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View Full Version : The Truth About Who's Responsible For Our Massive Budget Deficit



Cigar
02-15-2013, 07:52 AM
Say the words "budget deficit," and Republicans and Democrats begin screaming at each other about who's to blame.
Republicans howl that the deficit is President Obama's fault, because he has exploded government spending and failed to fix the economy.
Democrats roar that President Obama inherited a catastrophic economic mess, that this mess will take time to clean up, and that our massive deficit is therefore President Bush's fault.
So, who's right?


Let's start by looking at the deficits under Presidents Bush and Obama. Then we'll figure out what has caused them. Finally, we'll assign some blame.


First, the chart below shows the progress of the annual deficits under Presidents Bush and Obama.


President Bush, you will recall, inherited a budget surplus (the first in decades). Then, hit with a recession, he took the budget into deficit. Then he cut taxes, growing the deficit to $400 billion a year. Then, the economy boomed between 2005 and 2008, reducing the deficit to $200 billion a year. Then, the financial crisis hit, and the Bush deficit ballooned to $400 billion again.


In early 2009, President Obama took over, amid the worst recession since the Great Depression. President Obama signed an $800 billion spending increase at the same time that GDP and tax collections tanked. The combination of these two factors--growth in spending and a drop in revenue--exploded the deficit to $1.4 trillion. In 2010, the economy and tax collections improved modestly, and the deficit shrank to $1.3 trillion annualized.

http://static4.businessinsider.com/image/4e1b040549e2aeb51a1b0000-623-376/us-federal-budget-deficit-2000-2011.png


So, what actually caused these deficits?


The chart below provides a look at federal receipts (taxes) and spending during the same period. (The deficit is the difference between them).
Republicans howl that President Obama has exploded the size of federal government spending in his short tenure as President, and it is true that he has increased it. But President Bush actually increased federal spending by more than 2X as much as Obama has (http://www.businessinsider.com/government-spending-2011-7). So it is unfair to lay the explosion in spending at the feet of President Obama: Both presidents are responsible.


The increase in government spending, meanwhile, is actually NOT the only factor that has caused the deficit. The other factor--equally if not more important--is the fall-off in government revenue (tax receipts).


This second and larger factor can be blamed on two things: First, the Bush tax cuts, which reduced revenue, and, second, the weak economy, which has reduced the incomes and capital gains upon which most federal taxes are based.


In the chart below, you can see what happened to both federal receipts (red line) and spending (blue line) over the past decade.
President Bush cut taxes in 2001 and 2003. These tax cuts hit federal revenue, while federal spending growth continued apace. This combination ballooned the deficit in the early years of the Bush presidency.


By the middle years of the Bush presidency, however, on the strength of the housing boom and strong economic growth (much of which now looks like a debt-fueled mirage), federal revenues began to grow rapidly. By 2007, in fact, the gap had almost closed.


But then the bottom fell out. The housing bubble burst, the financial crisis hit, and the economy plunged into recession. And then President Bush handed President Obama the worst recession in more than 70 years and left Obama to clean up the mess.


This recession clobbered federal revenues (tax receipts--red line), which still have not regained their 2007 bubble highs. President Obama's stimulus, meanwhile, helped add about $600 billion to federal spending (blue line). The combination of these two factors ballooned the deficit from $400 billion when President Bush left office to ~$1.3 trillion now.


http://static2.businessinsider.com/image/4e1b069c49e2ae172a000000/us-federal-receipts-and-expenditures-2000-2011.png






Read more: http://www.businessinsider.com/us-budget-deficit-2011-7#ixzz2KyJ9xSQ6



You are now fee to start your denials ... :grin:

JackRuby
02-15-2013, 08:11 AM
Say the words "budget deficit," and Republicans and Democrats begin screaming at each other about who's to blame.
Republicans howl that the deficit is President Obama's fault, because he has exploded government spending and failed to fix the economy.
Democrats roar that President Obama inherited a catastrophic economic mess, that this mess will take time to clean up, and that our massive deficit is therefore President Bush's fault.
So, who's right?


Let's start by looking at the deficits under Presidents Bush and Obama. Then we'll figure out what has caused them. Finally, we'll assign some blame.


