RJ, no offence intended. I understand that you know a lot about this, which is why I would be surprised if you were trying to say that programmes that are currently solvent and so far are in surplus are the reason for a high deficit that we see now.

Medicare is perhaps the exception, which was expanded under Bush. Now, you asked us if expansion in these programmes was down to the Democrats controlling Congress in the last 2 years of Bush II's Presidency, or whenever they were in power. The answer to that is 'No'. The GOP had 51 Senators and 228-9 Representatives at the time the Medicare Prescription Drug Modernization Act was debated and passed in 2003. Majorities in both houses.

It seems to me that Republicans in Congress are not really much good at fettling Republican Presidents, even if they were able to help reduce the deficit under Clinton, they helped to open it back up under Bush II, before the 2006 elections

Also, as far as I can see, US spending as a % of GDP fell every year from 1991 to 2001, and the Democrats held a majority in both houses at the beginning of this period: http://en.wikipedia.org/wiki/US_budget_deficit

I think the jury is out on blaming one party or the other, frankly. It's more like the whole rotten system, but of course we can be distracted by arguments that it's all down to the heffalumps or the eedonks.

We were talking about the current spending rate and current problems, not future liabilities. I know you have concerns about those, but the contribution they have towards the historic deficits seems to be small. Regardless of which of the two parties was in control of what, it's clear that the problem we see now has deeper historic causes as well as the recent very sharp recession.

Danivon:

I think the jury is out on blaming one party or the other, frankly. It's more like the whole rotten system, but of course we can be distracted by arguments that it's all down to the heffalumps or the eedonks.

Yes, it's both parties. Freeman's view is that it is all the Republicans fault which is not true and not helpful, and that is clearly what I reacted to. Politicos on either side try to distort the stats (e.g. putting Obama's stimulus into Bush's baseline).

The reality is that Obama has not delivered on these promises. He said he would bend the health care cost curve downward, but there's no evidence that he has (and Freeman is willing to wait some more to see whether ACA will kick in with large savings), and he said he would go through the budget line by line for savings.

Nor has he tackled the longer term problem of medicare. I know the Republicans have fault too, but this notion that Obama gets a free ride is insidious. We have a $1,000,000,000,000 annual deficit for all of Obama's presidency. He has not implemented or faught for any spending cuts short term or long term. Doesn't he share some of the responsibility at this point?

Anyway, it's the same argument over and over again.

ray

He said he would bend the health care cost curve downward, but there's no evidence that he has

Pretty early in the process, since much of the law hasn't taken effect.
But even then, there is a lot of money being returned to companies and individuals - so there is some early evidence...

rickyp wrote:ray

He said he would bend the health care cost curve downward, but there's no evidence that he has

Pretty early in the process, since much of the law hasn't taken effect.
But even then, there is a lot of money being returned to companies and individuals - so there is some early evidence...

I think you need to show some evidence of these savings and that they are material relative to the total health care cost.

Ray Jay wrote:Nor has he tackled the longer term problem of medicare. I know the Republicans have fault too, but this notion that Obama gets a free ride is insidious. We have a $1,000,000,000,000 annual deficit for all of Obama's presidency. He has not implemented or faught for any spending cuts short term or long term. Doesn't he share some of the responsibility at this point?

Anyway, it's the same argument over and over again.

It is, but there is one unfortunate thing that is consistently left out that you finally raised: President Obama has been "in charge" for four years. What has he done to lead on reducing the deficit? What is his plan now? How many years does he believe it will be before we have a balanced budget?

The answers are not satisfactory.

For the most part, he has committed himself to class warfare, partisan rhetoric, and the promise of continued "investment."

Those are not solutions.

He began by blaming Bush. Actually, he's never stopped that. He has adopted new targets: the rich; Fox News; Rush Limbaugh.

That is not leadership.

freeman

So, I would not say Republicans are blame for long-term problems with medicare, medicaid or social security (why would they, they don't like particularly like those programs

I think that most republicans actually like Medicare. Perhaps party ideologues and some on the extreme right don't like Medicare but most polls indicate the general populace are quite attached to the programs.Maybe a large portion are disconnected between what they are, and how they are paid for, but getting their medical needs paid for is pretty popular.

