Government spending

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  • #1
mheslep
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Main Question or Discussion Point

One aspect of the OP is the deficit caused by run away spending. When the US President calls for even more big government projects, as he did last night, with a $14 trillion debt looming over the US, that is relevant to a thread on spending.
 
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  • #2
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One aspect of the OP is the deficit caused by run away spending. When the US President calls for even more big government projects, with a $14 trillion debt looming over the US, that is relevant to a thread on spending.
Then you should have said so explicitly. According to this
US_Federal_Debt_as_Percent_of_GDP_by_President.jpg

he still has some margin to do as bad as his immediate predecessor, and investing into science and education appears to some as a better long term strategy than other strategies. There is no reason that your personal opinion should appear as immediately obvious, or even right after thinking about it, to other PF members.
 
  • #3
russ_watters
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Then you should have said so explicitly. According to this...

he still has some margin to do as bad as his immediate predecessor....
Sure, if you only count his first year in office (he's been in two now....) against all 8 of his predecessor! :yuck:
 
  • #4
russ_watters
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If we need to move discussion of that graph to a new thread I'd be fine with that, but I'd actually really like to clarify because it appears to me that the graph was improperly made. According to the source, wiki: http://en.wikipedia.org/wiki/File:US_Federal_Debt_as_Percent_of_GDP_by_President.jpg
...the graph shows "This is a graph of U.S. gross federal government debt from 1940 to 2010, as a percentage of GDP, broken down by presidential terms."

The actual data comes from the budget office of the White House and is linked from the wiki. The data for the past 10 years is:
2000 57.3
2001 56.4
2002 58.8
2003 61.6
2004 62.9
2005 63.5
2006 63.9
2007 64.4
2008 69.2
2009 83.4
2010 94.3 (est)

So all good - the numbers match the graph. But wait - the data says "Year numbers refer to end of the fiscal year (that is, each year tick points to October 1...". So where 2009 is shown to be the start of Obama, that's OCTOBER of 2009, when he was in office for 8+ months. Now the budget for 2009 was passed when Bush was in office, but Obama's stimulus was added to that budget in the beginning of 2009. So if you want to leave the division where it is, you have to add the caveat that part of the uptick in 2009 is Bush's and part is Obama's.

Note: That graph has been changed twice in the past two weeks to deal with (and revert back to) that issue.

It gets worse. TARP was passed in late 2008 and spent about $300 billion charged to Bush's account. Well most of that has been paid back and AFAIK, that gets credited to Obama's balance sheet, creating a $600 billion swing (about 4.5%). TARP is currently projected to about break even, but the projections keep being increased, implying to me it is likely to turn a profit.
 
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  • #5
mheslep
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If we need to move discussion of that graph to a new thread I'd be fine with that, but I'd actually really like to clarify because it appears to me that the graph was improperly made. According to the source, wiki: http://en.wikipedia.org/wiki/File:US_Federal_Debt_as_Percent_of_GDP_by_President.jpg
...the graph shows "This is a graph of U.S. gross federal government debt from 1940 to 2010, as a percentage of GDP, broken down by presidential terms."

The actual data comes from the budget office of the White House and is linked from the wiki. The data for the past 10 years is: .....
Its also a good idea to look at absolute numbers, because while the budget is fixed (at the moment), the GDP from the economy is not:

http://www.usgovernmentspending.com...tack=1&size=m&title=&state=US&color=c&local=s
Year US Debt ( in 2005 $billions)
2000 $6400
2001 $6406 Bush, D. Senate, R. House
2002 $6761 Bush "
2003 $7208 Bush R Senate, R. House
2004 $7625 Bush "
2005 $7932 Bush "
2006 $8238 Bush D. House, D. Senate
2007 $8480 "
2008 $9205 Bush, "
2009 $10819 Obama, "
2010 $12361 Obama, "
2011 $13430 Obama, R. House, D. Senate.

Thats another $1.1 trillion in debt added this year, unless something like Paul requests is executed, now.
 
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  • #6
PhilKravitz
I am a bit confused is this "government spending" or "funding for science"? I will assume we are on "government spending"

How about we put a life time cap of medical care spending by the government of $50,000 per person? That would lower government spending in a measured way.
 
  • #7
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Such statistics are a bit dangerous to draw conclusions from out of context. In a working Keynsian world presidents who ruled during a recession should spend more than presidents who happen to rule during a boom. I think one of the major misstakes of the Bush administration was to spend so much money during good times (compared to now).

