatory policies chokes off business which results in far lesser revenue. Remember bad policies can be done in both ways. Restraining business and forcing to do business in a bad business way (Freddie Mac).

    Also when looking at the years, one should look at who controlled congress.

  19. Brummagem Joe says:

    Steve Verdon says:
    Monday, July 19, 2010 at 13:03

    “I know everyone loves to play the partisan blame game, but its the sign of an intellectual lightweight, IMO.”

    I’ve always considered the inability to do simple math the sign of an intellectual lightweight myself.

    “This is a load of garbage. President’s ability to influence the economy is at best imprecise and clumsy.”

    Not entirely true, but even if it is then by the same logic the current president has no responsibility for the current state of the economy, you can’t have it both ways!

  20. Brummagem Joe says:

    Wayne says:
    Monday, July 19, 2010 at 13:44
    “The rise or fall of Federal tax revenue is how much total money it takes in not % of GDP or anything like that. ”

    What’s the point of a debate with someone whose understanding is at this level.

  21. Brummagem Joe says:
  22. The Q says:

    Wayne,

    Riddle me this batman, how come during ALL democratic presidents, even during recession and depression, did tax revenue rise year to year?

    There is not ONE year (save ’71) where tax revenue decreased until Reagan in the 80s and Bush recently.

    You are wrong about revenue decreasing during Bush One’s term and you are wrong about it decreasing under Clinton.

    See this link to IRS gross collection by tax type:

    http://www.irs.gov/taxstats/article/0,,id=172265,00.html

    Hit 2009 and an excel spreadsheet will give you all the raw data from 1960

  23. Zelsdorf Ragshaft III says:

    Thanks Steve. I always like the quote about what Clinton did with the economy. What is always left out is who controlled congress during that time. Government spending is controlled by congress. The President requests, however it is congress who authorizes the spending. If the Democrats were dead set against the spending in the Bush years, they surely did very little to stop it. I saw a shocking comparison between the deficit during years the Republicans contolled congress and when Democrats did. Democrats spend 10 times more than Republicans. The average during GOP years was something like 60 billion where during the Democrat years the debt was raised by 800 billion. Which is to say Obama and the Dems have spend more and raised out debt more in the almost two years they have been in office than Bush did in 8 years. People can pull numbers out of the air but real numbers can be found, just google it.

  24. What is always left out is who controlled congress during that time. Government spending is controlled by congress. The President requests, however it is congress who authorizes the spending. If the Democrats were dead set against the spending in the Bush years, they surely did very little to stop

    Zels, I sometimes wonder if you’re reading this blog in an alternate reality or something.

    You do realize that the Republicans controlled Congress for the first six years years of the Bush Administration, don’t you ?

  25. Steve Verdon says:

    The Q,

    Do try to post while not high on drugs. My point isn’t that Bush was grand or that Republicans are fantastic. And if you really think that, I apologize for the comment about being on drugs as you really are just plain old vanilla stupid in this case (hint, look through the archives for plenty of examples of my disdain for Bush/Republicans). My point is that we aren’t doing hardly anything different than what Bush proposed in much of 2008 save perhaps going bigger.

    Brummagem Joe,

    I’ve always considered the inability to do simple math the sign of an intellectual lightweight myself.

    So you’ve got nothing to back up your claims. Noted.

    Not entirely true, but even if it is then by the same logic the current president has no responsibility for the current state of the economy, you can’t have it both ways!

    Okay, please post something I’ve written where I’ve blamed Obama for the current recession. You can find all of my posts on this site quite easily and you should be able to find something.

    Here is a hint, I don’t like Democrats…and I don’t like Republicans…at least the official party Bravo Sierra.

  26. The Q says:

    To ZR3.

    Dems controlled the house for 56 out of 60 years from 1932-1992, they controlled the Senate for 50 out of 60 year during this same period.

    So, according to you and Steve and Wayne, all the credit should go to the DemCongress for the incredible, stable and greatest economy the world has seen right?

    When we look back on low inflation, low unemployment, high GDP increases, we should drop down on our knees and thank, not FDR, Truman, Ike, JFK or even, yikes RR, but rather, Tip O’Neill and Sam Rayburn etc.