First, the chart below shows the progress of the annual deficits under Presidents Bush and Obama.


President Bush, you will recall, inherited a budget surplus (the first in decades). Then, hit with a recession, he took the budget into deficit. Then he cut taxes, growing the deficit to $400 billion a year. Then, the economy boomed between 2005 and 2008, reducing the deficit to $200 billion a year. Then, the financial crisis hit, and the Bush deficit ballooned to $400 billion again.


In early 2009, President Obama took over, amid the worst recession since the Great Depression. President Obama signed an $800 billion spending increase at the same time that GDP and tax collections tanked. The combination of these two factors--growth in spending and a drop in revenue--exploded the deficit to $1.4 trillion. In 2010, the economy and tax collections improved modestly, and the deficit shrank to $1.3 trillion annualized.

http://static4.businessinsider.com/image/4e1b040549e2aeb51a1b0000-623-376/us-federal-budget-deficit-2000-2011.png


So, what actually caused these deficits?


The chart below provides a look at federal receipts (taxes) and spending during the same period. (The deficit is the difference between them).
Republicans howl that President Obama has exploded the size of federal government spending in his short tenure as President, and it is true that he has increased it. But President Bush actually increased federal spending by more than 2X as much as Obama has (http://www.businessinsider.com/government-spending-2011-7). So it is unfair to lay the explosion in spending at the feet of President Obama: Both presidents are responsible.


The increase in government spending, meanwhile, is actually NOT the only factor that has caused the deficit. The other factor--equally if not more important--is the fall-off in government revenue (tax receipts).


This second and larger factor can be blamed on two things: First, the Bush tax cuts, which reduced revenue, and, second, the weak economy, which has reduced the incomes and capital gains upon which most federal taxes are based.


In the chart below, you can see what happened to both federal receipts (red line) and spending (blue line) over the past decade.
President Bush cut taxes in 2001 and 2003. These tax cuts hit federal revenue, while federal spending growth continued apace. This combination ballooned the deficit in the early years of the Bush presidency.


By the middle years of the Bush presidency, however, on the strength of the housing boom and strong economic growth (much of which now looks like a debt-fueled mirage), federal revenues began to grow rapidly. By 2007, in fact, the gap had almost closed.


But then the bottom fell out. The housing bubble burst, the financial crisis hit, and the economy plunged into recession. And then President Bush handed President Obama the worst recession in more than 70 years and left Obama to clean up the mess.


This recession clobbered federal revenues (tax receipts--red line), which still have not regained their 2007 bubble highs. President Obama's stimulus, meanwhile, helped add about $600 billion to federal spending (blue line). The combination of these two factors ballooned the deficit from $400 billion when President Bush left office to ~$1.3 trillion now.


http://static2.businessinsider.com/image/4e1b069c49e2ae172a000000/us-federal-receipts-and-expenditures-2000-2011.png




So, who's responsible for the massive deficit?


This is a tougher question.


We know WHAT is responsible: The combination of weak government revenues (tax receipts) and a vast increase in government spending.
But figuring out WHO to blame is a more subjective exercise.


If you believe that the growth during the "Bush Boom" was a debt-fueled mirage--a theory that is certainly supported by the evidence--then you can lay the blame squarely at the feet of President Bush. His combination of reduced taxes and increased spending took the US from a surplus to a deficit, and even the economic boom from a massive housing bubble and enormous borrowing couldn't close the gap.


Even if you think the "Bush Boom" was real, moreover, the recession and financial crisis began on his watch, and the deficit was already exploding when President Obama took office. So it's very hard to escape the conclusion that President Bush bears a lot of the responsibility for our current mess.


On the other hand, President Obama's stimulus certainly hasn't had as big an impact on the economy (and, therefore, government revenues) as he and his advisors promised it would. Given the extent of the mess Obama inherited, it's possible that nothing would have fixed it by now. But even huge Obama supporters are justifiably frustrated with his over-promising, as well as with many of the decisions he has made.
So it seems fair to lay some of the responsibility for our current deficit at President Obama's feet as well.


