So which is the Big Government Big Spending Party?
AxisofLogic/ Economy — When are the die-hard Bush supporters going to realize that they are being taken to the cleaners with the rest of us. Or is all this imaginary?
With Bush and cronies having added over $3 trillion dollars to the national debt, the country’s credit card tab now stands at $8.8 trillion. This represents an astounding increase of over 45 percent since Bush came into office in January of 2001. And all this fiscal profligacy took place during the years when the CBO originally forecasted record surpluses of approximately $2.5 trillion. And there is no end in sight to the deficits.
More alarmingly we now rely on foreigners to finance over 40 percent of this debt with the lion’s share coming from the Asian central banks. In FY 2006 the current account trade deficit is on track to set yet another record, on the order of $700 billion. To put this in perspective, billionaire investor Warren Buffet points out that, “15 years ago, the U.S. had no trade deficit with China. Now, it’s 200 billion dollars.” He says if the country does not change course, the rest of the world could end up owning 15 trillion-dollars worth of the United States. That’s equal to the value of all American stock.
This is an horrendous situation. The Bushies should be proud of themselves. It must be frustrating, John, to post this information, and then turn on the TV and hear how GREAT the economy is doing under the Bush admin. I mean where is the corellation of an historically high stock index, and what we see here. Are they just printing more money against thin air?
If you will notice the budget surplus is when the oohhhhh so evil contract with America republicans were in power and before the fat cat big spender republicans we just fired took over
As a true baby boomer, Dubya is spending the kids’ inheritance… just on a more grand scale.
It wasn’t just big spending that created this situation. The ill-advised tax cuts that Bush helped push through also played a large part. Tax receipts for 2002, 2003, and 2004 were all below 2000 and 2001 levels, both in absolute terms and as a percent of GDP. Tax receipts even for 2006 were below 2000 levels as a percent of GDP. Scary stuff.
Arithmetic isn’t really fun until you start counting votes, though, so I guess politicians weren’t really interested in watching how out-of-balance our budget was.
#1 Yes they are printing money out of thin air, and it is so embarrasingly high, the government now refuses to publish the M3 number which indicates how much.
The dollar is falling on all currencies. In 2000, a British pound was $1.50 and a Euro was $1.00. Now its $2.00 for a pound and $1.33 for a Euro.
Stocks may be up during the Bush years, but when you measure stocks in pounds or euros or even worse gold, the stock market is down under Bush.
Eat drink and be merry for tomorrow we work for China.
Bush will be out of office, building his Library and living off his tax payer pension, really; what does he care.
Please John, don’t ask hard questions, don’t disrupt Georges sleep. You make George mad and you wouldn’t like George mad.
The people 2 time choice has his middle finger on the button. Don’t get him mad. The NSA, FBI and George knows where everyone lives.
Gotta love those loyal Re-pugs, still believing in Mr Evil.
Gotta have some way to finance that war and the privateers. Charge it!
During the Clinton years I was making a six-figure income (with the bonuses) but since the Bush years my income at the same job has dropped by 40%!
The wealth that the rich are accumalating has to come from somewhere. The wealth taken in by the stock holders on Wall Street has come from the lower and middle class of America. Pure greed. How much more can another million mean? The Republican party are thieves. They’ve stolen so much money and have raped the USA. They did by getting into power by lying. EASY LIES, like Bush saying he is pro-choice, his favorite philosopher is Jesus and that he was for moral Christian values. The truth is that the real problem in America are not the rich, it is Christianity. If the Red states were Liberal, Bush would never had made it president.
Mr. Dvorak, nice story although I think a lot of the economic analysis is a little inaccurate.
On Debt:
The problem with that graph is that it does show the overall debt level, that measure, when taken alone, is misleading. The best measurements to gauge a countries debt is debt/GDP ratio, I like this graph better (http://tinyurl.com/yr8lzt). It shows that the debt/GDP ratio is definitely higher under Bush II, but nowhere near “catastrophic levels.” The variable to keep in mind is the level of investment, if one assumes the Solow growth model to be correct, and that level is still strong.
My second objection is that while the U.S. debt levels are high, when compared to the other G-7 nations we’re far below the average. Perhaps the most notorious debtor nation in the E.U. is Italy with a staggering 107% public debt/GDP. Here is another graph that highlights U.S. debt to GDP along with 40-year averages, and the G-7 trend line.
A comparison: if one takes out a loan at 4% interest rate over a 5-year period, and the inflation rate is 7% over this time period the borrower wins, and the loaner losses. I’m not quite sure the average interest rate of U.S. loans from China; I’ve heard that they’re not that high, and a similar situation could (or is) happen(ing).