    Right? According to your logic?

    And since the idiots, er Repubs have dominated since 1992: 12 out of 16 years in the house and senate. all the fu*cks ups are their fault right?

    I mean, its congress as wayne and steve and ZR3 that are really responsible for the huge deficits, financial implosion, Wall Street shenanigans etc.

    Because after all, the cornerstone of conservatism is taking responsibility for one’s actions… unless of course, you can blame it on everything and everyone but your own inherent flaws and ignorant policies right?

    You folks are repugnant.

  27. The Q says:

    Mr. Verdon,

    I apologize for mistaking you for a idiot.

    Yes, I am on drugs….Zantac because of the heartburn I get from reading insipid, plainly wrong posts by conservative apologists who can’t admit that 2+2=4.

    And I do think that the present Dems are not much better.

    To paraphrase an old aphorism which I am updating for to reflect the current times:

    The difference between a liberal and conservative can best be described in the two ways they each would deal with a starving man:

    The liberal would give a fish to a starving man – but only if he is a gay illegal alien, while the conservative would charge him for the fish right before cutting off his unemployment benefits.

  28. Wayne says:

    Q
    Where did I say revenue decrease in Bush’s one years?
    Bush 2 did not take office until 2001. You can attribute the first year of office revenue to the prior President or not. If so then 2001 would be Clintons decline. If not then Obama would own the decline of his first year 2009 of his first year. Which is it?

    Joe
    Your understanding is the one that needs to be adjusted. A tax cut will by nature take a lesser % but that doesn’t mean it will cut the total tax Revenue. For example if you cut taxes by a few % but GDP doubles. Your tax revenues will almost double but it will still be a lesser % of total GDP than the year before. Do you understand that or do I actually have to show you a mathematical example?

  29. Wayne says:

    Q
    Only simpletons think a coach or a player are responsible for all things positive or negative that goes on. It is a combination. Sometimes a coach or player will do negative things with negative results but the team still produce some positive results. Same goes with Government.

  30. Wayne says:

    Add on, I just saying you need to look at all that were involved not just the President or coach.

  31. The Q says:

    So the “Obama’s a kenyan marxist who will destroy America” screed by winguts is bullshit according to you Wayne?

    Since only “simpletons think a coach or a player are responsible for all things positive or negative that goes on.”

    Please write that to all who blame Obama for the deficits and economic conditions.

  32. TangoMan says:

    So how would you explain the fact that the cost of govt shrank during the Clinton administration and he’s the only recent president to leave a surplus whereas during both the Reagan and Bush presidencies it increased massively?

    Bull pucky, squared. The “Clinton Surplus” is an accounting trick. You can’t have a budget surplus while simultaneously increasing the total national debt. The source of the surplus fiction is that the debt sold to the public was reduced but those reductions were more than made up for by increases in intragovernment borrowing (SS & Medicare revenue streams surged during the late 90s and they served as the source of borrowing thus displacing debt sold to the public.)

  33. Gustopher says:

    Both Mitch McConnell and Jon Kyl have recently said that the Bush tax cuts did not reduce overall federal tax revenue and thus could not be said to have contributed to the federal budget deficit.

    Both Mitch McConnell and Jon Kyl are using a rhetorical technique known as “lying”.

  34. Wayne says:

    Q
    They did the same thing with Bush. People also make the same mistake in giving Presidents credit for positive conditions regardless of wither they did anything to deserve it. It comes with the job of being President.

    I would say your above statement is an overstatement. I do believe as most do in the latest poll that Obama has strong socialist tendencies. I for one don’t believe we must be 100% socialist free. Taking care of the elderly and to “temporary” help out the unemployed is not a bad deal. However it is a matter of degree. I small amount is ok but a large amount will destroy our country.

    I believe that Obama polices and actions are hurting the U.S. I also believe that we will correct our path before it destroys us. I could be wrong and Obama is not done yet. I also believe he has been using the Federal Government in a heavy handed manner. Once again I think there will be enough kickback on it to prevent permanent harm.