But, of course, if we're doling out blame, we need to bring two other parties into the conversation.
First, Congress, which approved all of the decisions above.


Second, us--the American citizenry--the folks who voted Presidents Bush and Obama and Congress into office.


We cheered as President Bush and Congress ignited the housing bubble. We cheered as they cut taxes and increased spending (it's just so marvelous to have it all). We cheered as President Obama and Congress approved the stimulus and extended the Bush tax cuts. And we're cheering now as Republicans promise us that--if only we just cut taxes and spending--our problems will be solved. (Never mind the examples of Greece and the UK, which demonstrate clearly that enacting "austerity" in the midst of a fragile recovery doesn't work).
In short, we've all become accustomed to our free lunch, and we never tire of electing politicians that promise it to us.
So if we want to know who's really to blame, we should take a peek in the mirror.


Read more: http://www.businessinsider.com/us-budget-deficit-2011-7#ixzz2KyJ9xSQ6



You are now fee to start your denials ... :grin:



Yea but wah wah wah my party didn't do it as bad as your party wah wah wah..........................

Jack

zelmo1234
02-15-2013, 08:14 AM
Notice that the Bush tax cuts had a dramatic effect on increaseing revenue, and the threat of tax increases have stopp invesment and lowered revenue.

The reason that the deficites are so dramatic under Obama is that his policies reduce reveneu, as tax increases and regulation often do, and he is spending more too?

And of course he has had 4 years to correct the problem, and has yet to pass a budget.

JackRuby
02-15-2013, 08:15 AM
Notice that the Bush tax cuts had a dramatic effect on increaseing revenue, and the threat of tax increases have stopp invesment and lowered revenue.

The reason that the deficites are so dramatic under Obama is that his policies reduce reveneu, as tax increases and regulation often do, and he is spending more too?

And of course he has had 4 years to correct the problem, and has yet to pass a budget.


We have ourselves a winner in the "My party isn't as responsible as yours" contest. Give that man a CIGAR!

Jack

Cigar
02-15-2013, 08:23 AM
We have ourselves a winner in the "My party isn't as responsible as yours" contest. Give that man a CIGAR!

Jack

They just don't get it ... they actually think they are on the right team ... when in reality, they're not even in the game. :rollseyes:

Chris
02-15-2013, 08:32 AM
We know WHAT is responsible: The combination of weak government revenues (tax receipts) and a vast increase in government spending.

But figuring out WHO to blame is a more subjective exercise.

He goes on to blame Bush, Obama, Congress and the people.


Cigar, I think you missed the point.

Cigar
02-15-2013, 08:38 AM
He goes on to blame Bush, Obama, Congress and the people.


Cigar, I think you missed the point.

No I didn't sport ... it's why it's included ... Duaaa

Chris
02-15-2013, 08:40 AM
No I didn't sport ... it's why it's included ... Duaaa

Comments like "They just don't get it ... they actually think they are on the right team ... when in reality, they're not even in the game." indicate you don't get it. Seems to say you think you're on the right team when the article you posted says you're not.

Cigar
02-15-2013, 08:42 AM
Comments like "They just don't get it ... they actually think they are on the right team ... when in reality, they're not even in the game." indicate you don't get it. Seems to say you think you're on the right team when the article you posted says you're not.

Are you having reading issues this morning ... ?

In your world ... are Democrats affected by the economy different than Republicans?

The team is the Government and we're sitting in the stands ...

Peter1469
02-15-2013, 09:02 AM
Z is correct. Bush's tax cuts increased tax revenue. Just like JFK's tax cuts did. Of course the great recession of 08 cut tax revenues- unemployment skyrocketed.

Bush's TARP and Obama's TARP II, various QE schemes, and Operation Twist I and II, have represented massive malinvestment of money that we don't have. It was exercises in making privately held debt a public obligation. It is insanity.

Look to Iceland for a better model.

Chris
02-15-2013, 09:04 AM
Are you having reading issues this morning ... ?

In your world ... are Democrats affected by the economy different than Republicans?

The team is the Government and we're sitting in the stands ...


