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Tilting at Windmills

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May 4, 2006
By: Kevin Drum

FEEDING THE BEAST....What happens if you lower the cost of something? People buy more of it. What if you raise the cost? People buy less of it.

So: what happens if the federal government reduces taxes and runs a deficit thus lowering the "cost" of government? People will "buy" more government.

This actually makes a strange kind of sense if there are no additional taxes to cause you pain, why shouldn't you support big government? and William Niskanen, the chairman of the Cato Institute, says he now has research to back this up:

Niskanen recently analyzed data from 1981 to 2005 and found....no sign that deficits have ever acted as a constraint on spending. To the contrary: judging by the last twenty-five years (plenty of time for a fair test), a tax cut of 1 percent of the GDP increases the rate of spending growth by about 0.15 percent of the GDP a year. A comparable tax hike reduces spending growth by the same amount.

....I would like to be proven wrong, says Niskanen. No wonder: for the modern conservative coalition, the implications of his findings are discomfiting, and in a sense tragic.

In other words, "starve the beast" doesn't work. If you cut taxes, all you do is encourage additional spending.

This makes sense to me because of the reductio case: what if you eliminated taxes altogether and funded the entire government by deficit? Then people would spend like crazy. Why not, after all? It's all free! (For a while, anyway....)

Of course, I'm not an economist and it might turn out that Niskanen's analysis is too crude. (His regressions don't sound especially sophisticated even to me.) So I'll be curious to hear what other economists have to say about this. Should we add "starve the beast" to the already large mountain of things Grover Norquist is wrong about?

Kevin Drum 2:07 AM Permalink | Trackbacks | Comments (171)

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Comments

Frequency nailed it!

Posted by: Lodi Mosque on May 4, 2006 at 2:21 AM | PERMALINK

You mean you haven't treated "starve the beast" as the very foundation of the pile that Grover is wrong about?

Posted by: abjectfunk on May 4, 2006 at 2:22 AM | PERMALINK

It's time to cut government spending.

Senator Tom Coburn and Congressman John Boerner (sp ?) have some great ideas to eliminate the awful practice of earmarks.

Posted by: BigRiver on May 4, 2006 at 2:26 AM | PERMALINK

I seem to recall that Kevin linked to Niskanen's argument some time ago. (Indeed, I even recall reporting some quick regressions here.) Has the Cato scholar updated his work?

Posted by: Measure for Measure on May 4, 2006 at 2:32 AM | PERMALINK

I think you're more or less on target here, Kevin, but perhaps the angle could be refined a bit.

My theory is that once it's accepted by the Powers That Be that deficits will be tolerated, there is then a corresponding reduction in any resistance to increased spending. Example: Deficit is already $400billion this year? What's another $50b on top of that? Practically pocket change in comparison -- and so they keep adding more and more, and are in fact tempted to take more and more 'off the books'.

The problem is our lawmakers (GOP mostly) have gotten used to the idea that they can run up huge deficits and have no immediate impact on the economy. They literally do not give one whit of thought as to what'll happen 10 years from now, or even further out. All they care about is maintaining power now and accumulating as much money as they can in the meantime.

It's like the classic story about the horse. Feed it, care for it, don't push it too hard and it'll get you where you need to go -- provided you're not in a hurry.

The GOP in the meantime is wielding the whip with glee and slowly starving the poor beast to death. That's the American economy in the next generation.

And they simply don't care.

Posted by: Technowitch on May 4, 2006 at 2:34 AM | PERMALINK


KEVIN DRUM: Then people would spend like crazy. Why not, after all? It's all free!
Well, when you say "people," you're referring to our elected representatives, which is stretching the meaning of the word. But, the fact is, it's always free to them, especially financially. The minute they were made to bear any financial burden of free spending, they'd simply vote themselves raises. So I really don't think it has to do with economic theory. Rather, it's behavioral theory: Dishonest people can be depended on to lie, and to make others pay for the consequences of their lies.


Posted by: jayarbee on May 4, 2006 at 2:41 AM | PERMALINK

Ah, here's the link. From May 20,2004:
http://www.washingtonmonthly.com/archives/individual/2004_05/003974.php

Part of Kevin's post:
WAR AND DEMOCRACY....Via Stuart Benjamin of the Volokh Conspiracy comes a link to an interesting paper by William Niskanen and Peter Van Doren of the Cato Institute in which they claim that contrary to the "starve the beast" hypothesis federal spending doesn't get squeezed when tax revenues are cut. In fact, the opposite happens: spending actually goes up when tax revenues go down. ...
---------
And here are my old comments:

The paper didn't exactly break new ground methodologically, but at least the authors admitted as much.
...
-----

For statisticians only:
1. The paper did not address stationarity. Let's face it, they have two variables with rather strong trends.

2. a. My replication of their results suggests that they did NOT use OLS, which is a good thing, considering their use of an autocorrelation term.
b. OTOH, my memory is very hazy on this point.

3. They have a simultaneity problem: surely unemployment and tax revenue shares are correlated.

4. Disclaimer: My statistical analysis is sloppy: OTOH, I suspect that it is not worse than that of the Cato authors.
Posted by: Measure for Measure on May 22, 2004 at 1:46 AM | PERMALINK

Let's take a look at how changes in tax shares affect changes in expenditure shares.

First, I will strip the cyclic effects away from the tax share variable with the following
equation:


Change In Tax Share = alpha + beta1 * Change in Unemployment + epsilon

After estimating the above equation with OLS, I create a "Non-cyclic Change in Tax Share" variable or "NONCYCchTS"

Then, I estimate the following equation:

Change in Expenditure Share = a + b1*Change in Unemployment + b2*NONCYCchTS + u

This addresses the cyclic concerns that others have had.

Here are my results:

Change in = a + b1*Change in Unemployment + b2*NONCYCchTS + u
Expend Share

1949-1980........................+.0040 **............ -.088
.....................................(.0012)............... (.1723)

1981-2003........................+.0047 **............ -.388 **
..................................... (.00084)...............(.123)
-------------

Ok, so higher unemployment is always linked with higher spending (no surprise). Higher (non-cyclic) tax shares had no effect before 1980. Afterwards, they were linked with _lower_ federal spending shares.

Ok, let's see now whether autonomously higher tax shares had a lagged effect on government expenditures. I use OLS in the following, though this may not be entirely kosher. Call the results "suggestive" and sue me.


Change in......= a + b1*Change in Unemployment + b2*NONCYCchTS + b3*Last Year's
Expend Share................................................................................ NONCYCchTS

1949-1980..................... .0027*......................... -.023................... +0.4476**
...................................(.0012)......................... (.157)..................(.1598)

Holy Libertarian Batman! Higher taxes had no effect on spending this year, but after
a mere one year lag BOOM! Spending shares go up, up, UP!


Let's see whether this effect holds in the Post-Carter era:

1981-2003..................... .0047**...............-.391**............ .0125
................................... (.0009)...............(.131)............ (.140)

It doesn't. Higher taxes lead to _lower_ spending in the same year. Budget austerity and tax increases go hand in hand. In the following year - no effect.

(I also tried a 2 year lag and found a qualitatively similar story.)

Posted by: Measure for Measure on May 4, 2006 at 2:42 AM | PERMALINK

Should we add "starve the beast" to the already large mountain of things Grover Norquist is wrong about?

Grover thinks otherwise!? My inner Bayesian takes this as additional support for the hypothesis...

Posted by: Amit Joshi on May 4, 2006 at 2:43 AM | PERMALINK

A little bit on receipts and deficits here.

You can go back to what you were doing, now.

Posted by: tbrosz on May 4, 2006 at 2:58 AM | PERMALINK

A little bit on receipts and deficits here. You can go back to what you were doing, now.

Thanks for that disinformation.

Now please explain the difference between "on-budget" and "unified budget" concepts, as you seem to consider yourself a fiscal expert.

Posted by: BB on May 4, 2006 at 3:04 AM | PERMALINK

BB:

These are just predictions. No need to sweat just yet. But real numbers will be rolling in in September and October, and if these predictions are accurate then you and other Democrats will be welcome to shave the edges off random numbers and go into quantum mechanics to explain to the average voter why a deficit coming in $50 to $150 billion lower than predictions isn't really going to mean a deficit coming in at $50 to $150 billion lower than predictions.

Lord knows there's enough practice around here at showing why a low unemployment rate isn't really a low unemployment rate, and why all the other statistics don't mean the obvious.

Posted by: tbrosz on May 4, 2006 at 3:24 AM | PERMALINK

That's all nice, tb. Now please tell us the difference between "on-budget" and "unified budget".

Or don't you know?

Posted by: BB on May 4, 2006 at 3:34 AM | PERMALINK

finally a post on public beast feeding, immediate gratification, and delayed costs. beast feeding is natural and necessary and should be practiced openly and in moderation.

Posted by: toast on May 4, 2006 at 3:37 AM | PERMALINK

Not up to all these stats but . . .

Until Reagan, weren't gov budgets run more on Keynesian terms?

He picked 1981-2005 which are a little different. Despite the tax cuts both Reagan and GWB went on defence spending sprees, etc. And wasn't it David Stockman/Stockton (which?) who (later) said that the Reagan deficits were run deliberately so that the New Deal and entitlement spending would get squeezed out down the road.

Equally, after the GH tax hikes and with Clinton, if government hadn't pulled deficits down, higher interest rates would have squeezed economic growth. They were raising taxes (unpopular) to reduce an unsustainable deficit so compromised on the necessary taxes by also reducing spending, and again not squeezing growth.

Also, isn't there naturally resistance, in government more than business, to lag on the necessary spending cuts and just sell some more bonds and keep the votes?

Post facto rationalization? Maybe a bright spark could explain the difference '49-80 and '81-05 in reasonably plain language.

Posted by: notthere on May 4, 2006 at 3:53 AM | PERMALINK

Of course, nobody is talking about the massive spending for the Iraq War and Hurricane Katrina; both those big-ticket items are off the books, and aren't factored into the current federal budget forecasts and determinations.

Posted by: Donald from Hawaii on May 4, 2006 at 3:53 AM | PERMALINK

Lord knows there's enough practice around here at showing why a low unemployment rate isn't really a low unemployment rate, and why all the other statistics don't mean the obvious.

Posted by: tbrosz on May 4, 2006 at 3:24 AM | PERMALINK

There are plenty of reasons why official unemployment figures misstate employment. As to the budget predictions quoted in the biznews, they are both federal sources, CBO and OMB, and, as stated, the OMB is often off when growth is higher than in the prediction (let's wait on real number)--call it conservative budget forccasting.

I would like to see where the extra taxes are coming from because 70% of the people aren't seeing much in the way of extra income.

Posted by: notthere on May 4, 2006 at 4:04 AM | PERMALINK

Donald from Hawaii--
yeah I was going to throw that in too but I forgot. Thanks.

Posted by: notthere on May 4, 2006 at 4:07 AM | PERMALINK

and if these predictions are accurate then you and other Democrats will be welcome to shave the edges off random numbers and go into quantum mechanics to explain to the average voter why a deficit coming in $50 to $150 billion lower than predictions isn't really going to mean a deficit coming in at $50 to $150 billion lower than predictions.

If I were a Democrat running for office, I'd tell people that Rpublicans have raised their family's share of the debt by $23,000 since Bush took office, and ask them if they enjoy having an extra $23,000 in debt to pay off.

