Budget Surpluses and Deficits in Graph

January 23, 2007 at 4:54 pm | Posted in American politics, Bill Clinton, Bush Administration, Democrats, George W Bush, Republicans | 22 Comments

For reference, read Joshua Marshall’s take. Note that the budget seems to go upwards with Democratic presidents, and generally downwards with Republican presidents. Now this is not to say that Republicans can’t manage a budget, necessarily, but it does seem to indicate that they have a harder time managing the national budget than Democrats can.

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  1. The trend I see is that deficits soar when the economy tanks. For instance, note that during the Ford Administration, we were experiencing record high oil prices and a very weak economy. The Clinton budget surpluses coincided with the Internet Bubble, a period of artificially high wealth from illogical stock markets. Once we came to our senses (and a lot of those bum dot-coms went under) in 2000-2001, the deficits came back.

    The federal budget surplus or deficit seems to have more to do with the economic times than with who’s in office, and I think we both agree that the president has very limited control over the economy.

  2. I agree with Jesse, I think that correlation being made isn’t telling the story of what’s going on. The president really has very limited control over the economy.

  3. Jesse,

    I think we both agree that the president has very limited control over the economy.

    To some degree I agree with your points, however, this particular point, I disagree with. In 1981, Ronald Reagan took control of the Executive branch, and began pushing through Congress huge increases in government spending while at the same time pushing for some tax cuts (he later had to increase some taxes, but that didn’t have enough of an effect on the deficit). The federal government budget is influenced, of course, by the economy—a strong economy means a higher revenue for the government, while a weaker economy means a lower revenue— the federal government budget is also influenced by how a budget is balanced.

    If you hypothetically receive 1 trillion dollars as an annual revenue from taxes, that should wisely be what you spend on your government budget. If your budget produces a surplus, you can give the surplus back to your citizens or keep it in a slush fund for emergencies (likely not, because no one rightly trusts government with extra money ::) ).

    If your budget gets you above the 1 trillion dollars revenue you received, you have to borrow money and add the payments to your budget. The more you borrow, the more you have to pay back.

    Now, some of the rhetoric from conservatives claims that by reducing taxes you magically get an increase in tax revenue, because that tax cut supposedly fuels a growth in the economy. Now, I look at the graph, and see huge deficits from Reagan to Bush I. With Clinton in office, the budget deficit is reduced, and you actually get a surplus. Now, conservative commentators claim this surplus came about because of the Reagan tax cuts. Fine, but as you said, this revenue came from the Internet “bubble,” and not really from a legitimate and stable growth in the economy. If it were not for the internet bubble, would the economy have grown so strongly? Probably not. So were Reagan’s tax cuts really that effective?

    Finally, Reagan may have passed tax cuts (the same with Bush II), but both also fundamentally INCREASED the size of the government and the budget. Economically speaking, why would you do that? Why would you increase your spending while decreasing your revenue? Does that even make economic sense?

    And, from a “freedom” perspective, how free will future societies be that have to pay for our debt? At the moment, our national debt equals roughly $25,000 per PERSON. In other words, it would take taxing each individual living in America $25,000 to pay off our national debt. The continual use of deficit budgeting does not bring this nation closer to freedom; it in fact binds more Americans with a greater chain around their neck than ever before.

    Lastly, my comments about the numbers seemingly going up with Democratic presidents were partially in jest, but also partially serious. In the past 35 years, we’ve had but 12 years of Democratic administrations. During those 12 years, our budget gets closer to a surplus and away from deficits. What would happen if Democrats were given more of a chance to run this country? From these numbers, it sure looks like they would balance a budget far better than Republicans could.

  4. What I think you’re really saying is not that Republicans are worse at managing money, but that Reaganomics doesn’t work and we’ve had proponents of these policies to the White House for 20 of the last 26 years who happen to be Republicans. It’s a small difference in wording, but a big difference in meaning, no?

    Regardless of if supply-side economics works or not (I don’t think it does), it’s not sound policy. It’s the equivalent of buying stocks with loaned money on the hopes that the stocks earn more money than the loan collects from you. While it might work for a while (even a long while), it’s risky business that obfuscates the federal government’s financial picture, just like excluding Social Security obligations from the national debt (which the $25,000 figure you quoted does; the real figure with SS is closer to $400K per household!).

  5. True, I should be clearer about it, that Reaganomics is really what doesn’t work. However, at this point, Reaganomics has so thoroughly been ingrained in Republican philosophy, that…well, do Republicans really have any other philosophy? I ask that about the Republican party. I understand libertarians have vastly different taxation and budgeting views than Republicans do.

  6. Ha ha, nice try on the Bush bashing.

    Try looking at the debt as a percentage of GDP. Then compare that number to other countries. 🙂

  7. “A national debt, if it is not excessive, will be to us a national blessing.”

    -Alexander Hamilton

  8. The comparison should be with CONGRESSES… They are the ones who write the budget bills. The best record on budget balancing was Newt Gingrich Congresses 1994-1998. All other times Congress has been a ‘miserable failure’ at keeping the budget balanced.

    As for whining about Reaganominc. Reaganomics works fine. Tax rate cuts result in economic growth and unexpected benefits that yield higher tax receipts long-term. Reagan’s tax cuts also moved the income tax burden MORE on the rich and he got millions off the taxrolls. GWB’s tax cuts did more of the same, something the Democrats never admit. In both cases, there was a direct economic response to the tax cuts that grew the economy.