This has had two negative effects: i) you increase the debt such that there are less money available to spend when you really need it, and ii) the spending makes the market adapt to the spending-level of money, so when the recession hits and you need to put in more money, the only way for it to have an effect is to put in even more money, which is what Obama has been doing. So he is not solely responsible for this spending, but also the one before him who forced this situation.
 
  • #8
mheslep
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Such statistics are a bit dangerous to draw conclusions from out of context. In a working Keynsian world...
Who say's this is a "Keynesian world"?
 
  • #9
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Who say's this is a "Keynesian world"?
:uhh:I've heard that so many times - almost forgot to challenge.:wink:
 
  • #10
Who say's this is a "Keynesian world"?
Well considering the banking system that has been adopted by the entire world revolves around Keynesian economic ideals I think it is pretty safe to say.
 
  • #11
mheslep
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Well considering the banking system that has been adopted by the entire world revolves around Keynesian economic ideals I think it is pretty safe to say.
Such as? Source?
 
  • #12
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Well, if Obama can get it down to below 80% by the end of his term (hopefully in 2016), then he will still be with the trend started in the 1970's of the debt/GDP ratio being lowered during Democratic presidents and being raised during Republican presidents.

Here's another similar wiki page:
http://en.wikipedia.org/wiki/National_debt_by_U.S._presidential_terms" [Broken]

Perhaps tax cuts might get votes, but it might not be the best thing for deficits.
 
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  • #13
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Well, if Obama can get it down to below 80% by the end of his term (hopefully in 2016), then he will still be with the trend started in the 1970's of the debt/GDP ratio being lowered during Democratic presidents and being raised during Republican presidents.

Here's another similar wiki page:
http://en.wikipedia.org/wiki/National_debt_by_U.S._presidential_terms" [Broken]

Perhaps tax cuts might get votes, but it might not be the best thing for deficits.
I hope you meant to say 60%?
 
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  • #14
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I hope you meant to say 60%?
He took office when it was at 83%, so getting it down to 80% would be a reduction....but, yeah, 60% would be tremendous! :smile:

Once the economy starts really clicking again, it should be all downhill.
 
  • #15
talk2glenn
Once the economy starts really clicking again, it should be all downhill.
Err, according to whom?

CBO projections show the deficit continuing to widen even after an improvement in the economy, given no change in taxes or expenses, out as far as they care to look.

To say that another way, government outlays under current law are projected to grow faster than the economy under even the optimistic projections used by CBO analysts. This is part of the reason the healthcare entitlement was scored by the CBO as reducing the deficit - it includes both tax increases and Congressional commitments to cuts elsewhere.

Long story short, without serious policy changes, the deficit is only going to get wider in the future, irrespective of the general macroeconomic picture.
 
  • #16
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Err, according to whom?

CBO projections show the deficit continuing to widen even after an improvement in the economy, given no change in taxes or expenses, out as far as they care to look.

To say that another way, government outlays under current law are projected to grow faster than the economy under even the optimistic projections used by CBO analysts. This is part of the reason the healthcare entitlement was scored by the CBO as reducing the deficit - it includes both tax increases and Congressional commitments to cuts elsewhere.

Long story short, without serious policy changes, the deficit is only going to get wider in the future, irrespective of the general macroeconomic picture.
Errr, according to the CBO? http://www.cbo.gov/ftpdocs/108xx/doc10871/01-26-Outlook.pdf"

It shows a deficit reduction through the year 2015 at least.

And of course, cutting spending and raising taxes would improve things even more...which I assume will happen eventually.

Which begs the question: what are you talking about?
 
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  • #17
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Errr, according to the CBO? http://www.cbo.gov/ftpdocs/108xx/doc10871/01-26-Outlook.pdf"

It shows a deficit reduction through the year 2015 at least.

And of course, cutting spending and raising taxes would improve things even more...which I assume will happen eventually.

Which begs the question: what are you talking about?
Take a look at the revenues on page 15 of your CBO link.
http://www.cbo.gov/ftpdocs/108xx/doc10871/01-26-Outlook.pdf

What makes you think collections will rebound as described? The economy is not recovering fast enough.
 
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  • #18
talk2glenn
Perhaps I should have been more specific....

Excluding the stimulus legislation (which creates a distorting blip in spending giving the appearance of fiscal tightening where there is none), the deficit only grows. See here:

http://www.heritage.org/Research/Reports/2009/01/CBO-Budget-Baseline-Shows-Historic-Surge-in-Spending-and-Debt [Broken]
 
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  • #19
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Perhaps I should have been more specific....
Perhaps, but in reality what you tried to do was completely misrepresent the CBO's numbers due what you apparently read in a conservative web site.

