EuroYank(
TM - no link) challenged Nazh to respond to one of his posts concerning the national debt under Bush. Since Nazh has been busy with other posts, I happily accept the challenge.
Some of what
EuroYank(
TM) says has merit. Others, do not. We'll go through some of them one by one.
Here's one quote which I love to hear from the Left
When Mr Bush took office he inherited a $236 billion budget surplus. Bill Clinton, his predecessor, had used budget surpluses to pay down some of the national debt in his last two years in office
I beg to differ Yank, but you're wrong if you think that Clinton had much to do with the decline of the deficits from 1995-2000.
I'll explain why I say that.
Each year, the President must submit an 5 year budget forecast. What this forecast does is to identify his budgetary priorities and to show how his fiscal policies will affect the economy and receipts to the federal coffers.
After Clinton got his massive tax hike (on the backs of the middle class) in 1993 from the Democrat-controlled Congress, he submitted a forecast each year which showed $200m+ deficits extending well past the year 2000.
Then 1994 came along and the GOP swept into power. With it came a promise by the GOP to balance the budget and cut the debt down.
In January 1995, the Clinton administration produced still another 5 year forecast which again showed that we would experience $200+m deficits well past the year 2000.
Now... again.
This is the President basically saying;
" These are my economic policies and this is what will happen if we keep following them.
In fact, he said (after the GOP started talking about a balanced budget) that we could not balance it in less than 10 years without draconian cuts.
What happened though? The GOP Congress forced him to submit a balanced budget and with the capital gains cut and Welfare Reform Act that the GOP Congress forced him to sign, the tax receipts increased over five-fold. So in 6 short years, we were forecasting a $230m surplus.
Pssst...That's a difference of over $400m for those who are playing this game at home.Please do not make the mistake of assuming that Clinton had much to do with any of the economic success of the 90's other than signing his name on a bill. The Clinton administration was taken by surprise at the good economic results that happened, not because, but in spite of their economic policies.
In fact, the entire looney Left was taken by surprise it the fact that tax cuts actually increase revenue. This is because they treat economic
variables as
constants. The Left consistently misunderstands the relationship between tax rates and the incentives to work more ( which raises your pay), to invest ( which helps you and the company you invest in)and to take economic risks (like starting a company - which would in turn emply people).
Lets go on to the next one shall we??
Bush's tax cuts account for 30 percent of the debt limit increases required during his presidency. Revenue losses from a recession and new spending to combat terrorism and for the war in Iraq are also responsible.
A recession that started under Clinton because he failed to act and cut taxes soon enough. A War on Terror which was a result of Clinton not acting to get Bin Laden when we had the chance. The economic effects of 9/11 and the recession Bush inherited had pushed down federal receipts until his tax cuts passed and the coffers started filling up faster than ever before.
Going on...
* The true national debt is $50 trillion, not the $8.3 trillion Bush reported.
That's $156,000 for every citizen, or $375,000 for every working American
This figure has more than doubled in the past five years. We paid $327 billion last year on interest alone
Really? Bush is responsible for all of this? Come on!!
We've had a national debt in this country since around 1791. We went way into debt when we borrowed money from France so we could do the "
Louisiana Purchase"
Anyone think we were foolish with our money by doubling the size of the country overnight??
Anyone??
Bueller???
Ok...enough of the Ben Stein impression. I'll explain what I mean.
I love how people like to equate the USA to a company. Ok lets do that. Go get the financial records of any public company. Look specifically at the BALANCE SHEET. Everyone loves to focus on the DEBT (read: Liabilities) of the US. Noone focuses on the ASSETS do they? The land, infrastructure (i.e. - highways), weapons (i.e- aircraft carriers), buildings (i.e.- libraries) are worth
something aren't they??
Additionally, the $50 Trillion number is by adding Social Security, Medicaid and Medicare (which we don't do). But you see that the way they are structured is the reason why the number is so high. We have to reform those programs or we don't have a prayer. We could stop all military spending and stop all pork-barrel spending but we wouldn't come close to knocking these liabilities down without reforming these programs.