    “do Republicans really have any other philosophy? I ask that about the Republican party.” Okay, you’re an ignoramus. but why broadcast it?

    ” I understand libertarians have vastly different taxation and budgeting views than Republicans do.”
    There are conservative Republicans who will cut taxes and reduce Govt spending, and moderate Republicans who wont. Some libertarians line up with the more conservative Republicans on tax and spend issues. Smaller Government means more freedom.

    • Bingo. The real correlation is that the Budget deficit increases when congress is controlled by Democrats.

  9. Please advise when any administration really executed a balanced budget. For I am unaware of any for more than 50 years. The Defense Department has more than 8,000 auditors, but never turns in anything except a ‘qualified audit’. Look at our official forex reserves. see:http://economicupdate.singaporerental.com/filam.html

    Yes, each Filipino has currently more foreign exchange held by the Central Bank of The Philippines than each American held by the Federal Reserve.

    Yes we know by education and training the value of and the sacredness of The Constitution–of the people, by the people and for the people. Our country has been on a binge of avoidance. Uninvolved active avoidance in: education,taxes,health care, balanced budgets at the federal level, and encouraging the election of good people with ethical and moral values. Let the internet be the source of solid factual information for the next election. Let Mitt Romney be the next President for it seems that there isn’t a better qualified person running. Is Mitt perfect? No. But he knows how to make positive decisions and uphold a balanced budget stewardhip.

    Best wishes with your blog. It is a very good one.

    sincerely

    Jim

  10. […] them into stone tablets after saving the earth from liberals, gays, atheists, and brown people. The information I cited to show that the budget deficit, with little exception, shrunk under democratic administrations and […]

  11. I fixed the graph. It now works like it should.

  12. So, let’s go ahead an update this graph for Obama, right?

  13. as soon as the Obama administration is over, sure. As they’ve been in power for a mere 60 days, inheriting an awful mess, it’s not the appropriate time.

  14. I have to agree with, uh, Ru Paul?

    Congress determines the budget. I agree that spending under Reagan increased, but he was working against a Democratic Congress, and a media that was screaming “spending cuts!” every time he tried to cut the rate of increase of a government program. I think there was more he could have done to stand firm on the issue, but our conservatives fold like cheap suits anytime they’re accused of being mean to the poor. Bush Jr was the worst with his compassionate conservatism.

    Budget-wise, it seems like we get the best results from a moderate-Dem in the White House with a Republican Congress.

    If you want to know who is really responsible for our current predicament, though, I can show you. Hop in a jet flying across the country, and when it gets to about 30,000 ft, look down. There they are: About 300 million people who think they can get something for nothing. They think the government can produce unlimited benefits without them having to pay for it. It’s like magic, the money just falls out of the sky and into their pockets.

    There are only three ways for the government to get the money: taxes, borrowing, or inflating the money supply. Borrowing is just a tax on the unborn, and inflation is just a tax no one sees. All of them have a detrimental effect on the economy.

    We’re not going to get out of this mess until we stop spending so much money. Anyone see that getting better under Obama?

  15. The graph is misleading at best, as it displays deficits in nominal, not real dollars. This underestimates earlier deficits (and debt) and overestimates more recent deficits. A much more accurate and meaningful approach would be to show deficits as a percentage of GDP. This simultaneously adjusts for inflation and relates the deficit to the size of the economy. The second largest debt this country ever had was during WWII, and that would only show up as a tiny bump on this chart. The largest debt this country every had was the one we have right now, of course.

  16. well Mike, as this particular graph only shows debt since 1960, it obviously doesn’t show the debt from World War II. Ironically, what the good citizens of that time thought was necessary to do in order to reduce that massive deficit was to raise taxes on the rich to 90%. Today, we say, eh, the hell with it, let’s cut the taxes to the rich.

  17. If you examine government revenues, you will see total revenues tend to remain fairly constant regardless of the maximum established income tax rate. Indeed, even when taxes were raised to 90% “on the rich,” government revenues did not significantly increase. It is not possible to tax our way out of debt. We must spend less. The least government, is the best government. Regardless of utopian ideals, the government can not solve all our problems. No matter how well meaning, every dollar taken in taxes is heavily consumed by the immense bureaucracy that is our government. Money invested in the private sector is far more effective. The sad irony is, there is much government spending which quite obviously can and should be cut–yet politicians quibble over a few billion dollars. We must spend trillions less.

  18. All the latest Federal Budget News http://www.2012federalbudget.com

  19. true… you know what they say…If you can count all your money, you don’t have a billion dollars

  20. Why not post a graph showing who was in control of the spending (congress,power of the purse) and how much the picture changes with just that small variation. Not to mention putting the same graph corosponding to Federal Reserve interest rates and policies.
    I bet you would find mixed results…..a FULL analysisi would show BOTH parties LOVE spending, deficits, growing their power, and weakening yours.

  21. Congress writes the budget. The president can only sign or veto. There is no line item veto. The tightest correlation you will find is when the democrats control congress- the deficit soars. More specifically when the House of Representatives is controlled by democrats. The correlation to presidential control is relatively, very loose. Look at 2007 for example, when in Jan democrats took over. Same in the days of tip O’neil.


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