Posted by: BB on May 4, 2006 at 4:14 AM | PERMALINK

Well at some point the deficit begins to trigger nasty effects like higher interest rates...which do irritate people.

I just don't see how the Democrat party of bleeding heart spending can do more with deficit issues than to knockdown conservative turnout a little.

Posted by: McA on May 4, 2006 at 4:17 AM | PERMALINK

Democrat party of bleeding heart spending

Republicans run up $700 billion yearly deficits and you still think the Democrats are the spenders?

Clinton was the one who led the charge that got us into surplus. Remember the surpluses?

I know - it seems like a distant dream from good times.

Posted by: BB on May 4, 2006 at 4:20 AM | PERMALINK

Clinton was the one who led the charge that got us into surplus. Remember the surpluses?

Posted by: BB on May 4, 2006 at 4:20 AM | PERMALINK

So anyone know exactly what plank of the Democrat agenda will bring back dot-com booms?

Is having a Clinton back in the White House going to help?

Posted by: McA on May 4, 2006 at 5:31 AM | PERMALINK

Actually, having a Clinton back into the White House would redirect government attention on productive investment, as opposed to crony capitalism, Mr McA. The dot-com boom and bust hurt a lot of stock speculators but generated the technology revolution that allows us all to exchange our ideas in this forum. What has BushCos crony capitalism bought us? Aside from some well-placed folks at Haliburton, most Americans simply acquired a huge pile of home equity debt.

I hope that you are HELOC'ed to the max, Mr McA. You deserve what's coming to you.

Posted by: troglodyte on May 4, 2006 at 6:52 AM | PERMALINK

Be specific. Taxes on the income, dividends and capital gains of the wealthy have been cut. I did not see any cuts in my SS, Medicare and Medicaid taxes. And both parties are complicit in robbing my SS taxes to mitigate the deficit created by the tax cuts on wealth.

Are the democrats going to make a campaign issue about rescinding the Bush tax cuts or not? How about it dems? Probably not. You might be called a 'Colbert' democrat or something else with balls.

Posted by: lou on May 4, 2006 at 6:52 AM | PERMALINK

So where is my fucking Nobel prize for economics???

Posted by: Matt on May 4, 2006 at 8:44 AM | PERMALINK

I just don't see how the Democrat party of bleeding heart spending can do more with deficit issues than to knockdown conservative turnout a little.

McA, it's conservatives who have this weird bacakwards fixation on some arbitrary size of the government. Dem's and libs are more concerned with pragmatic, useful questions, like "what needs to be done to stop another New Orleans type disaster" or, "how do we fight terrorism" and go from there.

This helps explain why Dems are so much better and basic functions such as balancing budgets. If it takes expanded government to get the job done, they realize it also takes expanded tax base (which, as Kevin's post points out, serves as a natural check on runaway government growth). If it makes sense to cut taxes, they cut taxes (as Kennedy did). Only conservatives seem to engaged in backward thinking of declaring what the tax rates should be first and then coming up with policy.

Posted by: moderleft on May 4, 2006 at 8:45 AM | PERMALINK

The real effect of simultaneously lowering taxes and raising spending is to start a game of electoral chicken.

The deficit grows day by day, year by year. At some point, taxes have to raised. But who gets tagged forever with the label of voting for tax raises?

The last one to chicken out in the face of reality.

But avoiding reality has always been a Republican strong hand, so, to date, they have won those games, and used the voted-for-tax-raises smear to defeat the Democrats.

What the Democrats have to do, as politicians, is to figure out how to make sure that the Republicans don't squeeze out of responsibility for the crisis they themselves have induced.

THey should not, as usual, let their instincts for good governance overwhelm them, and make them cave before the Republicans. Let the crisis get big enough that EVERYBODY sees it has to be addressed, and that the Republican tax cuts were the cause.

Posted by: frankly0 on May 4, 2006 at 8:48 AM | PERMALINK

The only office I run for is Town Meeting, but I did make a (minor) campaign statement that taxes need to be raised, and did get reelected (barely :-). Lots of people are in serious denial about how things work; they don't know that the historic rate of inflation is solidly over 3% (3.4% last time I computed it, probably more like 3.3% right now). They don't (want to) know that wages increase faster than inflation for skilled workers (like teachers). They don't know that nobody has figured out how to increase the "productivity" of a teacher in a classroom (measured by number of kids, not by quality of education).

They talk about run government like a business, but then pick a choose. Stock options? Bonuses? No, they meant something else. Complain about the size and compensation for the school administration, without considering how a $35million-revenues company with hundreds of employees delivering (measured) good product at a (measured) below-average price would compensate its executives. And, of course, which businesses do you care to be run like? Enron? Prime? Data General? DEC?

And then, based on this ignorance, they vote. Makes me nuts.

Posted by: dr2chase on May 4, 2006 at 8:50 AM | PERMALINK

And this is not suprising, for politics is the art of trying things that do not make sense:

Dems - Tax the rich, increase spending
Pubs - Don't tax the rich, reduce spending

If something made sense, it would most likely already be done in the private sector.

Some corollaries:

When government is too big for the private sector, immigration expands.

And French researchers are discovering another, finally. If you tax young families to high heaven to keep old people alive longer, fertility drops way down.


Posted by: Matt on May 4, 2006 at 8:54 AM | PERMALINK

The best way to understand the recent behavior of our economic and political elites is that they are expecting major crises on a number of fronts (energy, population, environment, water, war, terrorism, etc.) and are putting all of their efforts into positioning themselves and their progeny to be the ones who can ride it out and come out on top.

That's why virtually all of their exercise of power is aimed at increasing and consolidating their own wealth and power, and weakening the relative position of everyone else. They fully expect that, when it comes time to pay the piper, it will be somebody else who pays.

Posted by: Virginia Dutch on May 4, 2006 at 8:56 AM | PERMALINK

Virginia, in her anti-elite message gets another point right. We are hitting resource constraints, or to put it in glacial terms, we are approaching the downswing in the glacial cycle.

It seems wierd, but global warming, resource constraints, peak oil, and big government Republicaism are all entertwined.

So, tax the rich, make New Orleans the biodiesel capital of the USA, make minor adjustments to social security, and hold off on nationalized health care.

Do these things and a whole lot of problems get fixed.

Posted by: Matt on May 4, 2006 at 9:07 AM | PERMALINK

A little bit on receipts and deficits here.

So the budget deficits will be huge, just not as huge as they expected...Wow, great news.

New debt since Bush took office is approaching a
trillion dollars and one year of less than expected deficits is supposed to mean something ?

Posted by: Stephen on May 4, 2006 at 9:14 AM | PERMALINK

Virginia Dutch:

That's a really cynical and dark statement ... I've never thought of it quite that way.

But damned if it doesn't make perfect sense. It's not *denial* of global warming. That's "challenge the science" stuff is all just a front. It's not that peak oil isn't *real* -- it's that they want to cut as many people into the millionaire's club as possible before it hits.

What a profound disbelief in democracy ... the 21st century's answer to social darwinism.

I had better not think of this too much or I'll despair of ever making a difference ...

Bob

Posted by: rmck1 on May 4, 2006 at 9:14 AM | PERMALINK
Pubs - Don't tax the rich, reduce spending

The Republicans have had the presidency and both houses of Congress for some time now. How is that "reduce spending" idea working out?

Can we finally retire the idea that Republicans care at all about reducing spending? They care about reducing taxes, but as with Iraq they have no plan for what to do about the deficits the tax cuts cause.

Posted by: KCinDC on May 4, 2006 at 9:16 AM | PERMALINK

These are just predictions.

Yeah, estimates by "Action Economics"..

Posted by: Stephen on May 4, 2006 at 9:18 AM | PERMALINK

Fuck Drum you are a political vegetable if you don't get the ' Bait-and-switch' being run here. After all for 50 years ' starving the beast' has been an election winning meme. You must be a political mineral not to see that.
This is one of the issues ( like law-and-order) where the Dems can outflank the pugs and beat them at their own game.
Pledge to lower the overall size and power of the central state.
Roll out national health care, common NAFTA currency and Shengen and yr on a winner - look at the EU.
Carolyn Kay, Kos, Sirota and others know the future is open source netcentric ' small-is-beautiful', less-is-more. So when the fuck are you going to get with the program?

When are you going to starve the Vichy, MSM, war party beast?

Dickwad.

Posted by: professor rat on May 4, 2006 at 9:19 AM | PERMALINK

"He picked 1981-2005 which are a little different.."

If we skip WW2 as an abberation, and go back before that, the rule still applies, except we were not resource constrained. Low taxes on the rich, fueled European immigration and the westward expansion.

Like I always say, the idea of lowered taxes, goverment growth, and expanded immigration started with Hamilton and was perfected by Lincoln, who ran on a platform of great big government.

Traditional Republicans are Stalinists.

Posted by: Matt on May 4, 2006 at 9:20 AM | PERMALINK

Shorter tbrosz: Everyone else is as much of a dishonest partisan hack as I am.

Posted by: Gregory on May 4, 2006 at 9:25 AM | PERMALINK

Drum: :what if you eliminated taxes altogether and funded the entire government by deficit? Then people would spend like crazy. Why not, after all? It's all free! (For a while, anyway....)"

That's the point. Starve the beast doesn't assume that deficits will automatically constrain spending. Rather it assumes they will eventually bankrupt the country and force a fiscal crisis that will make it possible to eliminate medicare, social securrity, and other public programs that Republicans could never get rid of otherwise. I know it's crazy, but I really think that's the plan. The problem is that like Iraq--and everything else--they haven't really thought it through.

Posted by: Mark Mescher on May 4, 2006 at 9:38 AM | PERMALINK

Hey, check out this Hillary alternative for Dem Pres:

Tennessee Governor Phil Bredesen

Sound fiscal manager, a governor (as opposed to Senator), runs a surplus, and no Senate voting record to sink im.

Posted by: Matt on May 4, 2006 at 9:46 AM | PERMALINK

The whole argument of conservatives centers on
the bogus premise that cutting taxes will get the
spenders under wraps.

The real purpose of every move made by these hedonists, is to transfer real taxes from UNEARNED
INCOME (trust fund babies) to EARNED INCOME by lowering the Federal rate and forcing increases
to payroll taxes, which coincidentally, are capped
at $200K.

Posted by: Semanticleo on May 4, 2006 at 10:07 AM | PERMALINK

Lowering the cost of something doesn't mean people buy more of it. You'd have to lower the price of it for them to do that. And how much of it they buy extra in response to that price change depends on a whole range of factors that impact on the elasticity (the responsiveness to price change) of demand and supply.

To say nothing of their propensity to rationally base their consumption on price as a single variable of demand.

Here endeth Economics 101....

Posted by: Ken Payne on May 4, 2006 at 10:08 AM | PERMALINK

McA, please tend to your own affairs and leave us to our's. thanks.

Posted by: cleek on May 4, 2006 at 10:22 AM | PERMALINK

"...what if you eliminated taxes altogether and funded the entire government by deficit?"

Hmm.....a certain President seemed to have exactly that idea when he ran for reelction. Does anyone remember how the Shrub sneeringly derided Democrats who opposed his tax cut and proposed a smaller one? He claimed that they were for a "...little, itty-bitty tax cut!" (While he, of course, being the manly man we all know him to be, was for a robust, he-man tax cut).

