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.