Budget Explained, In One Chart

  • me

    *Cough* I expected a bit more from something quoted on your blog.

    While Obama is an unmitigated disaster and one of the worst presidents ever, Bush Jr was an unmitigated disaster and one of the worst presidents ever.

    The cause of the sudden spike in budget is the economic crisis which was wholly ignored and left to unfold unimpeded during the Bush years (and to anyone whining that it was caused by political measures put into effect decades earlier - note that absolutely nothing was done during 8 years of Bush despite lots of heads up and warning). Also, the first round of saving executive salaries in the face of incompetence by making the tax-payer pay happened under Bush.

  • ADiff

    Golly Me.....and here I thought the issue was the vast increase in incremental debt, not "he said, she said" petty partisan bickering. Obama's on the hot seat now, so he'll be the one to curse...at least until the next clown comes along to take his place, anyway.

    Bush Jr. was certainly a bit of a 'Hoover', which certainly doesn't mean Obama hasn't proven fundamentally a Utopian activist...perhaps the very worst kind of leader.

    Throwing money at problems seems this administration's favorite approach, especially when it's others money and they can throw a nice chunk to their friends. Not that every other administration hasn't...but never on this breathtaking scale!

  • Dan

    I agree with "me" who pointed out that the economy's collapse in 2008, not Obama, caused the deficit to explode. The 2010 and 2011 deficits I'll pin on Obama, as they occurred on his watch. But the 2008 collapse and subsequent tripling of the deficit happened on Bush's watch. It's not fair to assign Obama the blame.

    Also, a Republican freshman congressman was quoted in the New York Times over the weekend saying something very misleading and childish. Rep. Mulvaney of South Carolina said something along the lines of, "It's their debt" - meaning the Democrats'.

    Anyone looking at the chart above would see that most of the deficits occurred during Republican administrations, meaning both parties are responsible (though I'd argue the Republicans are far more responsible due to the huge growth in military spending under Reagan and Bush Jr. as well as the tax cuts that occurred during those times and the Medicare expansion under Bush Jr.)

    To call the accumulated deficits the Democrats' sole responsibility, as Mulvaney did, is something anyone should be able to see through, and hopefully people will. But I'm not encouraged about the American public's ability to understand even simple issues such as this one, so I look for other Republicans to follow Mulvaney's irresponsible example.

  • caseyboy

    Dan & me, do you know when the dem's took control of both house and senate? Democrat policies unchecked by Bush took a toll on the economy heading into Obama's term. I'd say the coke and pepsi parties both contributed to the economy Obama inherited. It is what Obama has done to the economy since entering office that provides a measure of his effectiveness. Why just give us this $800 billion stimulus and unemployment won't go over 8%. Really? Jobs, I'm going to focus like a laser, just as soon as I get this gigantic healthcare take-over, I mean reform done.

  • All that fuss and bother over what could a rounding error: it makes a fella proud to be an American.

  • Dan

    Caseyboy,

    You make excellent points. I agree Obama should have emphasized jobs over healthcare. It's unbelievable that he didn't learn from the debacle of Clinton's first two years in the White House (which, like Obama's first two years, resulted in a mid-term slaughter after too big a focus on healthcare).

    And yes - the Dems in control of Congress from 2006-2010 also share blame with Bush for those deficits. But Bush's tax cuts, wars and Medicare plan already set the wheels in motion for the deficits in those years well before dems took control of Congress.

  • Daublin

    It wasn't the economy that killed the budget. The economic problems caused tax revenues to fall, true, but Obama pushed for massive increases in spending that had an even larger effect. Check out the tables here:

    http://www.cbo.gov/ftpdocs/120xx/doc12039/HistoricalTables%5B1%5D.pdf

    Obama could have responded to lower revenue just like the states did, and spent less money. Instead, he spent *more* money.

  • Ignoramus

    As you look at the trendline abovr keep this in mind:

    TARP investments in bank stocks were treated as an expense in FY2009; their payback in FY2010 as revenue. This has had the effect of making the Bush FY2009 budget look nearly $400B worse, and the Obama FY2010 budget nearly $400B better.

    Government uses fucked up cash basis accounting. As a ten-year old I was more sophisticated running a paper route.

  • caseyboy

    Dan, our compassionate conservative president did indeed accelerate our Medicaid/Medicare problem and I'll concede that the Iraq war was dubious at its inception. Add to that the fact that it was so poorly executed so as to triple what it should have cost to kick down the doors, topple Hussein, confirm there were or weren't WMD and then get out of dodge. The nation building aspect drained us and now Obama is doing the same in Afghanistan.