He went so far as to explicity claim that the amount of jobs and growth was directly proportional to the amount of the tax cut.

So, if that's true, just eliminate taxes.....we'll have a fabulous economy bursting with jobs and growth.

This is the logical extension of the Republican anti-tax zealotry.

Posted by: marty on May 4, 2006 at 10:25 AM | PERMALINK

I always thought liberals wanted to raise taxes so they can increase spending and funding for their worthless projects. Who knew in reality liberals want to increase taxes to reduce spending?? No wonder you guys can't win, you can't even get your simplest messages out.

Posted by: Freedom Fighter on May 4, 2006 at 10:32 AM | PERMALINK

Lowering the cost of something doesn't mean people buy more of it. You'd have to lower the price of it for them to do that.

Taxes are the "price"

The point of the article is that tax cuts by themselves do nothing to reduce the size of governement ( you can't "starve the beast").

Posted by: Stephen on May 4, 2006 at 10:35 AM | PERMALINK

I would like to see where the extra taxes are coming from because 70% of the people aren't seeing much in the way of extra income.

Same place they have always come from. The evil rich.

Kevin, maybe the real issue with the "starve the beast" theory is that the people who actually control the spending, i.e. the Congress, aren't actually penalized for lousy fiscal discipline. Most voters see the lower taxes and the pork and other spending coming to the district, and don't connect it with the effects of increased debt.

So the good times keep rolling. Right now, legislators are throwing off all attempts to rein in earmarks, pork spending, and other election-year spending. Right now, it's people like Trent Lott who are really stinking up the joint.

Of course, the real tragedy, to use Rauch's term, was giving the government, which actually produces little real net wealth, a "credit card." Nearly half the 8 trillion debt is money the government owes to itself, a financial gimmick that, if someone in the private sector attempted it, would have them tossed into jail.

When a bank loans out money to, say, a farmer, it's expected that the money will be paid back from the farmer's production and creation of real wealth. If the farmer turns around and pays off that loan with money borrowed from another bank, or even the same bank under another name, we start to have a problem.

Incidentally, I thought any studies that came from places like the Cato Institute were automatically considered lies around here.

Posted by: tbrosz on May 4, 2006 at 10:37 AM | PERMALINK

Cinton presided over the dot com boom and bust.

Whoop tee doo.

Posted by: Paddy Whack on May 4, 2006 at 10:45 AM | PERMALINK
Incidentally, I thought any studies that came from places like the Cato Institute were automatically considered lies around here.

Well, that's because you are an idiot. Cato's institutional bias undermines their first-blush credibility when they say things that correspond to the conventional right-libertarian orthodoxy, of course, but when they say things contrary to that orthodoxy, their institutional bias is not a factor against credibility.

Furthermore, the bias effect on credibility is strongest when it is bare conclusions being offered because "Cato says...", to the extent that the reasoning itself is accessible and doesn't require an excess of specialized expertise to evaluate, the arguments stand on their own feet.

Now, you may be projecting because you evaluate all statements simply by who is stating them without consideration of substance, but not everyone is you.

Posted by: cmdicely on May 4, 2006 at 10:47 AM | PERMALINK

"The point of the article is that tax cuts by themselves do nothing to reduce the size of governement ( you can't "starve the beast")."

If you put into law the gov't can't spend more than what it actually has, then the problem is solved.

Posted by: Freedom Fighter on May 4, 2006 at 10:47 AM | PERMALINK

McA on May 4, 2006 at 5:31 AM:

So anyone know exactly what plank of the Democrat agenda will bring back dot-com booms?

Shedding oil dependency. Alternative energy sources. Energy tech has the potential to be the source of the next economic boom if the existing energy industry chooses to get out of the way. To draw an analogy of alternative energy development to the development of the Internet, we are basically in the 1970's...

Posted by: grape_crush on May 4, 2006 at 10:49 AM | PERMALINK

Well, there is a solution, but I don't think most here will like it; amend the constitution to mandate a balanced budget. I know it is a fantasy, but it really is the only solution. If politicians can borrow money, then they will continue to do so.

Posted by: Yancey Ward on May 4, 2006 at 10:50 AM | PERMALINK

"Well, that's because you are an idiot. Cato's institutional bias undermines their first-blush credibility when they say things that correspond to the conventional right-libertarian orthodoxy, of course, but when they say things contrary to that orthodoxy, their institutional bias is not a factor against credibility."

So basically, anything that agrees with your worldview is unbiased, and those that disagree are biased?

Posted by: Freedom Fighter on May 4, 2006 at 10:51 AM | PERMALINK

Mr Galbraith, of blessed memory:

The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness

Posted by: Davis X. Machina on May 4, 2006 at 10:52 AM | PERMALINK

If you put into law the gov't can't spend more than what it actually has, then the problem is solved.

Yeah, I think somebody suggested that..It was in a document called the "Contract With America"
Twelve years later, it still hasn't happened.

Of course, we wouldn't have been able to afford the invasion of Iraq.

Posted by: Stephen on May 4, 2006 at 10:52 AM | PERMALINK

Lots of deficits. Current account deficit for this year will be around $800Billion.

It's just one big game of whack-a-mole.

Posted by: Jeffrey Davis on May 4, 2006 at 10:59 AM | PERMALINK

I wonder if a big part of the left/right divide in the US might be because of a similar phenomenon.

"Red" states and counties tend to be those that have net positive inflows of tax dollars, while "Blue" ones have net outflows. This is true on the federal and state level. Red states are subsidized by the federal government with tax money from blue states, redder (mostly outer suburb and rural) counties are usually subsidized with tax revenue from bluer (inner suburb and urban) counties.

It is not really that the denizens of red-land are paying more than they want to (obviously everyone would like to pay nothing), it is that they are getting all they want from government and more so by default want taxes reduced. In contrast the denizens of blue-land want more services and infrastructure than they are getting so want taxes increased some.

Because taxes from the blue people are paying for government for the red people this situation is more or less permenant. With taxes flowing from blue to red at any tax rate blue people are more likely to want some more tax revenue, and red people more likely to think there is already more than enough.

Something to ponder anyway.

Posted by: jefff on May 4, 2006 at 11:00 AM | PERMALINK
So basically, anything that agrees with your worldview is unbiased

No, simply that a bare conclusion from a supposed "expert" source that corresponds to its established institutional bias (whether that bias corresponds with, opposes, or has no relevance to my worldview) is, naturally, less credible and more appropriately regarded as likely a product of bias, whereas one contrary to institutional bias is more credible.

Of course, again, those rules are important only to the degree that the argument is offered on the authority of the source, and least important when it is practical to evaluate the merits of the argument on its own.

Did you and tbrosz both fail Critical Thinking?

Posted by: cmdicely on May 4, 2006 at 11:01 AM | PERMALINK

"for the modern conservative coalition, the implications of his findings are discomfiting, and in a sense tragic."

William Niskanen has come face to face with the reality that conservatives have refused to admit:
People don't like taxes, but the majority want government to provide services that they can not afford as individuals.

The ever-present danger in our system is the seductive idea that someone else has more money than my group does, and it is "fair" for those "richer" people to pick up the tab for benefits that my group would like to receive.

Republicans have won because they have promised to cut taxes for those who were objecting to paying for benefits obtained by others. But they've also realized that expanding government services is a winning formula. And because they are special, they have figured out is that by running deficits your cronies don't have to pay such high taxes AND government can buy the services that people want today AND you and your cronies can get even richer providing the services that the electorate want. Heh. What's NOT to like? Hence corruption and passing off the costs of todays spending spree to our children.

Posted by: PTate in MN on May 4, 2006 at 11:04 AM | PERMALINK

"No, simply that a bare conclusion from a supposed "expert" source that corresponds to its established institutional bias (whether that bias corresponds with, opposes, or has no relevance to my worldview) is, naturally, less credible and more appropriately regarded as likely a product of bias, whereas one contrary to institutional bias is more credible."

So in other words, whenever Kevin Drum cites the NYT or Juan Cole as sources, then the point he is trying to make is not credible.

Posted by: Freedom Fighter on May 4, 2006 at 11:14 AM | PERMALINK

tbrosz: "Incidentally, I thought any studies that came from places like the Cato Institute were automatically considered lies around here."

Don't confuse disagreement with the world view and automatic rejection as lies.

Actually, the Cato Institute published a study that blew me away--it was an argument for smaller local governments because Big Federal government is too hard for citizens to "get." They classified 35% of the electorate as "know-nothings" who didn't know the basic fundamentals of our system--they didn't know the name of the Vice President, which party was in charge of Congress, who their Senators were, didn't know the rights guaranteed in the Bill of Rights.

That study took me to a dark place: maybe not all citizens should vote? Of course, those know-nothings may not vote now. Cato didn't provide that detail.

Still, I keep pondering that 33% that still approve of GWB's performance.

Posted by: PTate in MN on May 4, 2006 at 11:17 AM | PERMALINK

I'm just hoping and praying for Grover Norquist to get swept up in the Abramoff scandal, or some similar corrupt arrangement of Republicans.

Posted by: jim on May 4, 2006 at 11:19 AM | PERMALINK

"When a bank loans out money to, say, a farmer, it's expected that the money will be paid back from the farmer's production and creation of real wealth. If the farmer turns around and pays off that loan with money borrowed from another bank, or even the same bank under another name, we start to have a problem."

I thought Sarbanes-Oxley fixed that stuff.

Posted by: Freedom Fighter on May 4, 2006 at 11:22 AM | PERMALINK

....I would like to be proven wrong, says Niskanen. No wonder: for the modern conservative coalition, the implications of his findings are discomfiting, and in a sense tragic.

This is not a problem. For the modern conservative coalition, facts are negotiable.

Posted by: Alek Hidell on May 4, 2006 at 11:27 AM | PERMALINK

Does make a bit of sense. It's plausible.

There definitely is a disconnect between spending and taxes. Maybe higher taxes will cause people to pay more attention to what the hell congress is throwing money at.

This doesn't blow away "starve the beast", because starve the beast has more to do with running up deficits when interest is low, then when the interest rate is high the budget will have to be tightened (or taxes raised). Thing is that it looks more likely that the government will raise taxes than they will constrain spending growth.

I agree "starve the beast" isn't plausible. I hope that's not what they are actually trying to do. I think that they are just taking advantage of low interest rates, but who knows for sure ain't talking.

Posted by: aaron on May 4, 2006 at 11:32 AM | PERMALINK

tbrosz wrote: Kevin, maybe the real issue with the "starve the beast" theory is that the people who actually control the spending, i.e. the Congress, aren't actually penalized for lousy fiscal discipline.

Substitute "Republicans" for "Congress" and you're actually onto something, tbrosz.

Because guess what -- you refuse to penalize the Republicans for their lousy fiscal discipline. The Democrats would prefer to pay for government spending with tax revenue, but you steadfastly refuse to admit that approach is more responsible. It's all about the tax cuts for you, tbrosz. Shame on you.

Posted by: Gregory on May 4, 2006 at 11:35 AM | PERMALINK

jeff: "With taxes flowing from blue to red at any tax rate blue people are more likely to want some more tax revenue, and red people more likely to think there is already more than enough."