If you look at 'summary table 1' in the actual CBO report, you will see that you were factually incorrect in your assumptions about the CBO projections.

To be honest, I stopped reading your biased link when they mentioned the "failed 'stimulus'". :rolleyes:
 
  • #20
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To be honest, I stopped reading your biased link when they mentioned the "failed 'stimulus'". :rolleyes:
Do you really think the stimulus was successful?:confused:
 
  • #21
talk2glenn
Perhaps, but in reality what you tried to do was completely misrepresent the CBO's numbers due what you apparently read in a conservative web site.

If you look at 'summary table 1' in the actual CBO report, you will see that you were factually incorrect in your assumptions about the CBO projections.

To be honest, I stopped reading your biased link when they mentioned the "failed 'stimulus'". :rolleyes:
Your level of ideological loyalty is stunning. Heritage, its agenda aside, is one of the most respected and cited think tanks in the country. Do you have a specific concern, or do you reject anything inconvenient to your own, isolated world view?

Regardless, I haven't misrepresented anything. Excluding stimulus spending, the federal deficit has been increasing since approximately 2003, and the pace of the increase is quickening. Temporary stimulus measures created a large spike in the trend, but any objective consideration of the subject should necesarily exclude it. Regardless of its efficacy (just an FYI: the current consensus is that excluding tax cuts, it was an absolute failure), the program was a massive one time spending measure intended to be financed by public debts. Factoring it in analysis of the debt, and especially choosing your start date to be in the middle of peak stimulus expense, obviously distorts the picture by creating an apparently rosy trend where there is none; if you can't grasp why this is I can't help you. Roll back your start date and things start getting a lot clearer a lot quicker.

For your convenience, here's a graph from Wikipedia that illustrates the point:

800px-GAO_Slide.png
 
  • #22
Al68
For your convenience, here's a graph from Wikipedia that illustrates the point:
That graph seems a bit out of date, from 2007 data? Things are much worse now on the spending side.

But the point is the same, that graph's projections have an inherent flaw: it assumes that the U.S. government can survive that long under those conditions. Who in their right mind believes annual interest on the debt alone can reach 30% of GDP without a complete loss of the government's ability to borrow, and a complete collapse of the dollar?

That's like a graph showing what happens to the size of a balloon if you add a gallon of water to it every day, while assuming it stays intact. As a practical matter, such a graph is useless after the balloon busts.
 
  • #23
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Do you really think the stimulus was successful?:confused:
It depends on what your definition os "successful" is.

Did it turn our economy around so that we are firing on all cylinders again and got unemployment back down to 5-6%? No.

Did it have a big impact on avoiding an economic depression and start a slow turnaround that could have otherwise taken many years? Yes.

CBO estimates over 2 million jobs were saved/created as of 1st quarter 2010.

I must question the logic of anyone who can, with a straight face, claim that spending hundreds of billions and giving hundreds of billions more in tax breaks had no effect whatsoever. That is just not dealing with any sense of reality IMO.
 
  • #24
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Your level of ideological loyalty is stunning.
As is yours.


Regardless, I haven't misrepresented anything.
ummm this statement:
CBO projections show the deficit continuing to widen even after an improvement in the economy, given no change in taxes or expenses, out as far as they care to look.
....was a misrepresentation of the CBOs estimates plain and simple.
 
  • #25
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It depends on what your definition os "successful" is.

Did it turn our economy around so that we are firing on all cylinders again and got unemployment back down to 5-6%? No.

Did it have a big impact on avoiding an economic depression and start a slow turnaround that could have otherwise taken many years? Yes.

CBO estimates over 2 million jobs were saved/created as of 1st quarter 2010.

I must question the logic of anyone who can, with a straight face, claim that spending hundreds of billions and giving hundreds of billions more in tax breaks had no effect whatsoever. That is just not dealing with any sense of reality IMO.
How do you know it had "a big impact on avoiding an economic depression and start a slow turnaround that could have otherwise taken many years?" - I say it didn't - who is correct?

Ahh - the "saved/created jobs" argument - how many people are now out of work - 5 million(?), 6 million(?), 7 million(?), 8 million(?), or could it be 15 million?

http://www.bls.gov/opub/ted/2011/ted_20110111.htm


Btw - How much of that spending went into dead end projects with no financial return - only an ongoing need for more funding?
 
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