  35. wr says:

    Tangoman — That “accounting trick” sure fooled all the Republicans, who insisted that the so-called surplus be immediately returned to the (rich) people in the form of tax cuts before some terrible consequences ensued. So were they all not as bright as you, or were they simply lying to give money to their cronies?

  36. Brummagem Joe says:

    Wayne says:
    Monday, July 19, 2010 at 14:56

    ” A tax cut will by nature take a lesser % but that doesn’t mean it will cut the total tax Revenue.”

    A nice theoretical example but the problem is this didn’t happen which is what this thread is all about

    TangoMan says:
    Monday, July 19, 2010 at 17:11
    “Bull pucky, squared. The “Clinton Surplus” is an accounting trick.”

    Yeah right. The CBO have it all wrong. So show me the money. Give me the numbers 1980 to 2008 or thereabouts.

  37. Tommy V says:

    It’s not just tax cuts that matter. It’s what kind of tax cuts and what the rates were before the cuts. And they don’t automatically mean anything all by themselves. The economic environment before and after has a lot to do with it as well.

    Both the Kennedy and the Reagan tax cuts were followed by increased tax revenue.

    Clinton raised taxes and increased revenue, though a cut in capital gains tax helped a bit here as it the 90s economy was largely driven by the market (and increased productivity)

    Bush cut taxes, some of which was an equal “tax rebate” across the board, but this did not increase revenue.

    If you look at the numbers closely, it appears that the more the cuts weigh to the wealthy, the more it affects the revenue as well as the higher the taxes were before the cuts. This is actually pretty obvious as the wealthy pay most of the taxes.

    This matter deserves a closer look than a gross summary can provide.

  38. Wayne says:

    Joe
    As stated above there are very few years in which total tax revenues did not increase. Many of those increases included growth in revenues after Tax cuts were enacted including some during the Clinton years. Revenues also increase after tax hikes. If all you are concern with is Government revenues than it becomes a wash or at least you need to dig a bit deeper .

    However if you are also concern with more like the overall growth of the economy then you need to take that into account as well. Myself I would prefer similar increases of Government revenues while being a smaller % of the GNP. Not to say that I don’t think the Federal Government is currently too large.

  39. TangoMan says:

    So were they all not as bright as you, or were they simply lying to give money to their cronies?

    Both.

  40. TangoMan says:

    Yeah right. The CBO have it all wrong. So show me the money. Give me the numbers 1980 to 2008 or thereabouts.

    If anything should have been driven home this past year it’s that the CBO reports are scored under the contrivances presented to them. Recall how President Obama was touting CBO reports which showed that ObamaCare would come in under $x billion and that was because CBO was requested to score revenue that didn’t exist, ignore expenses that did exist and would exist in the future, etc.

    I provide the numbers in this thread. Direct from the US Treasury.

  41. sam says:

    @Tangoman

    “I provide the numbers in this thread. Direct from the US Treasury.”

    ‘Deficit’ is generally understood to mean an excess of expenditures over revenue; did the yearly payment on the national debt exceed tax receipts in each of the years you reference?

  42. TangoMan says:

    ‘Deficit’ is generally understood to mean an excess of expenditures over revenue; did the yearly payment on the national debt exceed tax receipts in each of the years you reference?

    You’re either posing a complex question or you’ve worded your question sloppily. First you define deficit and then you ask a question that doesn’t address the deficit but instead redefines expenditures as being debt servicing costs on the national debt. If you’re asking a complex question whatever you had in your mind didn’t translate well into words. Taking your question as presented, of course, tax receipts exceeded the cost of debt service, as they’ve done since the US has had a public debt. Does that mean anything to you with regards to the topic?

    The numbers I posted showed that the Total National Debt increased every year of the Clinton Presidency. What confuses people who buy into the notion of Clinton Surpluses is that the total debt held by the public decreased simultaneous to the debt held by other arms of the Federal Government increasing, with a net increase in Total Debt every year. There were no surpluses. They are an accounting trick. I’ve provided you with the US treasury source and you can track debt at the end of each fiscal year and compare for yourself the year to year debt increases. I’m not asking you to take my word for it.