Interesting point! It supports the Cato institute's concern that people will want more when the cost goes down. Because blue states are subsidizing red states, the red states--who are in control right now--are perfectly happy to ask for more. They don't have to pay for it! Our Texas political leaders don't want to cut the AMT, because the AMT affects the blue states more than the red states. And in the blue states, where the costs are high, people are ambivalent and wondering if we have too much government.

Posted by: PTate in MN on May 4, 2006 at 11:36 AM | PERMALINK

Starve the Beast can only work if congress is more opposed to taxes than they are in favor of new spending.

I think all that we in the public really want is for them eliminate old spending before they start piling on the new. Nobody is doing maintenance; once money is appropriated there is no accountability. There is still a lot of money going to things that aren't relevant to the times anymore. We see the financial effects of government spending, but we do not know if there is any economic benefit.

Posted by: aaron on May 4, 2006 at 11:44 AM | PERMALINK

Of course the implications of this analysis is not necessarily in favor of liberal causes. Rather it seems to be an argument to cut spending, or if that is unacceptable to voters who want their Medicare and SS checks come hell or high water, wait for the long-term consequences to rear their ugly heads.

Either way voters get to decide.

Posted by: Birkel on May 4, 2006 at 11:46 AM | PERMALINK
So in other words, whenever Kevin Drum cites the NYT or Juan Cole as sources, then the point he is trying to make is not credible.

Er, no.

Again, when he cites those sources, it is not universally the case that the argument can not be evaluated on its own without reference to the supposed authority or expertise of the source, even leaving aside debates about what the actual institutional biases of those sources are (a point on which you and I, particularly in the case of the NYT, are unlikely to agree.)

Posted by: cmdicely on May 4, 2006 at 11:48 AM | PERMALINK

What Starve the Beast really amounts to is quickly growing the government to it's maximum tolerable size, then claiming that government growth has slowed because it simply can't grow anymore.

Posted by: aaron on May 4, 2006 at 11:52 AM | PERMALINK

Why are conservatives, apparently, unable to understand that the amount the government spends is of greater importance fiscally than the amount it taxes? Spending is the basic problem irregardless of how much is taxed. Reducing taxes while increasing spending, as has been done extensively over the past 5 years, just finances the current spending by future citizens and taxpayers. Why aren't conservatives bright enough to fiqure this out? Every branch of government has increased it's spending under Bush and a republican controlled congress and this is supposed to be conservatism? Seems more like rampant stupidity.

Posted by: MRB on May 4, 2006 at 11:53 AM | PERMALINK

irregardless is not a word.

Posted by: Birkel on May 4, 2006 at 11:55 AM | PERMALINK

"Niskanen recently analyzed data from 1981 to 2005 and found....no sign that deficits have ever acted as a constraint on spending. To the contrary: judging by the last twenty-five years (plenty of time for a fair test)..."

I don't agree with that bit about this being "plenty of time for a fair test" though, and it is definately nowhere near what could have been easily analyzed. A typically lazy CATO institute collection of data really. 25 years of one federal government, thats all? Basically they have two multiyear periods of increasing deficits and one of decreasing deficits. Did this take a whole afternoon? There is probably fairly easily accessible data about 100 countries for 50 years or more.

Posted by: jefff on May 4, 2006 at 11:59 AM | PERMALINK

"The beast" is not government. "The beast" is only that part of government that spends money on social programs.

The rest of it is more like "the cash cow."

Posted by: Roddy McCorley on May 4, 2006 at 12:01 PM | PERMALINK

And the other day Cato published a brief of 31 pages detailing the crimes and misdemeanors of The Emperor. What's not to love about Cato these days!!

Posted by: PW on May 4, 2006 at 12:02 PM | PERMALINK

Every dictionary has a listing for "irregardless" and, although it is a nonstandard word, it cannot be determined in anyway that it is not a word.

Posted by: MRB on May 4, 2006 at 12:03 PM | PERMALINK

What is hard to understand. In our system of government delivering programs and services to constitutents is the only way a member of congress can be sure of being reelected. Remember Ted Stephan's bridge to nowhere. He was willing to go to the mat to keep that damn useless bridge. Why? He knows the importance of delivering the goods. Any member of congress worth keeping will move heaven and earth to deliver to his consituents.

Nearly all programs and services cost money. The politicians have two sources of money to pay for programs and services--taxes and borrowing. If politicians determine that lowering taxes is one of the programs or services their constituents desire and pass tax reductions, the only other source of money is borrowing. The expansion of the deficit follows naturally from any tax reduction.

The people who have been fools are the conservatives who simply don't understand how staying in congress works.

Posted by: Ron Byers on May 4, 2006 at 12:07 PM | PERMALINK

A little bit on receipts and deficits here.

No mention of the coming supplemental budget bill..I guess thats why the government doesn't revise its estimates so quickly.

Posted by: Stephen on May 4, 2006 at 12:11 PM | PERMALINK

irregardless is not a word.

You better notify Merriam-Webster.

http://m-w.com/dictionary/irregardless

Posted by: BB on May 4, 2006 at 12:18 PM | PERMALINK

PW: And the other day Cato published a brief of 31 pages detailing the crimes and misdemeanors of The Emperor. What's not to love about Cato these days!!

Also, a majority of the John Birchers answering a poll thought that Bush should be impeached.

Nothing unites people like a common enemy.

Posted by: alex on May 4, 2006 at 12:18 PM | PERMALINK

So if you want to sound ignorant, feel free:

Irregardless is a word that many mistakenly believe to be correct usage in formal style, when in fact it is used chiefly in nonstandard speech or casual writing. Coined in the United States in the early 20th century, it has met with a blizzard of condemnation for being an improper yoking of irrespective and regardless and for the logical absurdity of combining the negative ir- prefix and -less suffix in a single term. Although one might reasonably argue that it is no different from words with redundant affixes like debone and unravel, it has been considered a blunder for decades and will probably continue to be so.

Posted by: Birkel on May 4, 2006 at 12:19 PM | PERMALINK

New debt since Bush took office is approaching a
trillion dollars

It approached a triilion dollars a long time ago and ripped right past it. It has increased $2.6 trillion since he took office, increasing by about $1 million per minute, or $1.3 billion per day.

Posted by: BB on May 4, 2006 at 12:21 PM | PERMALINK

So if you want to sound ignorant, feel free

I didn't use the word, and you said it wasn't a word, and you're wrong about that.

Case closed. Move on.

Posted by: BB on May 4, 2006 at 12:24 PM | PERMALINK

If it was coined, then it is now a word, like it or not, even if it doesn't make logical sense.

Posted by: Yancey Ward on May 4, 2006 at 12:26 PM | PERMALINK

Gregory:

If you think that somehow a Congress controlled by Democrats and a Democratic president are going to be shining examples of fiscal responsibility either, you're dreaming. There would have been no surpluses if the Democrats had held Congress in 1994 and beyond.

We had surpluses when we last had real Republicans running the House. The last set of surpluses was the result of a "perfect storm" in the political situation, and it's not likely to be repeated.

There's like four pages of explanations in this, but I'll boil it down to a few uncomfortable facts:

--Clinton's policies had little or nothing to do with the surpluses

--The key is low taxes and low spending. Trading the present low taxes and high spending for high taxes and high spending is not an improvement.

--Bush has been a complete failure on fiscal restraint.

--This has permitted Congress to run wild, unable to face voters on spending cuts without being able to use a veto as an excuse. If Gingrich and the Gang of 94 were still running the House, it might be a different story. He isn't, they aren't, and the current Republicans are nowhere in the same ballpark.

Posted by: tbrosz on May 4, 2006 at 12:27 PM | PERMALINK

Yancey Ward: If it was coined, then it is now a word, like it or not, even if it doesn't make logical sense.

Ain't that the truth.

Posted by: alex on May 4, 2006 at 12:30 PM | PERMALINK

I have long been a proponent of paying for government services with end user taxes, with the exception of certain public goods that provide utility to most citizens. Education and defense are public goods that benefit most citizens. Progessive income taxes should be levied to pay for them. The Securities Exchange Commission, for example, provides a governmental service that does not provide utility for most citizens and should be financed soley through use taxes. Highways should be paid for with gas and tire taxes. The way our system works now subsidizes governmental services for the rich. Tax revenues that are paid by everyone for services that protect wealth. I really dislike government subsidized bank deposit insurance of up to $100,000 becuase a super majority of citizens will never have that much money deposited, yet they pay taxes to insure the wealthy do not lose their savings. Insuring up to $25,000 of deposits makes sense to ensure banking confidence, but when they raised the limit to $100,000 it was a signal to the (Republican) bankers to run their savings and loan institutions into the ground because the American chump taxpayers were going to cover all losses. I do not expect my ideas to ever gain traction because of the inherent corruption of our political economy.

Posted by: Powerpuff on May 4, 2006 at 12:31 PM | PERMALINK

Just like they knew Supply Side Economics was just a BS excuse to cut taxes, same is true with "starve the beast."

The goal - cutting taxes on the rich - remains constant; new justifications replace old ones as the latter are debunked.

Posted by: RT on May 4, 2006 at 12:32 PM | PERMALINK

Ha!

Very interesting.

Of course, YOU KNOW where that calculus takes place.

Right in the brain of your elected Representative and Senator.

"Hmmm... lowered taxes, so I'm getting less grief about that. Joe Voter sure likes that. And I'm bringing home vastly increased pork, so the folks back home likes me for that. Hey! it's not just a win-win situation! It's a like-like situation! People like me!"

We in it deep now.

Posted by: SombreroFallout on May 4, 2006 at 12:35 PM | PERMALINK

If you think that somehow a Congress controlled by Democrats and a Democratic president are going to be shining examples of fiscal responsibility either, you're dreaming. There would have been no surpluses if the Democrats had held Congress in 1994 and beyond.

Unfortunately, reality disagrees with you. Clinton and the Democratic Congress passed aggressive deficit reduction legislation and during the two budget years they were responsible for, the deficit went down considerably.

We had surpluses when we last had real Republicans running the House.

A "real" Republican? Pray tell, please tell us the difference in composition between the "real" Republican Congress and the current one.

There's like four pages of explanations in this, but I'll boil it down to a few uncomfortable facts:

--Clinton's policies had little or nothing to do with the surpluses

That's your wish, not a fact.

--The key is low taxes and low spending. Trading the present low taxes and high spending for high taxes and high spending is not an improvement.

This is also not supported by facts. Also define "low taxes" and "high taxes". Anyone who deals in such vagaries is unworthy of debating this topic.

--Bush has been a complete failure on fiscal restraint.

You got one obvious thing right.

Posted by: BB on May 4, 2006 at 12:37 PM | PERMALINK

There would have been no surpluses if the Democrats had held Congress in 1994

They did hold Congress in 1994 and in 1993.

The Republicans took control in 1995.

Posted by: BB on May 4, 2006 at 12:39 PM | PERMALINK

Fact:
"When President Clinton and Vice President Gore took office, the deficit was $290 billion and expected to grow to $455 billion by 2000. The 1993 economic plan contained $500 billion of total projected deficit reduction over five years, including $255 billion in spending cuts. Even before the Balanced Budget Agreement of 1997 took effect, the deficit had been cut to $22 billion in FY 1997, a 92 percent drop."

Posted by: BB on May 4, 2006 at 12:40 PM | PERMALINK

"There is probably fairly easily accessible data about 100 countries for 50 years or more."

We really want to study the 10 most industrialized nations in the period since the industrial revolution. And, it's been done.

