Yes, this is a long post. If you can’t be bothered to read the entire thing, please skim through the first half and stop to pay attention for the second half.
Alright – many of you know my opinion on the issue of trickle-down economics. That is, its has never worked and can never work, especially during a recession. And now the current debate is whether or not to allow the Bush-era tax cuts on the nations’ wealthiest individuals and companies or to extend them in hopes that the additional revenue will create jobs for lower and middle class Americans.
Lastly, we have the argument’s concerning President Obama’s “tax and spend” practices which some demand is causing an increased deficit and death to middle and lower-class jobs and individuals. Some blame the Bush administration’s ‘madman’ like spending on two Middle East wars and faith in the failed trickle-down theory.
Before we continue, it is important that we recognize the difference between a Federal Deficit and a Federal Debt. A deficit occurs when the government takes in less money than it spends in a given year. The debt is the total amount the government owes at any given time. So the debt goes up in any given year by the amount of the deficit, or it decreases by the amount of any surplus.
Which beings me to President Bill Clinton and the “phantom” surplus that the right wing seems to demand never truly existed. Curious about this, I started digging around. Did the GOP have merit in their accusations or was this more misdirection and intentional misuse of terminology in order to confuse the lay American public? Not wanting to leap to any conclusions, I scratched around, reading both sides, trying to get past the political bias and find a neutral source from which to secure a more accurate answer. Oddly enough, it was the conservative Right’s constant discussions about the CBO (the non-partisan Congressional Budget Office) in regards to the cost of Obama’s health care that turned me towards them. And what I found, I think, was very interesting indeed.
The short and sweet of it is this: The debt the government owes to the public decreased for a while under Clinton, but the debt was by no means erased. This was, in fact, a surplus. (remember: the debt goes up in any given year by the amount of the deficit, or it decreases by the amount of any surplus).
According to the CBO, for the fiscal years between 1994 – 2001 (fiscal years begin Oct 1 so the first year that can be counted as a Clinton year is 1994. The first year that can be counted as a GW Bush year is 2002) showed the effects of a large tax increase that Clinton pushed through in his first year, and that Republicans incorrectly claim is the "largest tax increase in history."
It fell almost exclusively on upper-income taxpayers. Clinton's fiscal 1994 budget also contained some spending restraints. An equally if not more powerful influence was the booming economy and huge gains in the stock markets, the so-called dot-com bubble, which brought in hundreds of millions in unanticipated tax revenue from taxes on capital gains and rising salaries.
Clinton's large budget surpluses also owe much to the Social Security tax on payrolls. Social Security taxes now bring in more than the cost of current benefits, and the "Social Security surplus" makes the total deficit or surplus figures look better than they would if Social Security wasn't counted. But even if we remove Social Security from the equation, there was a surplus of $1.9 billion in fiscal 1999 and $86.4 billion in fiscal 2000. So any way you count it, the federal budget was balanced and the deficit was erased, if only for a while.
There was a USA Today story which stated that, under an alternative type of accounting, the final four years of the Clinton administration taken together would have shown a deficit. This is based on an annual document called the "Financial Report of the U.S. Government," which reports what the governments books would look like if kept on an accrual basis like those of most corporations, rather than the cash basis that the government has always used. The principal difference is that under accrual accounting the government would book immediately the costs of promises made to pay future benefits to government workers and Social Security and Medicare beneficiaries. But even under accrual accounting, the annual reports showed surpluses of $69.2 billion in fiscal 1998, $76.9 billion in fiscal 1999, and $46 billion for fiscal year 2000.
So even if the government had been using that form of accounting the deficit would have been erased for those three years.
(source: www.cbo.gov and www.factcheck.org)
So perhaps now we can put to rest the seemingly purposeful misdirection and misconception regarding President Bill Clinton’s surplus: he did, in fact, leave us with a genuine surplus. When Bush entered into office he made massive tax cuts, including those held by Clinton. As a result, we went from a fiscal surplus of $133 Billion at the end of fiscal year 2001 to a deficit of $10.7 Trillion by the end of Fiscal Year 2008.
During the administration of President George W. Bush, the gross debt increased from $5.6 trillion in January 2001 to $10.7 trillion by December 2008, rising from 58% of GDP to 70.2% of GDP.
Let’s look at those numbers again. $5.6 Trillion to 10.7 Trillion in two terms. Eight years. The deficit nearly doubled,.
Obama was elected in 2008 and entered office in 2009, essentially beginning with a total deficit of $12.3 Trillion. Even at the CBO’s current estimates, placing the deficit at $18.3 Trillion by the end of 2014, Obama can’t even come close as to spending as Bush in two consecutive terms.
Where Bush went wrong was in increasing spending without increasing taxation. In fact, he ended the taxation program created by Clinton, limiting Federal income and expanding government and government spending (including a $950 million universal health care bill.
Didn’t hear about the universal health care bill? I’m not surprised. It wasn’t for us. This bill was to provide universal healthcare for Iraq. Yes, you heard me right, folks. The GOP is slamming universal healthcare for America due to cost, but is more than willing to front that cost to ensure health care for Iraq. (you can read it here: seattletimes.nwsource.com/html/nationworld/2001870042_iraqdig03.html)
So much for fiscal responsibility.