Perhaps you ought to read what you pasted. Yes, he blames government, but he also blames us: "Second, us--the American citizenry--the folks who voted Presidents Bush and Obama and Congress into office." See that now?

Cigar
02-15-2013, 09:12 AM
Perhaps you ought to read what you pasted. Yes, he blames government, but he also blames us: "Second, us--the American citizenry--the folks who voted Presidents Bush and Obama and Congress into office." See that now?

Ok ... so ... what point are you trying to make .... ?

That I can't post a Thread who's responsible?

Are you attempting to claim I'm blaming one particular said ... if so you need to read the thread and point outwhere I make such a claim.

nic34
02-15-2013, 09:15 AM
And we're cheering now as Republicans promise us that--if only we just cut taxes and spending--our problems will be solved. (Never mind the examples of Greece and the UK, which demonstrate clearly that enacting "austerity" in the midst of a fragile recovery doesn't work).


Repubs want CUTS, but when they are in power they spend as much as anyone... just not on the working person or the middle class and too often on the credit card.

I agree that cuts must be made as part of a balanced plan, but find me just one instance of a nation that has CUT its way to prosperity....

Chris
02-15-2013, 09:17 AM
Ok ... so ... what point are you trying to make .... ?

That I can't post a Thread who's responsible?

Are you attempting to claim I'm blaming one particular said ... if so you need to read the thread and point outwhere I make such a claim.

You're getting incoherent.

Let's say you're cherry picking the article's several points. It blames not just Presidents and Congress but the people who elect them. Contrary to your cherry picked "The team is the Government and we're sitting in the stands ... " we are not in the peanut gallery but participants.

Chris
02-15-2013, 09:20 AM
Repubs want CUTS, but when they are in power they spend as much as anyone... just not on the working person or the middle class and too often on the credit card.

I agree that cuts must be made as part of a balanced plan, but find me just one instance of a nation that has CUT its way to prosperity....

"The Democrats are the party that says government will make you smarter, taller, richer, and remove the crabgrass on your lawn. The Republicans are the party that says government doesn't work and then they get elected and prove it."
~ P. J. O'Rourke


I believe The Sweden Canard (http://thepoliticalforums.com/threads/7483-The-Sweden-Canard) discusses examples of countries cutting their way to prosperity.

Peter1469
02-15-2013, 09:20 AM
Repubs want CUTS, but when they are in power they spend as much as anyone... just not on the working person or the middle class and too often on the credit card.

I agree that cuts must be made as part of a balanced plan, but find me just one instance of a nation that has CUT its way to prosperity....

Iceland.

But typically, nations just crash their currencies and start over.

A balanced plan.....

Currently, we are taking in ~$2.3T in tax revenue per year. But we are spending ~$3.6T. Spending is the problem. Well, that and poor math skills.

Cigar
02-15-2013, 09:30 AM
You're getting incoherent.

Let's say you're cherry picking the article's several points. It blames not just Presidents and Congress but the people who elect them. Contrary to your cherry picked "The team is the Government and we're sitting in the stands ... " we are not in the peanut gallery but participants.


We are sitting in the stands ...

Mainecoons
02-15-2013, 09:31 AM
All the rotating chairs accomplish in D.C. is that the money is wasted on different "priorities" and the rich keep getting richer. The neocons blow it on the Pentagon and the progressives blow it on fraudulent and failing programs, one after another, and on dragging the people whose jobs they are killing into perpetual dependency on welfare and food stamps and other government handouts.

The Obama administration has managed to create a situation where the rich have gotten 121 percent of the income gains while the working class lost 0.4 percent. This on top of their policies which have driven up the cost of the essentials of living that the working stiffs need to survive and get to work, like food, fuel and energy to heat their homes. If they are lucky enough to have any money in the bank after 4 years of ObamaProsperity, it receives zero interest which means that thanks to the food, fuel and energy inflation caused by Obama's regime, let alone the wanton money printing which is enriching the unprosecuted bank and wall street criminals, they are sliding backwards at an accelerating pace while Obama and Bernake feed the one percenters.

And, in the greatest irony of all, the people who are getting screwed the worse by Obama, voted him back in office. Hard to feel sorry for people who are so stupid but the screwing of them started when they went to government schools run by leftist teachers and their unions and they emerged with dismally bad educations and their brains full of leftist propaganda.