"Spending is the basic problem irregardless of how much is taxed."

Government overall size and efficiency. It should be matched to the pivate sector.

However, what the original Cato author will discover, if he pursues this line, is that government as a lot of characteristics of a supply/demand economy. Appointeed buyers, cartels, and other political groups greatly mess up the dynamic of supply/demand; but it is still there in Congress, politics and the executive branch.

Cato is comming to some startling conclusions about big goverment Republicanism. There are a lot of studies to be published, and a new theory of how governments operate will result.

We will see more research on the effect of very large scale social spending on families. Remember the opposite side of the coin: Dems like flat taxes for social security and medicare for the very specific reason of growing these programs.

Just hang in there.

Posted by: Matt on May 4, 2006 at 12:44 PM | PERMALINK

All these posts by the righties seemed odd then it came to me all these posts are cut and pasted from The Heritage Foundation papers.Nice try republican'ts got any stuff you wrote yorself?

Posted by: Booo on May 4, 2006 at 12:49 PM | PERMALINK

BB:

They did hold Congress in 1994 and in 1993. The Republicans took control in 1995.

The election where the Republicans took the House was in 1994, as any idiot knew I meant.

As for the rest, maybe I needed to post the full discussion since the points went over your head.

Point to the Clinton policy that held spending under control.

Posted by: tbrosz on May 4, 2006 at 12:50 PM | PERMALINK

--Bush has been a complete failure on fiscal restraint.
--This has permitted Congress to run wild, unable to face voters on spending cuts without being able to use a veto as an excuse. If Gingrich and the Gang of 94 were still running the House, it might be a different story. He isn't, they aren't, and the current Republicans are nowhere in the same ballpark.

You've convinced me...time to throw the current Republican bastards out.

Posted by: Charley on May 4, 2006 at 12:54 PM | PERMALINK

tbrosz:

If you think that somehow a Congress controlled by Democrats and a Democratic president are going to be shining examples of fiscal responsibility either, you're dreaming

We made good progress on deficit reduction from '92 to '94 when Clinton had a Democratic Congress. The on-budget (excluding SS) deficit came down from 5.5% of GDP in '92 to 3.7% of GDP in '94.

That Democrat-controlled Congress did not go hog-wild on spending once Bush 41's veto threat was gone. Non defense discretionary spending was flat at 3.4% of GDP from '92 to '94 (a bit lower than today).

Clinton's policies had little or nothing to do with the surpluses

How about linking to an actual numerical breakdown that demonstrates that the '93 tax hike that no House Republicans voted for (and which Gingrich predicted would lead to a recession) had "little or nothing" to do with the surpluses.For instance, here. And I suppose you'll dismiss it because it's from Delong, but it you're going to toss off claims like that maybe you could at least try to back them up with an analysis from some right wing thinktank or something.

Posted by: Foo Bar on May 4, 2006 at 12:58 PM | PERMALINK

Fact:
"BB is an ignorant fool."

This quote comes from the same source as BB's "fact."

Posted by: Jason on May 4, 2006 at 1:01 PM | PERMALINK

Clinton's policies had little or nothing to do with the surpluses

Yeah, higher tax rates kill economic growth except when they don't.

The Republican line has always been that high taxes kill investment and economic growth. They also claim that Clinton raised taxes more than anyone. But, during Clinton's term, there was an excess of investment capital flying around, substantial economic growth and budget surpluses.

Maybe the Laffer curve is not as all powerful as
the Cons would have us believe.

Posted by: Stephen on May 4, 2006 at 1:01 PM | PERMALINK

If you think that somehow a Congress controlled by Democrats and a Democratic president are going to be shining examples of fiscal responsibility either, you're dreaming.

tbrosz, your steadfast refusal to confront the fact that the Republican tax-cut-borrow-and-spend policies are vastly more irresponsible than the Democratic preference for paying the way through tax revenue -- to say nothing of your addiction to straw man arguments -- pegs you as an intellectually dishonest hack.

As Kevin pointed out, and I've noted to you repeatedly, pay-as-you-go has an inherent check. The GOP reliance on the national credit card and pretending that cutting "pork" will balance the budget has none.

And another thing while we're at it, tbrosz. You love you some tax cuts, we know. You'd rather the government spend less, we know. If the GOP truly stood for such things, your position might be worthy of respect. But we've had too many years of Republican control. You get your tax cuts, sure -- and runaway deficits to boot (not to mention the off-the-book accounting for Iraq and Katrina). If the Republicans really proposed what it'd take to balance the budget on their tax regime, they'd get run out of Washington on a rail, and they know it. The Republican position, and your reflexive support of same, are inherently dishonest, as I noted in an earlier comment. Shame on you, tbrosz.

Posted by: Gregory on May 4, 2006 at 1:15 PM | PERMALINK

The election where the Republicans took the House was in 1994, as any idiot knew I meant.

Nice insult. Feel better?

As for the rest, maybe I needed to post the full discussion since the points went over your head.

Nice insult. Feel better?

Point to the Clinton policy that held spending under control.

Start here.
http://en.wikipedia.org/wiki/Omnibus_Budget_Reconciliation_Act_of_1993

You can look up the details of the spending cuts by going to Thomas.

Posted by: BB on May 4, 2006 at 1:16 PM | PERMALINK

By the by, I'm vastly amused that tbrosz considers "Bush has been a complete failure on fiscal restraint" an uncomfortable fact. Cognitive dissonance, much?

Posted by: Gregory on May 4, 2006 at 1:17 PM | PERMALINK

Fact:
"BB is an ignorant fool."

This quote comes from the same source as BB's "fact."

Nice insult. Feel better?

Posted by: BB on May 4, 2006 at 1:17 PM | PERMALINK

'tbrosz' posted:

"The election where the Republicans took the House was in 1994, as any idiot knew I meant."

But 'BB' is correct, they didn't take office until 1995, which any idiot would know is what mattered. Furthermore, the Republican controlled Congress didn't pass any major budget legislation that was signed into law until February of 1996. Remember how Newtie & the Blowhards shut the government down, TWICE ?
.

Posted by: VJ on May 4, 2006 at 1:22 PM | PERMALINK

The arguement is good: What ever you subsidize you get more of, what ever you tax you get less of. In terms of government if it cost less, you get more of it, if it cost more, you get less of it. Interesting theory indeed.

But theory and politics is different from reality.

As long as their is an alternative minimum tax, the politics of tax breaks is somewhat of a faux issue.

But one thing is notable: When wealth is pushed to the upper reaches of the economic spectrum, then the wealthy have to pay more minimum tax.

It would be interesting to know whether the Goverment gets more receipts from the top 5% because of the alternative minimum tax, or because of the standard tax code.

My sense is, all those rich people whose incomes have increased 500% under Bush are having to shell out their tax receipts along the lines of the alternative minimum tax - and that might explain why the deficit isn't worse than some might imagine it to be.

In which case, thank God for the minimum tax.

Posted by: Bubbles on May 4, 2006 at 1:26 PM | PERMALINK

tbrosz wrote: The key is low taxes and low spending. Trading the present low taxes and high spending for high taxes and high spending is not an improvement.

Yes, yes, tbrosz, we know you'd prefer low taxes and low spending, but it's now incontrovertible -- hell, even you admit it -- is that the GOP policy is low taxes and high spending, deficits be damned. You assert that raising taxes -- to, say, the ruinous rates of the Clinton years -- "is not an improvement," but one is forced to conclude that your assertion intersects with reality only inasmuch as such policies are not your preference.

Raising tax revenue to correspond with current spending rates is inherently an improvement to the deficit situation except for the discomfort it causes to your outlook. Which, since you're all to happy to carry water for the GOP as long as they cut your taxes, deserves no respect at all.

The GOP has no credibility when it comes to fiscal policy, tbrosz. None at all. Your claims to abhor their departure from the loony libertarian party line is so much straw when stacked up against your reflexire whoring for these clowns. To this very day you refuse to admit their actual policies are more irresponsible that the Democratic aklternative. Why anyone takes you seriously is truly a baffling question. Why you can look in the mirror without cringing in shame is even more of a mystery.

Posted by: Gregory on May 4, 2006 at 1:28 PM | PERMALINK

It would be fun to get a look at these trolls checkbooks, They must be a mess. oh me bad! sorry I forgot they live off mommies credit cards.

Posted by: Booo on May 4, 2006 at 1:29 PM | PERMALINK

One of the points that is never made often enough: No one should really even refer to tax "cuts" when spending rises. All of the spending will be paid for with someone's taxes someday, unless the government makes a profit selling a product or etc. Taxes = spending, pretty much period! Hence we shouldn't let Republican (or enabler Democrat) candidates brag of "tax cuts" in the face of deficit spending!

Posted by: Neil' on May 4, 2006 at 1:38 PM | PERMALINK

Alex: The anger and feeling of betrayal on the part of fringe Constitutionalists and Christian groups and some Libertarians (heard here in west central Texas on low-power FM) has been fascinating. From the first year of the Bush presidency. Oh, and the retired military.

Posted by: PW on May 4, 2006 at 1:41 PM | PERMALINK

Actually, increasing spending is part of the plan. They want to make the government so big and so broke that it collapses. The only way people will accept dismantling Medicaid and Medicare and Social Security and Welfare is if there is no other alternative.

It's easier to starve a beast that is exercising and using up calories than it is to starve one that is sedentary and quiet.

Posted by: NAR on May 4, 2006 at 1:47 PM | PERMALINK

Gregory,

tbrosz, your steadfast refusal to confront the fact that the Republican tax-cut-borrow-and-spend policies are vastly more irresponsible than the Democratic preference for paying the way through tax revenue -- to say nothing of your addiction to straw man arguments -- pegs you as an intellectually dishonest hack.

And your steadfast refusal to confront the fact that the Democrats have controlled Congress for most of the past 50 years, and that in almost every one of those years they spent more than they collected in taxes shows you to be a lying fool who doesn't really give a damn about fiscal irresponsibility except when he thinks he can blame it on Republicans.

Posted by: Jason on May 4, 2006 at 1:56 PM | PERMALINK

What is it with Bush defenders and their addiction to straw man arguments?

Show me where I claim the Democrats' fiscal policies are inherently responsible, Jason. I claim that their fiscal policies are inhernetly more responsible than the Republicans'. As for spending more than the government collects in taxes, Republicans exceed Democrats on this score hands down. Did you have a point to make?

Posted by: Gregory on May 4, 2006 at 2:04 PM | PERMALINK

And your steadfast refusal to confront the fact that the Democrats have controlled Congress for most of the past 50 years, and that in almost every one of those years they spent more than they collected in taxes shows you to be a lying fool who doesn't really give a damn about fiscal irresponsibility except when he thinks he can blame it on Republicans.

Stop living in the past, angry man.

Posted by: BB on May 4, 2006 at 2:14 PM | PERMALINK

A point to consider is that the modern monetary system functions as a form of public commons and it would be wise to regulate it as such. We still operate with the assumption, from the age of metal based currency, that value is inherent in the token, when it is the responsibility of the issuer to maintain the value of the money. Given that in a democratic society, the government is the property of the citizen and its currency is a form of public accommodations, similar to the highway system, it should be governed for the greatest good of the greatest number. This principle would not interfere with the basic rights of private property. In fact, if people were thus encouraged to invest their efforts into maintaining value within every aspect of life, rather then being tempted to drain reductionistic units out to store in a bank, this would lead to a healthier society and environment. It would also limit the ability of the government to tax the economy.

