Wednesday, July 20, 2011

Changes in Federal Debt, Annually, By President

To follow up the previous post, here's a nice list that I've reduced from a wikipedia table with figures about the rates of increased federal debt. But ha! There is one exception! The federal debt went down one (ONE!) time since 1993. This time, I'll add the growth in GDP right next to the growth of the debt, and put an asterisk * after the years spending increase percentages outstrip growth of GDP.

1994 Clinton 4.6% GDP: 3.8%
1995 Clinton 3.4% GDP: 2.7%
1996 Clinton 3.0% GDP: 2.7%
1997 Clinton 1.7% GDP: 4.3%
1998 Clinton 1.0% GDP: 4.4%
1999 Clinton 0.8% GDP: 4.2%
2000 Clinton -2.1% GDP: 3.7%
2001 Clinton 0.2% GDP: 1.2% *
2002 Bush 5.5% GDP: 1.3% *
2003 Bush 6.2% GDP: 1.4% *
2004 Bush 5.7% GDP: 3.4%
2005 Bush 3.7% GDP: 2.6% *
2006 Bush 3.4% GDP: 2.9% *
2007 Bush 3.6% GDP: 2.8%
2008 Bush 5.0% GDP: 0% *
2009 Bush 5.5% GDP: 2.6% *
2010 Obama 12.5% GDP: -2.0% *

Can't say that the magic formula is Democratic President, Republican Congress anymore!

After isolating, it's interesting to go back and lay these two side by side, as the original table does. What can be observed?

1. Government consistently grows in cost.
2. The debt consistently grows.
3. Only in one of the Clinton years, his last, did the spending increases outstrip growth of GDP. In 6 of the 8 Bush years it did. Also, in Obama's first year. Were the smart years the Clinton years, or the Bush years? Looks like we can learn something from this.

I see a lot of criticism tying the lack of revenues to the Bush tax cuts. Ok, but is the lack of GDP growth no factor? After all, tax revenues are relative to the growth of GDP. If a person enjoys a tax cut to 20% and makes $100,000/year, he pays $20,000, while the person suffering a higher tax rate of 25% while making $50,000/year pays $12,500.

Maybe we should worry far less about tax rates, and worry a whole lot more about seeing to it that people can make more income. Taxing millionaires might yield satisfying rhetoric, but will cause your income to rise? Will it put 20 people into jobs? I mean jobs that expand GDP by creating wealth.

If we're really interested first and foremost about raising revenues, shouldn't we be trying to do everything we can to get fuller employment, and for people to earn more? We have 2.8 million millionaires. Meanwhile, we have 14.1 million unemployed. Nevermind the underemployed, like me. I'd rather see us get the unemployed into jobs, and the underemployed more work.

So, if the smart days were the Clinton years, we should observe that there is no GDP growth, so we should accordingly spend less. I mean, if that was smart then.


Doug said...

We shouldn't spend less if we want to get people back to work. Where private industry can't or won't get the machine moving, government needs to step in and prime the pump.

Looking at that chart, the Reagan years are illuminating. 15% one year -- and he's a conservative hero!

Mike Kole said...

Sure- he's a conservative hero, but on myth and not merit. He gets credit for deregulation, when it was Carter. That was what my previous post was about- exploding the bullshit.

The Clinton years were the glory years, right? Or, are you saying that as Reagan, Clinton's successes are the stuff of myth, and that he enjoys the successes that were set up by his predecessor?

rick said...

I never understood the thought of how tax cuts for wealthy create jobs....I was under the impression that demand for product would inspire job creators to hire in order to fill demand....rather that giving job creators more money (tax cuts) outright. I have to assume if they get more money without the demand necessary for them to hire people they won't hire.

Mike Kole said...

The choice of words is interesting, Rick. "giving job creators more money (tax cuts) outright"? Giving? This implies either it wasn't their income to begin with, or that they don't have first claim on their own money. I don't like either... although in reality, I do know that we don't have first claim on our labor. Check the withholding on the pay stub for proof.

I was classified as wealthy once, for one glorious year. I made a nice big pile of money that one year, and boy did we spend it. Yes, we paid off a car, a student loan, and a lot of credit card debt. But we also put people to work doing things with our home property that, when I don't make so much money, I do myself as a cost-benefit analysis. That's at least one way. In such case, yes, my demand created work necessary for someone to have employees, for at least another day or two. But then, I'm small fry. One glorious year. If the taxes were high enough to eradicate any gains, I wouldn't have hired people to work on my property. The extra money was the requirement, along with the idea that they could get done more than I could in time I'd rather spend making more money.

But I know this: When I'm not earning, I'm not spending. I tighten up, big time. Ask my wife. Extrapolate that over an economy.