And Freeman, I think you can blame Reagan for the attitudinal shift regarding fiscal prudence. It was in his eight years that deficits stopped mattering, politically. When there were no political consequences for running deficits, there was no true governor on the budget process.
But the notion that one could cut taxes and still get the same services and military, or even expand the military, became a bipartisan effort after that... Clinton benefited from a surging economy to get to his balanced budget . Even so, cutting taxes rather than focusing on debt reduction or at least balancing the budget once he decided to start two wars was all on Bush and the Congress under him. If his administration and Congress hadn't still held delusions about deficits, much of the debt amassed could have been avoided. At least till the financial crisis caused by that other great misconception .... the ability of markets to always act rationally when minimally regulated.
The key to balancing the budget is a growing economy. All the indications are that, if it weren't for the uncertainty over the fiscal cliff ...the economy would be growing. As Fate pointed out, most of the economic slack in the last quarter was from reduced government spending. And much of that was down to the uncertainty of continued full funding in many departments . Especially the military.
The key is to stop playing chicken with the budget process and the debt ceiling . And provide certainty. With that the economy will grow and after it starts growing the decisions about trimming government spending can be made judiciously. And they have to made judiciously not in broad fashion ... as broad cuts might well end any recovery as Fate's information pointed out.

http://www.davemanuel.com/history-of-deficits-and-surpluses-in-the-united-states.php

Based upon the above chart, why did you pick Reagan? Did not ALL the others have deficits? What about Johnson and Kennedy? Bush 1? Nixon? Do you have bias against Reagan?

I think the chart shows the problem. BOTH SIDES!

There, I said it. Can you say that the Dems are the problem as well? Do both sides need to balance the budget?

Because the deficits under Reagan added to the countries debt burden. Before that, deficits did not. They were so small, that with the expanding economy, the US saw the debt as a portion of the GDP decrease. Under Reagan, that trajectory changed..
Moreover, the attitude towards accumulated debt changed. It didn't matter that revenues and spending had to be in balance enough to see the debt burden decrease.... Sunny Ron, bought into the idea that tax cuts create more revenue.... Always. And although he raised taxes a fair number of times, after his initial major cuts created a large deficit, , he never achieved either a real surplus, or a deficit that didn't add to the debt burden... And he was the first to manage that since Truman. That he did this, and paid no political penalty allowed Politicians the liberty to ignore deficit and debt.

In the United States, national debt is money borrowed by the federal government of the United States. Debt burden is usually measured as a ratio of public debt to gross domestic product.

Debt as a share of the US economy reached a maximum during Harry Truman's first presidential term. Public debt as a percentage of GDP fell rapidly in the post-World War II period, and reached a low in 1973 under President Richard Nixon. The debt burden has consistently increased since then, except during the presidencies of Jimmy Carter and Bill Clinton. In recent years sharp increases in deficits and the resulting increases in debt have led to heightened concern about the long-term sustainability of the federal government's fiscal policies.

http://en.wikipedia.org/wiki/File:Publi ... 0-2012.png

This is exactly the drivel that makes me frustrated with both parties. "No, my guy is better and your guy sucks" No My guy is better AND your guy sucks"

There have been deficits on both sides. Tax cuts do spur the economy at the cost of lower revenue. Spending temporarily spurs the economy at the expense of greater burden on the populace.

BOTH SIDES ARE A PROBLEM.

Brad, you do have to admit that Reagan's deficits were the first that consistently increased the debt:GDP ratio. Whether it was him or he was forced to by a Democratic controlled Congress is something we could argue.on all day.

However, if both parties are the problem, why are people so sure that the Republicans are the solution?

I am not talking ratios. I am talking debt. Both sides are running deficits. If it makes one feel better to say one side does it more, I find that sad. The debt is the problem.

Both sides added to it.
Both sides have done little to anything to solve the problem.

If Reagan is so bad for the debt increase, what do you think of Bush and Obama's debt increases?

I really appreciate Brad's line of questioning. My view is that at least the Republicans acknowledge that there is a problem. I don't have that sense from the Democrats. Of course, that doesn't mean that the Republicans would actually do anything if they were successful, but that's a hypothetical that will have to wait. I just think the Democrats are in denial about this.