Posted by: brodix on May 4, 2006 at 2:22 PM | PERMALINK

Is it any wonder that an ideology built around nothing more than an elaborate rationalization for personal selfishness would sell itself on free lunches and ponies for everyone?

Posted by: Gord Brown on May 4, 2006 at 2:22 PM | PERMALINK

Gregory, everybody here knows what I do for a living, and why it permits me to post here now and then.

Last I heard you were a technical writer (the "Mazinga" byline stuff doesn't really count). Not sure what you're doing now, but I don't think I'd be surprised that massive tax increases wouldn't bother you.

Maybe what we need is some financial equivalent of "chickenhawk," where anyone who paid less than $30,000 in Federal income/payroll taxes doesn't have the right to talk about spending and tax issues.

Posted by: tbrosz on May 4, 2006 at 2:44 PM | PERMALINK

everybody here knows what I do for a living, and why it permits me to post here now and then.

Yeah, and the fact that you bitch about taxation while drawing your paycheck from the taxpayer's dime -- even if it is filtered through consulting companies -- is appreciated by all, I'm sure.

I presume "last you heard" == "what I just Googled on you," but hey -- it won't be the first time a hasty Google search led you to post incomplete or -- perish forbid! -- misleading information.

Yes, yes, we know you love you some tax cuts. That sole data point hardly transforms your straw men and general intellectual dishonesty into valid arguments, nor excuses your embrace of the Republican Party's irresponsible polices.

How much taxes any individual pays is utterly irrelevant to the fact that the Republicans don't dare make any serious effort to cut entitlement programs, but do underfund the government in general -- including the so-called war on terror, tbrosz, which your cherished President insists on both running off the books and paying for with a tax cut. The Republican position is inherently dishonest, tbrosz. No wonder you have such an affinity for them.

Posted by: Gregory on May 4, 2006 at 3:07 PM | PERMALINK

Maybe what we need is some financial equivalent of "chickenhawk," where anyone who paid less than $30,000 in Federal income/payroll taxes doesn't have the right to talk about spending and tax issues.

Warren Buffet has pointed out that his maid pays a higher percentage of her income in taxes than he does. I think your tax "chickenhawk" idea would better apply to people whose tax percetages were in the less-than-the-hired-help range.

Posted by: Jeffrey Davis on May 4, 2006 at 3:23 PM | PERMALINK

Maybe what we need is some financial equivalent of "chickenhawk," where anyone who paid less than $30,000 in Federal income/payroll taxes doesn't have the right to talk about spending and tax issues.

Can this be class warfare? From Flanders, of all people?

Maybe what we need is for people who have a large enough income that they were able to pay more than $30,000 in Federal income/payroll tax shouldn't be allowed to whine about how much they have to pay. If someone paid that much in taxes they probably have an income in excess of $100,000 -- well boohoo, tell us again how much you're suffering.

You want to pay less taxes? Make less money.

Or, conversely, make so much damn money that you can hire a good enough tax lawyer who will help you pay nothing.

Posted by: Stefan on May 4, 2006 at 3:24 PM | PERMALINK

Maybe what we need is some financial equivalent of "chickenhawk," where anyone who paid less than $30,000 in Federal income/payroll taxes doesn't have the right to talk about spending and tax issues.

And, as usual, Flanders gets the terms of the debate wrong. A chickenhawk is someone who, while braying loudly for war, doesn't want to go off and fight himself, i.e. doesn't want to do his fair share. The financial equivalent would be someone who wants all the benefits and advantages that come from his government without paying the taxes necessary to make it work -- i.e., someone like Flanders who doesn't want to pay his fair share.

Posted by: Stefan on May 4, 2006 at 3:29 PM | PERMALINK

You also gotta love the way tbrosz terms repealing the Bush tax cuts -- in other words, a return to the ruinous rates of the Clinton Administration -- "massive tax increases."

Oh, tbrosz was just throwing out his usual straw man bullshit, you say? Never mind, then.

Posted by: Gregory on May 4, 2006 at 3:36 PM | PERMALINK

Unless the government has a time machine in the basement of the treasury building, all spending by the government comes out of present production. In other words, the thing one must put the most focus on is the total of government consumption. How the government collects from the contemporary economy of the world the resources it consumes and redistributes is of a secondary concern. The shame of the Republicans is that they give lip service to cutting government's size, but do everything in their power to increase it.

Posted by: Yancey Ward on May 4, 2006 at 3:53 PM | PERMALINK

'Jason' posted:

"And your steadfast refusal to confront the fact that the Democrats have controlled Congress for most of the past 50 years, and that in almost every one of those years they spent more than they collected in taxes shows you to be a lying fool who doesn't really give a damn about fiscal irresponsibility except when he thinks he can blame it on Republicans."

But the largest annual deficit during those 50 years was a lousy $69 billion, or about what the Republican controlled Congress and Republican occupied White House are currently running up every month.
.

Posted by: VJ on May 4, 2006 at 4:00 PM | PERMALINK

"Unless the government has a time machine in the basement of the treasury building, all spending by the government comes out of present production."

This is part of the "deficits dont matter" claim, pumped out by some rightwing economic think tank or other.

They ignore the critical fact that the US isn't a closed system. Our deficits are in large part financed by borrowing from abroad, so all government spending does not come out of current US production some of it comes from foreign production. That spending will some day have to be paid back unless the debt is forgiven or wiped out in an economic collapse.

The government doesn't have a time machine in the basement, they have China.

Posted by: jefff on May 4, 2006 at 4:12 PM | PERMALINK
Unless the government has a time machine in the basement of the treasury building, all spending by the government comes out of present production.

Er, no. You've messed something up there.

Certainly, everything that government receives comes out of the world's current or past production, and everything that the government spends comes out of the US's (or, more specifically, the government's revenue base's, which isn't necessarily the same thing) present, past, or future production (the ability to raise revenue on existing property by seizure and resale, fine, expropriation, property tax, inheritance tax, etc., lets it use past production; the ability to borrow let's it use future production.)

Neither is limited to present production, in any sense.

Posted by: cmdicely on May 4, 2006 at 4:23 PM | PERMALINK

But the largest annual deficit during those 50 years was a lousy $69 billion,

Meaningless. What matters is the deficit in real dollars and as a fraction of GDP. The Democrats have controlled congress for most of the past 50 years. As this chart shows, the Democrats have run deficits virtually every year they were in power.

The claim that the Democratic Party is fiscally responsible is unmitigated crap.

Posted by: e12 on May 4, 2006 at 4:25 PM | PERMALINK

jefff,

One way or another, the actual consumption of the government has to be resourced whether you have a budget deficit or not. It may be the case that if the US government still spent X but also taxed Americans X, that the Chinese would be less likely to loan the same amount to private Americans, but I don't think that has to be true. Think about it this way, to address your concern, we could require that the US Government only borrow the deficit from US citizens. What would be the affect, do you think?

Posted by: Yancey Ward on May 4, 2006 at 4:25 PM | PERMALINK

Stop living in the past, angry man.

Stop lying, moron.

Posted by: Jason on May 4, 2006 at 4:26 PM | PERMALINK
One way or another, the actual consumption of the government has to be resourced whether you have a budget deficit or not.

"resource" is not a verb. If you mean something like "supplied", yes, that's the case. It has to be supplied, out of the world's current or past production. This is clear. This is also not what you claimed.

It may be the case that if the US government still spent X but also taxed Americans X, that the Chinese would be less likely to loan the same amount to private Americans, but I don't think that has to be true.

"Less likely" than what? Given that the reduction is a given in the hypothetical, the only "less likely" that matters is "less likely than 100% certain", which I think is pretty clear.

In any case, its entirely irrelevant to your claim about "present production", as Chinese loans are not "present production", they are an input to the US economy from present or past production taxed by the Chinese government.

Think about it this way, to address your concern, we could require that the US Government only borrow the deficit from US citizens. What would be the affect, do you think?

The effect would be that the total availability of credit to the US would be decreased, as individual US citizens would not be viewed as a certainly able to pay as the US government, even if they chose to act as de facto intermediaries for the US government by using foreign loans to by US government securities.

Especially if the US government didn't give those foreign claims legal priority in, e.g., bankruptcy proceedings against US citizens.

Why do you ask?

Posted by: cmdicely on May 4, 2006 at 4:34 PM | PERMALINK

cmdicely,

True, it can come from past production that has not been consumed up to the present, but it cannot spend today future production. By borrowing, the government is willing to pay someone for their present/past production that they have not consumed. That person uses the interest to have higher future consumption.

Posted by: Yancey Ward on May 4, 2006 at 4:36 PM | PERMALINK

Flanders and his ilk remind me of that Simpsons episode where the town demands protection from the bears who've begun wandering into Springfield but are then outraged when they discover that a new "bear tax" has been levied to pay for the stepped-up patrols.

Quimby: Are those morons getting dumber or just louder?
Assistant: [ checks his clipboard ] Dumber, sir.
Quimby: They want the bear patrol but they won't pay taxes for it.

Posted by: Stefan on May 4, 2006 at 4:47 PM | PERMALINK

"What would be the affect, do you think?"

I don't know exactly, just as you stated I suppose people would buy tbills and sell tbill backed securities to foreigners or something, but it still would not eliminate the critical flaw in your claim. The US isn't a closed system. The US can and does indeed consume at a rate higher than it's production by borrowing from foreigners and will likely need to produce at a rate higher than consumption to pay it back someday.

cmdicely is also correct in that even a system that is closed could consume at beyond its production temporarily by consuming cached resources just as it can consume at less than production while building up resources to be used later. So even for a closed system we can indeed really in effect borrow from future generations to some extent and pay it back later.

Posted by: jefff on May 4, 2006 at 4:47 PM | PERMALINK
True, it can come from past production that has not been consumed up to the present, but it cannot spend today future production.

Sure it can. Exchanging a future claim (a debt) for presently-provided goods and services is spending from future production.


By borrowing, the government is willing to pay someone for their present/past production that they have not consumed.

Well, no. The government can, even if perhaps it choses not to, create entirely new and valid claims against itself and exchange them directly for goods and services without acquiring any product, direct or indirect, of past or present production to support that claim. Now, its ability to do so is dependent on its ability engender trust in the recipient of the future claim, but its certainly possible and regularly practiced.

Indeed, the issuing of currency and the exchange of it for goods and services by the government is at its core nothing other than the creation of a vague and nonspecific future claim (the promise to accept $1 in currency for whatever it currently demands $1 for) in exchange for something (which may be either a present good or service or a return future claim.)

Posted by: cmdicely on May 4, 2006 at 4:49 PM | PERMALINK

And yes, we can in effect spend future production.

Say we start running the US on nuclear power and just dumping the waste in shallow trenches in some relatively dry area (Hanford, for example).

Our descendents decades years later will have a choice between tolerating an increasingly radioactive colombia river (loosing productivity to the effects of that) and cleaning up our waste (expending productivity directly). The electricity will be long gone, but the costs of producing it will be ongoing.

Posted by: jefff on May 4, 2006 at 4:56 PM | PERMALINK

No, cmdicely, everything the government consumes today has to be from present or past unconsumed production. It may exchange a claim on future production for present goods, but it cannot consume those future goods today.