Unfortunately, Bush (the looney Left's "bogeyman") was the one who tried to reform Social Security so that it would be more secure and self-sustaining by changing its unfunded liability into a fully funded liability.
Who stood in his way? Oh yeah, thats right... they'd the ones on Capitol Hill with a "D" after their names.
Until Social Security and Medicare are reformed, we won't address these liabilities (regardless of which party is in office).
Now lets focus on the debt - which we count officially at $9 Trillion BTW
Lets compare our total National debt to our annual federal budget and the nation's GDP.
Before I go further let me illustrate something to you.
My wife and I just bought our first home. Lets say we paid $300k for it and we have an annual combined income of $100k. Now...since I lack the $300k in cash, I need to finance it. In other words, I need to take on new debt in the form of a mortgage. Let us just say for argument's sake that the "carrying cost" (mortgage payment) is roughly $2k a month.
Think that's high?
It might be for you. It might be for me and my wife.
So we might struggle to make ends meet.
Now, lets say Bill Gates buys the house and decides to finance it as well (he can make more than 6% in the market). Think Bill Gates is sweating a $2k monthly payment?
You don't? Why not?
-Lightbulbs goes off in liberals heads the world over-
That's right...because he has more money!! He simply has far more money each month than it takes to carry the cost of the debt.
Now...back to the National debt and the "carrying cost" of servicing this debt. The carrying cost of the national debt is our yearly payments on the "net interest" on the total debt. According to the Concord Coalition the net interest in fiscal year 2007 was $238 billion.
This is about 9% of the federal budget.
Now... back to my wife and I. If our yearly mortgage payments totalled 9% of our income that would put our total mortgage payments ( assuming we made $100k) at $9k a year. Which works out to a monthly payment of $750.
The key here...is the carrying cost of any debt in relation to your wealth and income.
A $2k payment every month might be a stretch for you or I.
To Bill Gates, that is pocket change.
Simply put...the goal isn't to focus on the debt but to make sure the debt payments fall in relation to GDP.
According to Concord;
For fiscal year 2007, outlays for net interest equaled ($238 billion) 1.7 percent of GDP. Its recent high point was 3.3 percent of GDP in 1991.
Which is what they have done under Bush despite a 9/11 attack that severely harmed our economy and inheriting the recession from Clinton. Oh yeah and don't forget that we're actually fighting a war (which always requires that a nation go into debt to prosecute correctly).
Now I have been critical of Bush and the GOP controlled Congress for not reining in discretionary spending but the fact remains that (according to Concord)
During the 1980s and 90s, before the 1998-2001 surpluses, interest regularly consumed 13 percent or more of the federal budget a year, reaching a high point of 15.4 percent in 1996.
Everyone get that?? Under Bill Clinton the "mortgage payment" of our country was higher (at 15.4%) in relation to our income than under the "evil" Bush (at 9% in 2007).
So ... during the Clinton presidency ... which the Left regards as the "good old years" we actually had a tougher time making our "mortgage payment" as a nation.
And Clinton had it easy compared to Bush. It was after the Cold War was over. No major enemies (although Clinton did nothing about Bin Laden) and no wars to fight (Gulf War 1 was over by then). The only sustained action was in Bosnia ( we were involved due to the impotence of European militaries to yet again solve problems on their own continent) but even this doesn't come close to the economic stress 9/11 and the War on Terror has had.
And I am supposed to get worked up that, under Bush, the total debt has risen even though Bush inherited a big mess economically (as opposed to Clinton inheriting an economy that had already been growing for 21 months prior to taking office - a stone cold fact - look it up!!)??
Forgive me if I don't jump off the same
economic-sky-is-falling cliff as the rest of the looney Left.
I'll have more to speak on this subject. But that is for another day.
Stay tuned...
-Thai