The American people have become little better than zombies. Like you, Nic. You're one of the screwees and you haven't got a clue what has been done to you and what is being done to you. You actually believe the same government that is destroying your future is going to save you and the enemy is the people who see this and want to cut that government down to size instead. You would be a proud citizen of Orwell's world of Big Brother.

Looking at things from my perspective of living nearly 70 years and watching all this develop, I simply cannot understand how anyone can be so brainwashed as to still think that the progressives and their corporatist fellow travelers, like Soros, Buffett, Gates, et. al. are their friends. I've watched them pile failure upon failure and the real standard of living of working people decline steadily for over 4 decades. I can drive through any major area and see all the shuttered places of work. I remember when U.S. cities were not half made up of decaying slums.

BTW, I see that Soros made a billion bucks attacking the currency of Japan, which of course is an attack on the people of Japan. That's Obama's big buddy, George Soros.

Cigar
02-15-2013, 09:32 AM
Iceland.

But typically, nations just crash their currencies and start over.

A balanced plan.....

Currently, we are taking in ~$2.3T in tax revenue per year. But we are spending ~$3.6T. Spending is the problem. Well, that and poor math skills.

So you're promoting a balanced plan?

Chris
02-15-2013, 09:36 AM
We are sitting in the stands ...

So then you disagree with the author in your OP and rather than witness for you he becomes a hostile witness. Read closer before you paste.

Cigar
02-15-2013, 09:54 AM
So then you disagree with the author in your OP and rather than witness for you he becomes a hostile witness. Read closer before you paste.

I'm not responsible for anything that happened ... nor am I accountable for the actions of others, and I don't care how many times you read or re-read it, that won't change anything.

Fact; I posted an article on the truth to the massive budget. You can either agree or disagree with what the author has written, but in no way am I personally attached to anything ever written on any of these threads.

It's story written ... nothing more, nothing less, nothing else.

I sand my what I said ... we're in the stand watching the clown act.

Chris
02-15-2013, 10:16 AM
I'm not responsible for anything that happened ... nor am I accountable for the actions of others, and I don't care how many times you read or re-read it, that won't change anything.

Fact; I posted an article on the truth to the massive budget. You can either agree or disagree with what the author has written, but in no way am I personally attached to anything ever written on any of these threads.

It's story written ... nothing more, nothing less, nothing else.

I sand my what I said ... we're in the stand watching the clown act.


I sand my what I said

Head in the "sand".

nic34
02-15-2013, 10:28 AM
"The Democrats are the party that says government will make you smarter, taller, richer, and remove the crabgrass on your lawn. The Republicans are the party that says government doesn't work and then they get elected and prove it."
~ P. J. O'Rourke


I believe The Sweden Canard (http://thepoliticalforums.com/threads/7483-The-Sweden-Canard) discusses examples of countries cutting their way to prosperity.

Ok, that's Sweden. Maybe Iceland.

If we were standing at their starting point with their infrastructure, with their healthcare, education system, defense budget, social equality, corporate responsibility, environmental concerns etc...

If you're gonna CUT you got to have something to CUT....

....but we can't even get past the idea that our precious gun rights are so damn more important than having any of those things Sweden would never get rid of.

Mister D
02-15-2013, 10:39 AM
What do gun rights have to do with this?

Chris
02-15-2013, 10:39 AM
Ok, that's Sweden. Maybe Iceland.

If we were standing at their starting point with their infrastructure, with their healthcare, education system, defense budget, social equality, corporate responsibility, environmental concerns etc...

If you're gonna CUT you got to have something to CUT....

....but we can't even get past the idea that our precious gun rights are so damn more important than having any of those things Sweden would never get rid of.

Thing is, nic, they tries what you're advocating, it failed, they're reversing course. The old Keynesian notion you could create jobs and build an economy by make work projects never worked. Cut social welfare, cut corporate welfare, which would include a huge military budget).

Unrelated to guns.

Cigar
02-15-2013, 10:59 AM
Thankfully this President won't kick the poor and middle class in the Balls anymore than they've already have.