I only made the point in response to the claim that deficits are robbing from future generations. The real robbery is the historical size of the government that we leave future Americans. By consuming today's resources (and tomorrow's, and the next day's) in largely unproductive consumption, we will leave the future a less productive economy. On the philosophical flip side of government, those who believe bigger government to be a benefit to the future shouldn't worry so much about the government debt burden we used to make the government larger in the present.

Posted by: Yancey Ward on May 4, 2006 at 5:02 PM | PERMALINK

On the philosophical flip side of government, those who believe bigger government to be a benefit to the future shouldn't worry so much about the government debt burden we used to make the government larger in the present.

Makes no sense at all, Yancey.

Posted by: obscure on May 4, 2006 at 5:10 PM | PERMALINK

No necessary connection between size of debt and size of gov't.

Sorry to post & run.

Posted by: obscure on May 4, 2006 at 5:11 PM | PERMALINK
No, cmdicely, everything the government consumes today has to be from present or past unconsumed production.

Duh. Before you said spends, now you say consumes. Totally different things.

Yes, whatever it consumes must already have been produced, or be produced at the time it is consumed (the latter being typical of services.) This is trivial and obvious.

But it can certainly spend things that have not been produced yet. You are conflating what it can consume (a subset of what it can spend for, but note that the government can and does spend for future consumption, as well) with what it can spend from (which clearly includes future production.)

It may exchange a claim on future production for present goods, but it cannot consume those future goods today.

No doubt this is true, but your claim was: Unless the government has a time machine in the basement of the treasury building, all spending by the government comes out of present production. Your original claim remains false.

I only made the point in response to the claim that deficits are robbing from future generations.

The claim you were responding to is true; the thing traded for present consumption to create the deficit is a claim on the future production of the tax base of the United States and, therefore, on future generations.

The real robbery is the historical size of the government that we leave future Americans.

No, the real robbery is the choice we leave future generations between failing to meet the obligations to others we have left them in the form of debt or earning the enmity and distrust of outsiders for failing to live up to those obligations which are perceived as running with the institution known as the "United States of America".

The size of government is within the power to change, the existence of that choice is not.

By consuming today's resources (and tomorrow's, and the next day's) in largely unproductive consumption, we will leave the future a less productive economy.

This, of course, is almost entirely orthogonal to the size of government, unless you believe that the most productive government spending is always less productive than the least productive alternative. Yes, inefficient spending is, erm, inefficient. Spending which is inefficient in long run analysis is possible in both the private and public sector.

On the philosophical flip side of government, those who believe bigger government to be a benefit to the future shouldn't worry so much about the government debt burden we used to make the government larger in the present.

This seems to presume that debt burden isn't a burden, that it has no actual effect and requires no resources to address. This seems rather foolish.

Posted by: cmdicely on May 4, 2006 at 5:15 PM | PERMALINK

Meaningless. What matters is the deficit in real dollars and as a fraction of GDP. The Democrats have controlled congress for most of the past 50 years. As this chart shows, the Democrats have run deficits virtually every year they were in power.

The deficit as a precentage of GDP from 1981-1987
(Reagan was President and Republicans controlled the Senate) got as high as %6 of GDP. It was never that high in the previous years (excluding WWII).

Even measured in real dollars, deficits totaled more from 1981-1987 than they did in the preceeding 25 years. The highest deficits, measured in real dollars, occured when Repubs controlled the White House and at least one house of congress.

http://www.gpoaccess.gov/usbudget/fy05/hist.html

Even by your standards, you lose again.


Posted by: Stephen on May 4, 2006 at 5:15 PM | PERMALINK

'e12' posted:

"Meaningless."

The largest federal deficits and federal debt in history (both in raw numbers an as a percentage of GDP) is obviously not "meaningless".

.

"The Democrats have controlled congress for most of the past 50 years. As this chart shows, the Democrats have run deficits virtually every year they were in power"

Slight deficits can be stimulative to the national economy. Massive deficits have never stimulated the national econmy.
.

Posted by: VJ on May 4, 2006 at 5:28 PM | PERMALINK

Stop lying, moron.

Lying about what, oh, angry one?

Posted by: BB on May 4, 2006 at 7:02 PM | PERMALINK

VJ,

"The largest federal deficits and federal debt in history (both in raw numbers an as a percentage of GDP)"

You're spouting nonsense. You can't even get this right. No deficit under Bush is even close to being the largest federal deficit in history as a percentage of GDP.

And the federal debt is obviously cumulative, so every year there is a deficit it increases the debt from the year before. Almost every year when they controlled congress, the Democrats ran a deficit, and almost every year they controlled congress, the Democrats created the largest federal debt in history up to that time.

The claim that the Democratic Party is fiscally responsible is unmitigated crap.

Posted by: e12 on May 4, 2006 at 7:10 PM | PERMALINK

"The deficit as a precentage of GDP from 1981-1987
(Reagan was President and Republicans controlled the Senate) got as high as %6 of GDP."

The Democrats controlled the House during 1981-1987. The Democrats have controlled both the House and the Senate for most of the past 50 years. During almost every one of those years, the Democrats ran a deficit. During almost every one of those years, the Democrats increased the national debt to its highest level ever.

Even by your standards, you lose yet again.

Posted by: phil on May 4, 2006 at 7:17 PM | PERMALINK

The claim that the Democratic Party is fiscally responsible is unmitigated crap.

Well, it's all relative, isn't it?

Posted by: Gas Gluefish on May 4, 2006 at 7:27 PM | PERMALINK

I like the way e12 skips beyond the word ALMOST,Now why do you suppose those Deficits where there,Because the Republican'ts where in office just before,We have to straighten things up you know like after REAGANs bigger pie.And now it will happen again after G.W. Higher pie.

Posted by: Booo on May 4, 2006 at 7:29 PM | PERMALINK

The political dynamics around the deficit/debt issue shifted radically in the '80s and early '90s, so it doesn't really make much sense to talk about which party is more "historically" responsible. (We could go into GOP debt during the Civil War, but that would pretty obviously be irrelevant.)

Here's what happened. Because under Reagan the government ran its largest deficits (as a percentage of GDP) ever outside of wartime, and because this went on for 8 years and continued under Bush (initially), and because Reagan never even tried to submit a balanced budget to Congress or to seriously cut spending to bring it in line with his tax cuts, the term "the Reagan deficits" became appropriately widespread, and people began to view the deficits as something Republicans were responsible for. The presidential campaign of '84, where Mondale frankly told the American public that raising taxes was necessary and Reagan would raise them too (and got hammered for it, though he was right and Reagan was lying), helped to make the GOP-deficits connection crystal clear.

Bush pere made a fairly sincere effort to control deficits, but lacked the political strength or the robust economy to tackle the issue effectively. But it was the '92 presidential campaign that really changed the picture, with the Concord Coalition, Paul Tsongas, and the shift in power inside the Democratic Party to Clinton and the DLC. Meanwhile, a constituency for fiscal responsibility had built up in Congress, as became apparent in '93. In the first 6-12 months of the Clinton presidency, the single most striking political phenomenon was that cutting the deficit had become extremely politically popular, and this was reflected time and again in the President's interactions with Congress. Legislators and the President, Republican and Democrat (but mostly Democrat), were practically falling over each other in the race to cut the deficit.

Lo and behold, the US economy experienced the most robust peacetime expansion in history, and five years later, the US government was running a substantial surplus. Even though the GOP took the House in '94. But meanwhile, politically, Republicans stopped having to even think about the issue of deficit spending, because there was no deficit. As a result, the mindless tax-cutting wing of the party (which was closely allied to the reformist Gingrich "Contract with America" folks who had won in '94) accumulated more and more power. By the time the GOP won the presidency in 2000, the power and hunger of that tax-cut constituency had overwhelmed any residual fiscal-responsibility element in the party.

And the rest is history.

At what moment did the Democrats become the party of fiscal responsibility? You could say it was 22 years ago, when the impeccably sober and responsible Mondale said "He won't tell you. I just did." Or you could say it wasn't until the Tsongas-Clinton era. Either way, Democrats have been the party of fiscal responsibility for at least 15 years. Of course, the GOP could easily change this perception at any time. All they have to do, since they control Congress and the executive, is balance the budget. Bill Clinton did it - how hard could it be?

Posted by: brooksfoe on May 4, 2006 at 9:33 PM | PERMALINK

No deficit under Bush is even close to being the largest federal deficit in history as a percentage of GDP.

Au contraire. The worst deficit after WWII was in 1983 at 6% of GDP. From October 1, 2001 to March 31, 2006 (the beginning of the federal budget's FY2002 through the end of the first quarter of this year), the deficit has AVERAGED 4.8% of GDP. The additonal debt accumulated in that time period is $2.6 trillion, just shy of the growth in GDP of $2.9 trillion.

This whole "percentage of GDP" thing is nonsense since in Reagan's day Social Security funding was essentially breakeven, whereas in Bush's time it's been running surpluses of $160-175 billion annually. In the unified budget these "off-budget" surpluses get folded in, and this is the number we hear in the media and the one you're using. The real budget deficit is therefore actually much worse than is usually reported.

Add to that that the war expenditures are mostly part of "emergency" supplemental requests, adding up to hundreds of billions more debt that doesn't get reported as part of the deficits.

So, one, these Bush/Republican deficits are indeed at or close to historic post-war records (with FY2003 and FY2004 possibly even more than 6% of GDP with the war supplementals added in). What also makes this period different from the ones in the Reagan era is that they were preceded by moderate on-budget surpluses in FY1999-2000 and a very small deficit in FY2001. So the drop-off in public finances from a long period of steady erosion in deficits is unprecedented in modern history.

Posted by: BB on May 4, 2006 at 11:45 PM | PERMALINK

Add to that that the war expenditures are mostly part of "emergency" supplemental requests, adding up to hundreds of billions more debt that doesn't get reported as part of the deficits.

I don't think that's true. The final deficit stats for the year do I think include emergency supplemental requests such as the war expenditures.

Posted by: brooksfoe on May 5, 2006 at 12:16 AM | PERMALINK

Also, note that Reagan's first big deficit followed a very small deficit in Carter's final year. Carter cut the deficit in half - if memory serves it dropped from $30 billion or so to $15 billion or so. Another brick in the responsible-Democrats wall...

Posted by: brooksfoe on May 5, 2006 at 12:18 AM | PERMALINK

'e12' posted:

"No deficit under Bush is even close to being the largest federal deficit in history as a percentage of GDP."

Of course they have, you fool.

You can't go by what the White House is releasing. You have to add in all the off-budget spending for Afghanistan, Iraq, Katrina, and Homeland Security, and on and on and on.

Stop the off-setting of the deficit with the Social Security/Medicare Trust Funds, and all the other federal trust funds.

It's over $800 billion annually.

Stop being so damn gullible.
.

Posted by: VJ on May 5, 2006 at 12:48 AM | PERMALINK

I don't think that's true. The final deficit stats for the year do I think include emergency supplemental requests such as the war expenditures.

If you add up the on-budget deficits for FY2002-2005 (10/1/01-9/30/05), it comes to $1.84 trillion. If you calculate the increase in public debt during that same period, it comes to $2.13 trillion.

The discrepancy between the two is $282 billion - right in line with the total of the supplemental requests.