Between the trickle-down theory that, in actuality, creates more deficit, the truth about Clinton’s genuine surplus, and the seemingly endless blockade on any bill presented by the dems to help small business, individuals in need of healthcare, the unemployed, immigration and fiscal incentives for middle and lower class Americas by allowing the Bush-era cuts to expire and forwarding additional cuts to the lower classes, two unfunded wars overseas… what hope do we have of actually crawling out of this recession? Given the fiscal track record of the GOP over the past twenty (20) years (1990-2010) can we really be certain they can put us “on the right track”?
IMPORTANT: PLEASE READ
(Yes, if you’ve skimmed past the previous entry, I encourage you to read the following in greater detail)
Since 1938 the Democrats have held the White house for 35 years, the Republicans for 36. Over that time the national debt has increased at an average annual rate of 8.5%. In years Democrats were in the White House there was an average increase of 8.3%. In years the Republicans ran the White House the debt increased an average 9.2% per year. Those averages aren’t that far apart, but they do show a bias toward more borrowing by Republicans than Democrats even including World War II.
If you look at the 60+ year record of debt since the end of WWII, starting with Truman’s term, the difference between the two parties’ contributions to our national debt level change considerably. Since 1946, Democratic presidents increased the national debt an average of only 3.2% per year. The Republican presidents stay at an average increase of 9.2% per year. Republican Presidents out borrowed and spent Democratic presidents by a three to one ratio. Putting that in very real terms; for every dollar a Democratic president has raised the national debt in the past 63 years Republican presidents have raised the debt by $2.84.
Prior to the Neo-Conservative takeover of the Republican Party there was not much difference between the two parties’ debt philosophy. They both worked together to minimize it. However the debt has been on a steady incline ever since the Reagan presidency. The only exception to the steep increase over the last 30 years was during the Clinton presidency, when he brought spending under control and the debt growth down to almost zero.
Comparing the borrowing habits of the two parties since 1981, when the Neo-Conservative movement really took hold and government spending raced out of control, it is extremely obvious that the big spenders in Washington are Republicans and their party’s presidents. The only Democratic president since then, Mr. Clinton raised the national debt an average of 4.3% per year. The Republican presidents (Reagan, Bush, and Bush II) raised the debt an average of 10.8% per year. That is, for every dollar a Democratic President has raised the national debt in the past 30 years, Republican presidents have raised the debt by $2.52. Any way you look at it Neo-Conservative Republican presidents cannot or will not control government spending.
And, for the argument “The Demos controlled the House for mist of Bush’s presidency”, I offer this:
“All bills for raising revenue shall originate in the House of Representatives; but the Senate may propose or concur with amendments as on other bills…”
US Constitution, Article 1, Section 7
“The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United Sates; but all duties, imposts and excises shall be uniform throughout the United States:…”
US Constitution, Article 1, Section 8
The Constitution makes it clear that Congress theoretically holds the purse strings of government. However the Presidents set the direction for the country, and have great power to push the nation in whatever direction they choose. During the time span covered by this paper, history has shown that Congress tends to follow much more than it leads when it comes to most matters, especially fiscal ones. i.e., regardless of a Democratic House and Senate, the President calls the shots. So the above argument is moot.
The Neo-Cons got control of both Houses of Congress in 1995, and singular control of our government from 2000 to 2006, and yet, even with all that power in 12 years they never controlled spending.
But despite history and past practice, they want you to think they can now.
Summary and Conclusions
This missive is clearly biased against deficit spending. Getting past the hysteria, bias and rhetoric, certain facts about the United States national debt stand out:
1. Since the Neo-Conservative movement has become the dominant force in the Republican Party the national debt has grown and continues to grow at an unsustainable rate, by any measure you care to use.
2. Experience has shown that “trickle down tax cuts” only work to concentrate the nation’s wealth into fewer hands and never help to rebound the economy.
3. Mr. Bush has no viable plan to deal with the debt he has already created, and we cannot count on him to contain government spending in the future.
4. The only time we have seen national debt reduction in the past 60 years was when Democrats were totally in charge of our government or when one party was in the White House and another ran Congress.
5. In the past 60 years when Republicans were in control of the presidency and both Houses of Congress, neither debt, nor government spending was ever reduced. The last time a Republican Congress reduced the national debt was in 1947, under Truman’s leadership.
The last time the debt was reduced was in 1961 during President Kennedy’s first year in office. It has been almost a half century, 46 years, since this nation has paid down any of its exponentially increasing debt. (Had President Bill Clinton been in office one more year we would probably have seen a debt decrease in 2001.)
The failure of the financial and insurance markets can be directly related to the tax and regulation policies of the Neo-Cons.
I realize this will create some heated debate on both sides. Have at it. I am rather uninterested in fringe GOP/Dem bashing, but would like to hear from a more centrist base. And I offer a final challenge: change my mind.
Prove to me that the ‘Fiscally conservative” GOP have, since Reagan, decreased spending and deficit and increased Federal surplus.
Bon apaetite. .