  43. Steve Verdon says:

    Yeah right. The CBO have it all wrong. So show me the money. Give me the numbers 1980 to 2008 or thereabouts.

    This is hilarious coming from you…when you can’t back up your numbers when asked. I know why don’t you make up another statistic and use 70% again.

    Obvious troll is obvious…yet again.

  44. sam says:

    “you’ve worded your question sloppily”

    Yes I have. ‘Deficit ‘ is defined as an excess of expenditures over tax revenues. As part of any budget, debt service is included, by law. So, a budget can be submitted such that during the term of the budget, expenditures of the budget are less than the revenues, and there would be no deficit that year. But, and correct me if I’m wrong, the national debt could still increase owing to interest on the debt accruing. If the year’s interest payment on the debt was less than the interest accrued during the year, the debt would increase. But would this reflect a budgetary deficit? Consider this situation: For a fiscal year, the government borrows zero dollars–wouldn’t the debt still increase because of interest accruing? That’s what I was trying, sloppily, to get at: Isn’t it possible that the debt can increase because of something other than borrowing.?

  45. The Q says:

    Wayne,

    Please explain what “strong socialist tendencies” means?

    Its an empty phrase which is meaningless and is used like liberals when describing Cheney or bush as “fascists” or “Nazis”.

    Please give concrete, empirical evidence that Obama has “strong socialist tendencies”.

    This is just another smokescreen for the right to hide behind in absence of any policies of their own.

  46. Gerry W. says:

    TangoMan,

    Let us separate what deficits are which are yearly reported if you don’t have enough revenue and you fall short for the year. And If for the year, you have more revenue and less government spending, then you have a yearly surplus.

    The other separate issue is the national debt that has been accumulating since the beginning or our nation. The yearly deficits are rolled into the debt at the end of the year.

    The Clinton debt went up from about 4 trillion to roughly 6 trillion.

    Now, let us look at the yearly deficits. They were 255, 203, 164, 107, and 22 billion, and then surpluses of 69, 126, and 236 billion. So he had yearly surpluses at the end of his term in which I would credit Newt Gingrich.

    Now, let us back up with those yearly deficits. Those were tacked on to the national debt. So yes, the national debt went up under Clinton as the deficits piled up for 5 years. In his last 3 years he had surpluses and some of that went to paying down the national debt.

    Unless, I misunderstand you guys, there are two separate issues. One is the yearly deficit and the other is the national debt. Clinton (Gingrich) achieved a surplus on the yearly budget, but the national debt still went up as they tried for years to get the deficit under control. So it takes many years to work on the yearly deficit, and during that time, the deficits are still tacked on the national debt.

    But what may be worse than all this is the human loss in terms of jobs and what is happening to our high unemployment because of globalization and Washington does not address this problem. They still praise globalization along with that high unemployment and less wages, and ignore that this is weighing in on our deficit and debt.

  47. The Q says:

    Gerry,

    Very nice post above….except for the giving credit to Newt Gingrich part.

    If Newt was so successful, then why change those successful policies in the 2000s?

    Answer, because it wasn’t Newt’s success, it was Clintonomics which was quickly abandoned the first chance the Republicans got in 2001.

    With predictable results, i.e. huge deficits, class warfare, less tax revenue.

    What does it take to get conservatives to give up the ghost…a third go round? another crippling recession if Repubs take congress and the Prez in 2012.

    I don’t think the country can stand it.

  48. Gerry W. says:

    I think what happens to both parties is that the very right or left wings of the parties take over. The democrats have to be careful of the tax and spend policies. On the republican side, Bush came in and he only believed in the ideology of trickle down and he stayed the course and ran the country into the ground. I also think that Bush gave us a chance to see what a right wing religious nut would do in running the country. And he relied on God in making a decision in going to Iraq. While people can find faults with Obama, I find Bush was totally hilarious.

    I will continue to give Gingrich credit. He and Clinton battled it out. The downfall is that republicans still pander to the rich, go to laissez-faire and they forget the little guy.