On the current-account balance:
This is more of a mystery, as balance levels such as these have not been seen in the U.S. since the 1820’s, but it seems that U.S. consumers cannot get enough of those Chinese produced, low priced goods. This trade deficit speaks more towards their comparative advantage than anything else. Similarly, people were saying the same thing about Japan during the 1980’s and the U.S. is still doing fine.
The latter part of the story deals mostly with the possibility of a currency crash. While I cannot rule this out, nor do I think that anyone can, I really do not see the trends that need to be in place for this to occur. My favorite currency debacles, Argentina, East Asia (Thai), “The Great Monetary Collapse on Ferenginar”, & Mexico all had undesirable mixes of macroeconomic problems, (overvalued currencies, “bank runs”, large influxes of money from the central bank, unrealistic debtor regimes), which the U.S. does not have to worry about at all, or very little for a few of the above variables.
To close, as the author of this paper did, with a little John Maynard Keynes, I’d like to throw out a “John Maynard Keynes was wrong with just about everything…and the followers of Keynes are wrong about everything” –M. Friedman. The fact of the matter is that during the times of Keynes there were no free floating currencies, that type of currency regime in it of itself will help to curve any kind of steep rise and fall in international currency fluctuations.
The Bush family have always been owned by the banks.If we ever elect his brother the same thing would happen.How do you destroy the power of the Federal Gov?Bankrupt them.
Figured you had to come up with Friedman since he hasn’t liked a government since Mussolini. Or didn’t, that is.
Comparing our debt v. gdp to Italy @ 107% when the Feds estimate our own number for 2006 at 105% is a farce. Very little of this is a mystery. There’s no mystery about US consumer preferences. We can only afford to buy on the cheap. US corporations maximize profit by buying on the cheap as well. When was the last time you bumped into electronic products from domestic manufacture?
Yeah, blame the consumer for choices we have absolutely no say about. Is someone holding a referendum about sourcing in your neighborhood? Because we get little or no chance to vote with our dollars.
Add in the quality quotient from industries still producing domestically – run by dunderheads like the crew at GM – who still own sufficient lobbying power and lawyers to keep incumbent incompetents in office – and my response is that we need to throw all of them out. Starting with the idiots who vote to continue pouring money down the Iraq rathole.
#11
“Comparing our debt v. gdp to Italy @ 107% when the Feds estimate our own number for 2006 at 105% is a farce. ” If you could please cite where you obtained that figure of 105%, I’d be much obliged. When I searched for figured for this post, the highest number I found was in the high 60’s to high 30’s depending on the calculation. Also, could you elaborate on why this is a farce?
“When was the last time you bumped into electronic products from domestic manufacture?” You’re asking the wrong question. America’s comparative advantage isn’t in the low skill assembly process (exception is that a majority of Dell computers assembled are done so in the U.S.) it is in R&D, along with the service sector. What does it say on every piece of Apple equipment I own? “Designed in the U.S., assembled in China.” If that process gets me a lower cost product, with high levels of R&D, I’m all the more for it.
Lets not forget the entitlement budget. How many votes were bought with entitlements, and pork barrel spending? I find it interesting, that more people voted in King county in Washington, than were registered voters, yet, it didn’t make it into the news. However, in Ohio, there is lots of suppostion, and finger pointing….
My concern is that, while supposedly much of the US economy is driven by R&D, well, that’s today. As the mfg might of the Far East grows, eventually so will it’s ability to research and design. Our R&D capacity sprang from the fact our fathers built the stuff. The Depression and WW2 created a pentup demand for basic goods and there was really nowhere else to turn to for those goods but ourselves. For the next generation, where does that wealth of ability going to spring from? We’re not even making our own cars anymore. We have to create our wealth from within to combat the debt problems (seems to me), and I’m having trouble seeing the source for that ability.
Oh wow a surplus with hellish taxation? Yet still the debt was ignored. The graph is deceptive being that both Bush and Clinton are/were big spending statists. Both love to trample on economic and social liberty.
I’ll show you politics in America. Here it is, right here. “I think the puppet on the right shares my beliefs.” “I think the puppet on the left is more to my liking.” “Hey, wait a minute, there’s one guy holding out both puppets!” — Bill Hicks
If you look at when the trends started you will see the the trend towards the surplu began during Bush 41’s administration and the trend towards the most recent deficit started during the Clinton administration. Not that it means a damn thing.
Bla, bla, bla, bla…
Economic mumbo jumbo. To the dipsh*t named “mxpwr03,” since U have your head shoved so far up your ass, how can U not see sh*t clearly?
*yawn* The deficit is an obvious thing.
“The wealth that the rich are accumalating has to come from somewhere.”
Because we all know that wealth is zero-sum. It certainly can’t be created. The same amount of wealth has existed in the world since man began to walk and talk.
18 – Yes. Obvious. And so are outlandish tax cuts, and incentives to move corporations offshore, and incentives to outsource jobs, and trashing the dollar, and intentionally distorting both intel and scientific data to obscure just how damaging current policies are.