    However, I won't concede that tax reductions added to the deficit. Tax receipts increased after the rate reduction as it did for Kennedy and Reagan before Bush. However, like Reagan, Bush didn't squish spending. Instead he joined the spending party. We have a SPENDING PROBLEM. Take the top 2% of the wealthiest citizens and confiscate 100% of their income as a tax surcharge and you wouldn't come close to closing the deficit. READ MY LIPS, WE SPEND TOO MUCH MONEY.

  • Dan

    I agree that taxing the rich at higher rates won't solve the deficit problem. It's naive to think it would. But the lower rates over so many years certainly have contributed to the crushing debt our country faces.

    It's estimated that last year's extension of the Bush tax cuts will add nearly $400 billion to the debt between now and when the extension ends. That may be small change when we have a $14 trillion debt, but year to year, it amounts to a decent percentage of the annual deficit. While Obama's stimulus hasn't necessarily worked, these tax cuts haven't created jobs either, as far as I can see.

    I didn't mean to get into this blame game, when as others have said, there's blame enough to go around. But I object to the knee-jerk libertarians here who claim Obama is responsible for all ills. Glad to see that the people in this thread, at least, acknowledge it wasn't just him.

  • one chart? explains it all? how naive.

  • Dan

    What's interesting, too, about the chart, is the way deficits eased significantly during two periods when the economy was booming (roughly 1994 to 2000 and 2003-2007), but still grew when the economy was booming in the mid-1980s. I'd guess that had to do with the immense military spending Reagan was ramping up at that time. Usually deficits fall when the economy is growing.

  • Ignoramus

    Caseboy is right. Dan is wrong. There's fifty years of data that shows that the feds will take in about 18% of GDP each year, no matter the tax regime we've had in place. It won't go higher, so we ought to budget to that figure.

    Instead, Obama & Co have jacked spending to over 25%, which is unfinanceable.

    In the last couple of years, tax receipts are actually down to 14%because of recession, the John Galt effect, and because of the inherent leverage in progressive taxation. But if you flog the horse more, Old Paint won't necessarily move any faster.

    SO YES, IT'S A SPENDING PROBLEM.

  • Doug

    "It’s estimated that last year’s extension of the Bush tax cuts will add nearly $400 billion to the debt between now and when the extension ends."

    What kind of BS is this? Estimated BY WHOM? Eric Cantor or Nancy Pelosi?

    It is estimated that Bush's tax cuts added $400B to the treasury. Who can doubt me?

    And let's not forget something that few mention about the Reagan era. Yes, Reagan ramped up military spending, and for a specific purpose. The net result was that he KILLED the Soviet Union. Reagan literally spent them to death. The Evil Empire was gone by 1991! To this day, no president who succeeded him has had to contend with the Cold War, which had been a massive money sink for every post-WWII administration. Clinton was the first to benefit from it; I still remember him pondering what to do with "the peace dividend." Does anyone remember that?

    Killing off the Red Bear, in my opinion, was one helluva payoff for the Reagan military spending deficit. It was money was well spent because it accomplished its intended purpose of exterminating the Russian empire. Unfortunately, it put a lot of "surplus money" on the table for succeeding politicians of both parties to stir up fiscal mischief. None of the post-Reagan administrations had the great idea "that war is over, so how about we stop spending the money that was earmarked for it?"

    It's easy to see what happened next.

  • Rick C

    With attitudes like that, why should Republicans even bother trying for any more cuts? This cut was indeed pathetic in the grand scheme of things, but let's look at if for what it isa: a start. Do any of you people think the Republicans could've gotten, say, a $500 billion cut this year? If so, please turn yourself in to the local cops; they'll be interested in whatever you're smoking.

    The thing to do now is keep up the pressure and make sure there is another cut, and that it's bigger than the last one. Remember, a week ago, $10 billion was draconian and extreme; now $38 billion is historic, even do the Democrats.

  • marco73

    Sure, this budget cut doesn't look like much. I have hope that the debate has changed, so that more cuts are now possible. No, it won't be easy.
    Look at how football was played 100 years ago. Run, run, run. Then someone looked at the rule book, and tried a pass. It probably was ugly and fluttered like a shot bird, but someone else caught that pass. The experts thought nothing would come from it, but more and more players tried passes, and now we have the game we have today.
    Look at how the public has responded to this first cut: MORE!

  • me

    *G* Interesting discussion - I take it Caseyboy and I are in agreement (too much spending, regardless of the purported color of the last two presidents hats). I disagree with all the posters claiming that everything would be just peachy if McCain had been elected. As Caseyboy points out, it's an enormous spending problem, and unless the enormity of it is tackled (instead of a few high points of ineffective proposals thrown back and forth between the current set of incompetents), nothing is going to happen.

    As for Reagan's spending - successful, but there's a second lesson in one of the world powers successfully bankrupting themselves through military spending. Cough.