That's why he was re-elected and that's why he'll have the backing for the majority of American people.

nic34
02-15-2013, 11:04 AM
Guns have a lot to do with it. So does all special interest lobbying...

Plus I don't see that Sweden will be adopting our 2nd amendment or our healthcare system anytime soon.

But I do see that the right to shoot stuff seems more important to some in the US than providing a minimum amount of healthcare to its citizens...

Mister D
02-15-2013, 11:07 AM
Guns have a lot to do with it. So does all special interest lobbying...

Plus I don't see that Sweden will be adopting our 2nd amendment or our healthcare system anytime soon.

But I do see that the right to shoot stuff seems more important to some in the US than providing a minimum amount of healthcare to its citizens...

Guns have nothing at all to do with it. It's an unrelated issue. lol

Cigar
02-15-2013, 11:08 AM
Guns have a lot to do with it. So does all special interest lobbying...

Plus I don't see that Sweden will be adopting our 2nd amendment or our healthcare system anytime soon.

But I do see that the right to shoot stuff seems more important to some in the US than providing a minimum amount of healthcare to its citizens...

Bing-Go!

Mister D
02-15-2013, 11:09 AM
Bing-Go!

Because you say so? Sweden has in fact reversed course. It has nothing to do with guns, apples, or the price of tea in China.

Chris
02-15-2013, 02:22 PM
Guns have a lot to do with it. So does all special interest lobbying...

Plus I don't see that Sweden will be adopting our 2nd amendment or our healthcare system anytime soon.

But I do see that the right to shoot stuff seems more important to some in the US than providing a minimum amount of healthcare to its citizens...

Your claim had to do with no nation has taken a fiscally conservative approach and prospered, nic, those nations did and bounced back from the failure social democracy led them to.

Chris
02-15-2013, 02:24 PM
Thankfully this President won't kick the poor and middle class in the Balls anymore than they've already have.

That's why he was re-elected and that's why he'll have the backing for the majority of American people.

LOL, the banksters are getting richer and the poor and middle class poorer under Obama. Stop cheerleading for a moment and smell the roses.

Mainecoons
02-15-2013, 03:19 PM
This President has kicked working people in the balls more than any in my life time. I'm not going to bother to list all the ways this is true as I have done it a number of times here.

I'm not talking about equal opportunity parasites who post on company time. Cigar, you'll be happy to know that I've decided never to call you an equal opportunity whore again. You see, whores actually do the work they are paid to do unlike equal opportunity parasites who post on message boards when they should be working.

Whores have an honorable, if sad, profession. Parasites are just that, people who feed off of others and deliver no value.

zelmo1234
02-15-2013, 04:13 PM
Repubs want CUTS, but when they are in power they spend as much as anyone... just not on the working person or the middle class and too often on the credit card.

I agree that cuts must be made as part of a balanced plan, but find me just one instance of a nation that has CUT its way to prosperity....

Germany!

zelmo1234
02-15-2013, 04:24 PM
Guns have a lot to do with it. So does all special interest lobbying...

Plus I don't see that Sweden will be adopting our 2nd amendment or our healthcare system anytime soon.

But I do see that the right to shoot stuff seems more important to some in the US than providing a minimum amount of healthcare to its citizens...

The only thing that Guns are doing to the budget, is providing revenue, they are taxed on almost every level, including the ammunition, and they are one of the few industries that are benifiting from President obamas policies.

And as far a sweden, if you are trying to save kids maybe Sweden is not the country to look to.

http://www.ncbi.nlm.nih.gov/pubmed/9539389

As far as cutting we have tons of things to cut, Starting with the little things, like the Cowboy poetry festival in nevada that get 2 milllion. Ann Arbor MI gets 1 million for its arts fair. There are thousands of these little projects taht can be cut.

Next how about the Dept of Education, this department cost hundreds of billions a year, and they have onlymade educations worse. Kill the department and give half of the money to the states to determine the best way to spend it on educations.

You could reforem the tax code so it is line with the world, and increase the tax base.

And if you really care about affordable heathcare you could repeal Obamacare, it is doing just the opposite.