What is puzzling is the blind loyalty of the idiots who are bent over the barrel, taking it with stupid grins and still defending the last few years of government by right-wing corruptos and corporate cockroaches.
What is puzzling is the blind loyalty to anyone with an R or D next to their name. Who are bent on using the barrel of government to get their way. Taking it with stupid grins, still defend the government provided their brand of republicrats and cockroaches are in office.
#14 – That’s a very valid concern, but the rise of China & India have been mostly based upon their large endowment of unskilled workers. In the big eastern cities in China the competitive wage is already being bid up to a level where these workers are becoming too expensive. The best thing the U.S. can do is to keep a well educated work force, that allows a greater deal of labour mobility between industries and sectors.
#17 – Don’t hate, congratulate. Feel free to offer more constructive criticisms. What exactly am I missing?
#19 – Yea, the trend line behind technological progress is missed by some people. Never mind the fact the the average U.S. citizen is 500-600% wealthier than they were a hundred years ago.
#20 – See the problem with that statement is the very little, if any, quantitative, or even qualitative, data to back it up. Data aside, a couple supporting sentences would help push the analysis further. What tax cuts are outlandish? And why?
Outsourcing…welcome to the world of international capital flows. You should pick up “The World is Flat,” it is somewhat overrated but he has a lot of good data points, and personal interviews to highlight how revolutionary those jobs are to the 3rd world nations who receive them.
#20 – What is puzzling to me is that anyone would think the boneheads we have always had in gov’t would do anything other than screw things up. Democrats/Republicans… all the same.
Why would anyone think lawyers (who don’t create wealth mind you) would know how to turn the country around? Put some engineers in charge and you’ll see improvements. Seems to be working well for China.
I think the worst president we had in that time line was Jimmy Carter (D) I think Gas was under a buck when he took office…
He had no clue about the economy nor how to deal with the energy crisis.
Bill Clinton was by far our best president (D) Clinton was totaly in tune with every aspect of government. Clinton reversed all negative aspects the country was facing.
I have my doubts about Ronald reagans theory known as Reganomics. Basically give the rich tax breraks so they can employee the poor..what a con jobs.
I think its time to tax the very rich and not tax the poor.
It blows my mind that some of the top CEOs in the country make over 200 million as a salary and many Americans live in poverty and pay tax on top of it.
Are you forgetting all of the sea ports Clinton gave away to China?
Certainly better than the Vice presidents move to haliburton to dubai.
And having dubai manage our ports
W
e can find fault in each president. However I feel that clinton was by far the best for the american people and this in no way is an endorsement for Hillary.
I am leading toward John Edwards or John Mccain………
IF the united States of America was not attacked on Sept 11, 2001 and we did not go to war, how would George W. Bush Fair as a President and Would we be in a Deficit today?
Givin all this, how would one of the other presidents fair in the same situation that bush was faced with do?
I know that Bill Clinton, who was a peacful president, enterered us into a quick gulf war.
Anyone really believe that Sadam Hussien was a gentleman?
Anyone really believe that Bin Laden wouldn’t atttack us again?
Wow,
I’m impressed (and a little saddened) by the economic ignorance displayed in many of the comments above. I Don’t mean that as an insult, economics is a very specialized field but unlike other fields the general public has primary responsibility for making political decisions based on some understanding of economics.
Take free trade for an easy example of what I mean. Many if not most people are inclined against it. Most economists understand that it is generally a good thing. Politicians and partisans cynically exploit the issue for political gain.
The same is true of budget deficit graph above. This is a piece of data, but it is cherry picked to prove a point. As an indicator of economic performance it is useless and to give it any relevance one would have to make the following assumptions:
1. A President’s impact on the economy is effected immediately upon coming into office (actually the graph would indicate the impact occurs several months before election.)
2. Congress has no impact.
3. Externalities and global conditions have no impact. (collapse of USSR, Chinese liberalization, 9/11 and war in middle east, etc.)
4. A Presidents impact is not only immediate, but ephemeral. any effect ceases immediately upon losing the election.
This last item is worth additional detail. To think that the President has no long term impact goes against common sense. Carter’s Fed Chair (P. Volcker) stayed on for 8 years and is credited, along with Reagan’s tax cuts for ending the worst post war economy the US has seen. Reagan’s tax cuts and deregulation are considered responsible for the longest post war economic expansion, well into the Clinton years. And even Bush deserves some credit for the relative soft landing and healthy recovery seen after 9/11 and the tech bubble crash.
Does everyone here remember the tech bubble? One commenter above seems to, but he blames Bush for it’s demise and his subsequent decrease in compensation. Maybe the politicians are right in their cynicism.
mxpwr03 for President!
Yeah I don’t care much for what John Maynard Keynes did. He gave a blank check of “justification” for exuberant government spending.