Democratic Party Budget Deficit Deception and Scare Tactics

[adios]

I've been analyzing some Federal budget data for the last couple of weeks. Many Democrats have been very critical about the budget deficit and the Bush tax cuts being responsible. Also Democrats have been railing on about record budget deficits as well. Lastly there is much debate and criticism of on-budget numbers and off-budget numbers (Social Secuirty and the Post Office) being combined to represent what's referred to as the total budget. Here's my source for budget numbers:

Historical Tables - Budget of the Unitied States Government (http://www.whitehouse.gov/omb/budget/fy2004/pdf/hist.pdf)

Before anyone goes off and states that it's Bush propaganda, the Congressional Budget Office posts a link to this url as a source of information.

Many Democrats have been very critical about the budget deficit and the Bush tax cuts being responsible.

Let's dispel this one right away. Total Federal outlays have increased EVERY year since 1965 to 1966. More or less a tradition started by the LBJ "Great Society" initiative. Total Federal revenues have declined two straight years. The only time since 1980 that revenues have declined year to year is 1982-1983 more or less correlating to the 82 recession. Furthermore if you look at the url I posted you'll see that year to year data is only recorded starting at 1900. The only period that I saw where total Federal revenues declined 3 straight years was from 1930-1933, the beginning of the great depression. Projections for fiscal year 2003 indicate that year to year revenues will be down again for the third straight year. So what we're seeing is an extradordinary event that we haven't witnessed since the great depression. Since I haven't heard or read about any Democratic party initiatives to DECREASE federal outlays to match the decline in revenues, I have to assume that the Democratic party alternative is to raise taxes to balance the budget. Whether or not that would succeed is open debate in my mind. I guarantee that if you add up the numbers the Bush tax cut isn't responsible for the entire deficit either. You can't have a decrease in revenues (due to a slower economy) and have an increase in outlays (one that's increased from year to year for almost 40 years in a row) and expect to have anything but a budget deficit. Interestingly enough, payments on the deficit have DECLINED SUBSTANTIALLY from the time the feds were running a surplus and collecting record revenues.

Also Democrats have been railing on about record budget deficits as well.

This one shows how disingenuous the Democrats are. In 1942 the total budget deficit was $20.503 billion which as a percentage of GDP (normalized for GDP) was 14.22%. Projections for 2003 indicate the total budget deficit will be $304.159 billion which as a percentage of GDP is 2.83%. Ok the budget deficit for 2003 is approximately 15 times as much as it was in 1942 but the economy as measured by GDP is 125 times as big! So which deficit is larger. I submit that the 1942 deficit is much larger. I'm not saying the 1942 deficit was wasteful, only that it's larger when normalized for GDP. The reason to do this is to make comparisons meaningful. Generally speaking revenues for the last several decades have been between 17% and 20% of GDP while expenditures are now about 21% of GDP. Revenues and outlays increase as the economy grows. I think it is intuitivly clear why this is the case. So the deficit may be a record in absolute dollar terms but it's certainly not a record when doing meaningful comparisons to previous years.

Lastly there is much debate and criticism of on-budget numbers and off-budget numbers (Social Secuirty and the Post Office) being combined to represent what's referred to as the total budget.

Lastly I'll post links which explains both sides of the issue. I believe the viewpoint presented by the Congressional Budget Office grasps the true situation. BTW many Democrats cite the CBO as being an object entity. I wonder what they would say after being shot down by that same organizaiton:

CBO - Social Security and the Federal Budget: The Necessity of Maintaining a Comprehensive Long-Range Perspective (http://)

Some alternative views:

Position Paper on Returning Social Security to “Off-Budget” Status (http://www.vica.com/VICAPositions/2002/socialsecurityoffbudget.htm)

House Budget Comittee Democrats (http://www.house.gov/budget_democrats/)

U.S. Budget Deficits Headed Toward Record Heights (http://www.larouchepub.com/other/2002/2947fed_deficit.html)

[TAFKAn]

It's a common tactic used by BOTH parties to make claims about money in terms of dollar figures instead of percentages (such as your example about deficit dollars vs. percentage of GDP). They do this because people are stupid and it works.

They get outraged over the "biggest tax cut in history" or but never bother to look into what the reporter means when he says 'biggest'.

[andyfox]

"how disingenuous the Democrats are"

Gee, ya think? Politicians, disingenuous? When they feel they got jobbed out of the last election?

Whenever there's a debate such as this, in which, historically, when the Democrats are in power and the Republicans rail about budget deficits, and when the Republicans are in power and the Democrats rail about budget deficits, one needs to remind oneself of the wise words of advice from journalist I. F. Stone; "Every government is run by liars and nothing they say should be believed."

[adios]

I agree with you and Andy as well.

[adios]

It did occur to me that if Gore were president now that the Republicans would be saying the same things about the budget deficit as the Democrats are now. I wonder when the last time the Office of Management and Budget and/or the Congressional Budget Office planned for a recession. I'd guess that severe economic slowdowns are never in budget planning.

[andyfox]

I think it is indeed true that most budgets are based on the rosiest of economic forecasts. Then if things don't work out, it was the bad economy caused by either the President (if you're a member of congress from the opposite political party) or congress (if you're the president from the opposite political party that controls the congress).

Too bad we don't have any presidential candidates honestly trying to look at the numbers and their meaning and explain them to people like you are.

[Cyrus]

"I wonder when the last time the Office of Management and Budget and/or the Congressional Budget Office planned for a recession. I'd guess that severe economic slowdowns are never in budget planning."

I remember, once upon a time, that the next year's Op Plan called for a decrease in revenues, from a specific activity. The Managing Director at the time, who had no say in the actual running of the company btw, refused to endorse the plan, and replaced the minus signs with plus signs. He could afford to do that cause the absolute figures were small anyway. Easy to turn -2% to +2%, at least on paper.

We had quite a "lively" argument about that which he eventually won. I argued that yearly objectives and yearly estimates are two different things. He argued that no army should ever plan for defeat. I argued that this is true but no serious army plans for unimpeded advance and continuous wins either. He argued that we were pessimists. And so on.

A year after, when his successor asked why we could not meet the plan, I responded that we were meeting our plan but we were behind his plan. When he correctly claimed he had nothing to do with our plan, I said that I was talking to his chair and not to him. He didn't appreciate the joke. I said this wasn't a joke. And so on.

..Pencil pushers such as those working the OMB know only too well the unwritten demands that their bosses place on them. Be they in the private or in the public sector.

[adios]

I noticed I screwed up a URL in my post. This should fix it:

CBO - Social Security and the Federal Budget: The Necessity of Maintaining a Comprehensive Long-Range Perspective (http://www.cbo.gov/showdoc.cfm?index=3650&sequence=0)