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-- Brad Delong

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Tuesday, March 15, 2011

Republicans - All Wrong, All The Time, Pt . 25 -- Another Look at Federal Budgets and GDP

In comments, Jerry asked about showing debt and revenue together.  Here it is, and more, as percentages of GDP.

Federal Receipts are shown in green, expenditures in yellow.  The line with blue and red segments is the net, with Red indicating the terms of Rethug Presidents, and blue indicating Dems.  The choppy brown line is year over year nominal GDP growth, also as a percentage.  Note how it trends generally upward to the maximum of 13.5% in 1977, and downward after.  The only pause in the decline is during the Clinton administration.

During the Post-WW II Golden Age deficits were small and transitory.  Since hitting a minimum of 0.4% of GDP in 1974, it's been (almost) all deficits all the time.  And this despite the fact that expenses/GDP were generally shrinking - albeit slowly at first - after the 1983 maximum of 23.5%.   Nominal GDP growth was exceptional in those days - 6.7% in 1983 and 11.7% in 1984.  Of course that was coming out of the nasty 80-81 recession, and boosted by the greatest defects ever (until now), outside of a World War.

And look what Clinton did - by reducing spending and raising revenues, he restored consistent GDP growth and balanced the budget.

I'm a long way from being a deficit hawk, and I believe some of Clinton's cuts were highly questionable.  But the all-too-temporary restoration of fiscal sanity and level of economic success during his administration are both remarkable and unique.

Even Carter - who made a lot of mistakes - was able to slightly narrow the deficit gap.

In stark contrast - every Rethug administration, even Eisenhower's, caused a net decrease in revenues/GDP.

Meanwhile, every Rethug administration after Eisenhower either raised or held expenses above 20% of GDP.

To quote Jerry:  " . . . while republicans reduce government revenue, they do not reduce government spending and thus grow larger deficits.    I call that fiscal irresponsibility."

And he's right.  

While this paints a picture of grotesque Rethug fiscal irresponsibility - to a point that I would call traitorous - it's important to not get too hung up on raw budget numbers.  Not all spending is created equally, nor is all revenue.  My assessment is domestic social program spending = good, imperialist expansion spending = bad. I've already shown how the spending pattern changed post 1980-ish. 

Someday I guess I'll have to take a closer look at revenue sources.


Jerry Critter said...

Thanks. It shows what I suspected. It is also interesting to note that revenues peaked under Clinton. Bush came along and reversed it. He trashed revenues, from which we still have not recovered, and peaked expenditures.

So much for republican fiscal responsibility. What a joke!

BadTux said...

A look at revenue sources would be interesting indeed. I've pointed out that taxes today have been shifted towards the middle and lower classes by shifting away from income taxes on corporations and the rich towards consumption taxes and flattening the tax rates. Thus while overall taxes today are the same as in 1950, *who* pays those taxes is a different story. But I don't have time to put together all the numbers and pretty graphs and such, I just got home from work...

- Badtux the "Please?" Penguin

Jazzbumpa said...

Jerry -

Right. What is not a joke is calling Rethug irresponsibility traitorous. I am deadly serious about that.

Tux -

You may have missed an earier post. I did a bit of that here. This is the graph that really tells the story. FICA has replaced corporate taxation.

I'd like to be able to break it down by income group, but am not sure how to go at it. Help me find the right data and I'll be happy to do the graphs.