Meanwhile, back at the ranch....
Greetings all,
Missed me? I've been a busy little beaver of late but now I have some time to get caught up a bit. I'll be doing a couple of posts here.
Ok, folks, once again we have El Presidente and his administration forgetting history.
Treasury Secretary John Snow, testifying before Congress, said that they should adopt the Bush plan of cutting taxes to reduce the deficit.
No, this is not a typo, and for those of you wondering, yes we have heard this one before. Back in 1979, while running for the GOP nomination, Ronald Reagan became enamored with a policy drawn up by a young policy wonk, David Stockman. One night in either a restaurant or a bar, he drew out a plan on a cocktail napkin with a chart showing that as taxes get cut, more money flows into the treasury because economic activity increases, which means there's more money to tax albeit at a lower rate. Reagan added a little twist, increasing military spending as well.
His opponent in the primary election, George H. Bush, blasted the plan, calling it "voodoo economics", pointing out that that everyone except pointy-headed economists knew that if you cut taxes and increased spending, the deficit (which is the yearly shortfall) would increase. Bush was later forced to quietly accept it after he became Reagan's vice president and the plan was adopted.
It turned out to be a complete disaster. Of course the deficit skyrocketed into record territory and the national debt (the cumulative sum of the deficits that is total amount money borrowed/owed to cover the deficits) increased 188% from $789 billion to $2.05 trillion. The policy was so horrible and the results so devastatingly bad that even Stockman, who was the architect of the policy, disavowed it.
Under Bush Sr, the situation improved slightly. The debt increased to a touch under $3 trillion.
Enter the supposed tax and spend liberal Bill Clinton. Here's where the numbers shatter the rhetoric.
Clinton's first year in office, the deficit dropped from $290 billion to $255 billion. The next year it dropped to $203 billion. It continued to drop between $50 to $75 billion each succeeding year and in 1997 the deficit was only $27 billion. The debt was $3.72 trillion.
In 1998, we saw the extraordinary. There was a budget surplus of $69 billion. And the surpluses continued to grow each year to 2001, which was the last year of Clinton's budget. When Bill Clinton left office and El Presidente took over, Clinton handed them a budget surplus of $128 billion (down from the previous years' $236 billion) and a national debt of $3.31 trillion, an increase of only 10% from the time he took office.
Once El Presidente took over, we have seen the following:
2002 deficit $157.8 billion
2003 deficit $377.6 billion
2004 deficit $412.7 billion
2005 deficit $318.3 billion
Note the 2002 number. In 1 year of Dubya, the country went from a budget surplus of $128 billion to a deficit of $157.8 billion, a swing of $285 billion.
Ok, now everyone will say "but 9/11".
Remember, folks, during Clinton's term there was also an attack on the WTC. And war? Well there was this ugly little thing happening in Bosnia but rather than play cowboy, Clinton used the United Nations.
So now we have 'Back to the Future' with Dubya and we see him once again stepping away from the (relatively) prudent course set by his father.
Tags: Bush budget deficit voodoo economics Reagan Clinton
Missed me? I've been a busy little beaver of late but now I have some time to get caught up a bit. I'll be doing a couple of posts here.
Ok, folks, once again we have El Presidente and his administration forgetting history.
Treasury Secretary John Snow, testifying before Congress, said that they should adopt the Bush plan of cutting taxes to reduce the deficit.
No, this is not a typo, and for those of you wondering, yes we have heard this one before. Back in 1979, while running for the GOP nomination, Ronald Reagan became enamored with a policy drawn up by a young policy wonk, David Stockman. One night in either a restaurant or a bar, he drew out a plan on a cocktail napkin with a chart showing that as taxes get cut, more money flows into the treasury because economic activity increases, which means there's more money to tax albeit at a lower rate. Reagan added a little twist, increasing military spending as well.
His opponent in the primary election, George H. Bush, blasted the plan, calling it "voodoo economics", pointing out that that everyone except pointy-headed economists knew that if you cut taxes and increased spending, the deficit (which is the yearly shortfall) would increase. Bush was later forced to quietly accept it after he became Reagan's vice president and the plan was adopted.
It turned out to be a complete disaster. Of course the deficit skyrocketed into record territory and the national debt (the cumulative sum of the deficits that is total amount money borrowed/owed to cover the deficits) increased 188% from $789 billion to $2.05 trillion. The policy was so horrible and the results so devastatingly bad that even Stockman, who was the architect of the policy, disavowed it.
Under Bush Sr, the situation improved slightly. The debt increased to a touch under $3 trillion.
Enter the supposed tax and spend liberal Bill Clinton. Here's where the numbers shatter the rhetoric.
Clinton's first year in office, the deficit dropped from $290 billion to $255 billion. The next year it dropped to $203 billion. It continued to drop between $50 to $75 billion each succeeding year and in 1997 the deficit was only $27 billion. The debt was $3.72 trillion.
In 1998, we saw the extraordinary. There was a budget surplus of $69 billion. And the surpluses continued to grow each year to 2001, which was the last year of Clinton's budget. When Bill Clinton left office and El Presidente took over, Clinton handed them a budget surplus of $128 billion (down from the previous years' $236 billion) and a national debt of $3.31 trillion, an increase of only 10% from the time he took office.
Once El Presidente took over, we have seen the following:
2002 deficit $157.8 billion
2003 deficit $377.6 billion
2004 deficit $412.7 billion
2005 deficit $318.3 billion
Note the 2002 number. In 1 year of Dubya, the country went from a budget surplus of $128 billion to a deficit of $157.8 billion, a swing of $285 billion.
Ok, now everyone will say "but 9/11".
Remember, folks, during Clinton's term there was also an attack on the WTC. And war? Well there was this ugly little thing happening in Bosnia but rather than play cowboy, Clinton used the United Nations.
So now we have 'Back to the Future' with Dubya and we see him once again stepping away from the (relatively) prudent course set by his father.
Tags: Bush budget deficit voodoo economics Reagan Clinton
posted by Stevie Z at 11:13 PM
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