Posted by: BB on May 5, 2006 at 12:49 AM | PERMALINK

Another thing to keep in mind.

Democrats have controlled all of Congress and the White House during three separate periods since 1955, for a total of 14 years. The first was during Kennedy/Johnson, the second during Carter, and the third during Clinton's first two years.

In every cae the deficit they were handed, in terms of % of GDP, was larger than how they left it. The decline during the two year's of Clinton was the steepest, even though the period was the shortest.

Contrast that with the only period in which Republicans have held the White House and all of Congress (2001-present, with the Senate changing hands several times during the 107th Congress). Bush and the Republican Congress inherited a 0.3% deficit and it came to 4.0% in FY2005 without the supplements.

Posted by: BB on May 5, 2006 at 12:57 AM | PERMALINK

If you take away the offsetting effects of SS and Medicare etc. (which I totally agree with doing), you need to go back an do the same for all the historical data.

Posted by: aaron on May 5, 2006 at 1:48 AM | PERMALINK

Real economic effects have a long lag (we can see some financial reactions to policy). How much of the revenue additional revenue was due the previous decisions? Did spending get cut, or did revenue just increase? How much revenue was due to increased taxs and how much due to economic growth (which is likely attributed to the previous policy makers)?

Posted by: aaron on May 5, 2006 at 1:54 AM | PERMALINK

If you take away the offsetting effects of SS and Medicare etc. (which I totally agree with doing), you need to go back an do the same for all the historical data.

Like I said, during the Reagan era peak deficits, Social Security was in balance.

The % of GDP figures I was referencing were all on-budget numbers, ie, not reflecting the balance of Social Security numbers, so they are equalized across time already.

Real economic effects have a long lag (we can see some financial reactions to policy). How much of the revenue additional revenue was due the previous decisions? Did spending get cut, or did revenue just increase? How much revenue was due to increased taxs and how much due to economic growth (which is likely attributed to the previous policy makers)?

Talk about a fool's errand.

Posted by: BB on May 5, 2006 at 2:36 AM | PERMALINK

The hard part is finding the right data, but it really wouldn't be too hard (though I'm not about to do it) with just a few days of freetime (which I don't have).

Posted by: aaron on May 5, 2006 at 2:40 AM | PERMALINK

I'd be willing to bet that you'd find a pretty even split between the Clinton era fiscal discipline and prior economic policy in getting the budget closer to balance.

While I don't agree with his seemingly total disregard for deficits, the skeptical optimist has some really good analysis. Recommend reading if you're interested.

Posted by: aaron on May 5, 2006 at 2:48 AM | PERMALINK

The hard part is finding the right data, but it really wouldn't be too hard (though I'm not about to do it) with just a few days of freetime (which I don't have).

Data's easy to find. The hard part is attributing specific policy actions to specific revenue and outlay data - especially the revenue side of the equation. There's no way you'll ever get agreement on something like that.

Posted by: BB on May 5, 2006 at 2:55 AM | PERMALINK

Nah, all you need to do is subtract out the parts that atributable to tax policy changes. You don't need match revenue to specific policy actions.

Posted by: aaron on May 5, 2006 at 5:30 AM | PERMALINK

Exceptions being recent policies (in the period being observed) that have immediate and obvious impact.

Posted by: aaron on May 5, 2006 at 5:33 AM | PERMALINK

'aaron' posted:

"If you take away the offsetting effects of SS and Medicare etc. (which I totally agree with doing), you need to go back an do the same for all the historical data."

When the deficits were transforming to surpluses during the Clinton administration, the Republican Majority in Congress insisted that the trust funds not be used in the calculation, but starting in 2001 they insisted the trust funds once again be used to mask the size of the growing deficits.

.

"I'd be willing to bet that you'd find a pretty even split between the Clinton era fiscal discipline and prior economic policy in getting the budget closer to balance."

You would lose that bet, as during the 12 years of Reagan/Bush, the federal deficits and federal debt was growing faster than the underlying economy, whereas during eight years of the Clinton administration the underlying economy grew faster than the federal deficits an federal debt, hence the surpluses.
.

Posted by: VJ on May 5, 2006 at 6:17 AM | PERMALINK

VJ, my point was that you must use consistent measurements during comparison. It doesn't matter which so much, but I prefer not including SS, Medicare trustfund revenue no be included.

VJ, the ecomimic growth is mostly attributable to the policies of Reagan and Bush during the first half of Clinton, and to all three during the later half of Clinton and first half of Bush II. Increased tax revenues are attributable to economic growth and increased tax rate.

Posted by: aaron on May 5, 2006 at 7:37 AM | PERMALINK

shorter aaron: If its good its the because of Republicans, if its bad, its the Democrats fault.

Posted by: Stephen on May 5, 2006 at 9:03 AM | PERMALINK

No Stephen.

Posted by: aaron on May 5, 2006 at 9:36 AM | PERMALINK


The Democrats controlled the House during 1981-1987.

Right, but the Republicans controlled the White House AND the Senate.


During almost every one of those years, the Democrats increased the national debt to its highest level ever.

This is incorrect. The National debt increaesed more from 1981-1987 than it did in the preceding 25 years (measured in constant dollars),

See:http://www.gpoaccess.gov/usbudget/fy05/hist.html

Even by your standards, you lose yet again.
Phil, have you ever heard the word "truthiness" ?


Posted by: Stephen on May 5, 2006 at 10:57 AM | PERMALINK

BB,

Au contraire. The worst deficit after WWII was in 1983 at 6% of GDP.

You have a serious reading problem, don't you? The phrase "largest federal deficit in history as a percentage of GDP" obviously does not refer only to deficits after WWII.

Democrats have controlled all of Congress and the White House during three separate periods since 1955, for a total of 14 years. The first was during Kennedy/Johnson, the second during Carter, and the third during Clinton's first two years. In every cae the deficit they were handed, in terms of % of GDP, was larger than how they left it.

Total nonsense. The year Kennedy was elected, for example (1960), the budget was in surplus. By the last year of the Johnson Administration, the Democrats had turned that surplus into a deficit of 2.9% of GDP. And they ran a deficit every year they were in power. The Democrats controlled the Whitehouse, the Senate and the House every year of this period.

The claim that the Democratic Party is fiscally responsible is unmitigated crap.

Posted by: phil on May 5, 2006 at 1:19 PM | PERMALINK

You have a serious reading problem, don't you? The phrase "largest federal deficit in history as a percentage of GDP" obviously does not refer only to deficits after WWII.

No one of any seriousness includes the fiscal situation during WWII for comparison purposes. If they do, they are an idiot.

Perhaps if you were actually familiar with the material, you wouldn't just launch in with a foolish insult instead of actually discussing something meaningful.

Total nonsense. The year Kennedy was elected, for example (1960), the budget was in surplus.

Again, you are demonstrating ignorance about the federal budget process. FY1960 ran from October 1, 1959 to September 30, 1960. When Kennedy was elected, the US was already in FY 1961. That is the budget he inherited.

The claim that the Democratic Party is fiscally responsible is unmitigated crap.

You're ignorant, so your conclusions are meaningless.

Posted by: BB on May 5, 2006 at 1:36 PM | PERMALINK

BB,

No one of any seriousness includes the fiscal situation during WWII for comparison purposes. If they do, they are an idiot.

Then you agree with me that VJ is an idiot. He included the situation during WWII in his comparison (and got his facts wrong anyway).

Again, you are demonstrating ignorance about the federal budget process. FY1960 ran from October 1, 1959 to September 30, 1960. When Kennedy was elected, the US was already in FY 1961. That is the budget he inherited.

The budget was in surplus for FY1960. For FY1961, the first year of Kennedy's presidency, the budget was in deficit. It remained in deficit every year of Kennedy's presidency, and every year of Johnson's presidency. By the last year of the Johnson administration, the deficit was 2.9% of GDP. The Democrats controlled not only the White House, but also both the Senate and the House during every one of these years.

The claim that the Democratic Party is fiscally responsible is unmitigated crap.

Posted by: phil on May 5, 2006 at 2:01 PM | PERMALINK

He included the situation during WWII in his comparison (and got his facts wrong anyway).

Where did he do that?

The budget was in surplus for FY1960. For FY1961, the first year of Kennedy's presidency, the budget was in deficit.

Kennedy had nothing to do with the budget for FY1961. It is the budget he inherited, as I keep saying.

"The fiscal year is the accounting period of the federal government. It begins on October 1 and ends on September 30 of the next calendar year. Each fiscal year is identified by the calendar year in which it ends and commonly is referred to as 'FY.' For example, FY2003 began October 1, 2002, and ends September 30, 2003."
http://www.rules.house.gov/Archives/98-325.pdf

The Democrats controlled not only the White House, but also both the Senate and the House during every one of these years.

I know this, since I pointed it out. However, that Democratic Congress and White House were responsible for FY1962-FY1969 budgets, not FY1961-FY1968.

It remained in deficit every year of Kennedy's presidency, and every year of Johnson's presidency. By the last year of the Johnson administration, the deficit was 2.9% of GDP.

The average on-budget deficit for FY1962-FY1969 was 1.0 percent. The FY1961 on-budget deficit was 0.7 percent, and the FY1969 on-budget deficit was 0.1 percent, consistent with what I said. The FY1968 on-budget deficit was 3.2 percent and anomalous. Six of the eight fiscal years during Kennedy/Johnson the on-budget deficit was 1.0 percent or lower. FY1967 on-budget deficit was 1.6 percent. The bump in the deficit those two years came primarily because of large increases in military spending, and as I said, that receded as of FY1969

The claim that the Democratic Party is fiscally responsible is unmitigated crap.

Repetition does not equal truth.

Also, I think it's pretty foolish in general to be looking so far into the past with respect to political party behavior, as the two main parties have changed considerably over the years. Clinton's shift to the right-center was a fundamental realignment, as was the Republican abandonment of fiscal restraint during these Bush years.

Regardless, the record of Democratic monopoly compared to Republican monopoly over the past 50 years is clearly favorable to the Democrats.

Posted by: BB on May 5, 2006 at 2:52 PM | PERMALINK

The claim that the Democratic Party is fiscally responsible is unmitigated crap.

We've heard variations on this theme from dishonest Republican apologists -- but I repeat myself -- like tbrosz and phil.

The claim is that Democrates are more fiscally responsible than Republicans, or, conversely, that Republicans are much more fiscally irresponsible than Democrats. Since the d.R.a's can't realy refute that claim -- you can practically hear the congnitive dissonance in tbrosz' head -- they take a whack or two at this straw man. That dog won't hunt. But I do not that the favorable comparison of Democrats to Republicans stands pretty much unassailed, to say nothing of unrefuted.

Pretty pathetic performance, boyos.

Posted by: Gregory on May 5, 2006 at 3:11 PM | PERMALINK

'aaron' posted:

"VJ, the ecomimic growth is mostly attributable to the policies of Reagan and Bush during the first half of Clinton"

Sorry, wrong.

The economy was going in the opposite direction at the end of Reagan's term, and even further in the wrong direction during Poppy Bush.

You can't get there from there.

.

"Increased tax revenues are attributable to economic growth and increased tax rate."

Exactly.

The Clinton administration raised income taxes on the top 1.2% of wealthiest taxpayers with spectacular results.

.

Posted by: VJ on May 5, 2006 at 3:35 PM | PERMALINK




 

 

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