I don't understand the criticism of Reagan. Yes he did engage in deficit spending, but he fixed the economy. I remember this so clearly since I was an adult for his entire presidency. It's true that he increased the deficit, but he grew the economy for several reasons: (lowering marginal tax rates, lowering capital gains rates, getting rid of so many weird provisions of the tax code that were distorting the economy, supporting free trade agreements, getting interest rates to something normal, improving oil drilling). Reagan and his economic advisors thought much more from a long term perspective than either Bush II or Obama. And it worked.

It's true that the deficit spending was largely for defense spending, but arguably that has something to do with the break up of the USSR. I would think that people in Germany, Poland, Lithuania, Latvia, Estonia, Hungary, the former Czeckoslovakia, Russia, and many other countries would really appreciate this. There was a subsequent peace dividend that brought the deficit back down. Aside from Russia, these countries have had much improved economies and political lives.

Because Reagan grew the economy, the resulting deficits were eventually manageable. This is very distinct to Obama and Bush II. Growing the economy is the prescription that I've been hearing from Ricky, Danivon, and Freeman for the last 4 years. Reagan actually did it by growing the economy in the right way.

BTW, I also give a lot of credit to Clinton who kept up with the free trade agreements and reduced government spending. We also did well by the congressional democrats during Reagan's terms and the congressional republicans during Clinton's terms.

ray

I don't understand the criticism of Reagan. Yes he did engage in deficit spending, but he fixed the economy

There is always revisionism going on. The US economy was suffering from stagflation in the 10 years before Reagan.
Much of the credit for the resolution of the stagflation is given to two causes: a three year contraction of the money supply by the Federal Reserve Board under Paul Volcker, initiated in the last year of Carter's presidency and long term easing of supply and pricing in oil during the 1980s oil glut.President Jimmy Carter had begun phasing out price controls on petroleum, while he created the Department of Energy.

So a large part of the economic solution was in place when he won election. A lot of the measures Reagan brought in, were important contributors too. But the turn around had begun. (Getting rid of Nixon's wage and price controls was a large part of that too.)
And since this debate is about deficits and the economy, its important to understand how deficits are created. The simplest way is to say take in more revenue than you spend. And simply put, Reagan ignored that.
Realistic fiscal planning can allow for small deficits that are less than the rate of GDP growth, because that means debt ratio to the size of the economy is being reduced. And Reagan's immediate predecessors stayed within this margin. Reagan ignored that margin, in the mistaken belief that tax cuts would pay for themselves.... His first large tax cuts were a fiscal disaster, and even with his subsequent tax increases he never closed the gap and brought fiscal sanity back, I submit, because the right was not prepared to let go of the notion that tax cuts could always create more revenue through increased economic activity. It wasn't good enough to be able to say, that sometimes judicious tax cuts can create more revenue because of increased economic activity. It had to be always. To this day, conservatives make the claim about tax cuts...

The problem with Reagan, is not really Reagan. Its the political reaction to his presumed success (ignoring the ground work done by Carter) . Politicians of all stripe began to believe that one could ignore fiscal prudence and run deficits that grew the debt ratio - and that they could do so forever. Reagan grew in mythic proportions that failed to acknowledge that in some ways he had failed. And most Specifically and spectacularly, in controlling debt when the economy was expanding. A period when controlling debt should have been easy and a priority.
He's the first since WWII to fail in this way. For 8 years. And he set the stage for what followed. especially the disaster that was Bush II.


ray

It's true that the deficit spending was largely for defense spending, but arguably that has something to do with the break up of the USSR.

Its probably more true that the Soviet was broken and crumbling and that it could not be sustained because Communism is a lousy long term economic or governance solution.
The Pentagon used all kinds of wild estimates of Soviet armed strength to justify the enormous military spending. In reality, as was reported by Soviet generals in books like "Paper tiger", that the Soviet military might was an illusion. An example I remember is that tank brigades could only fire 6 shells a month per tank at the firing ranges as practice. They simply didn't have munitions.
Reagan gets credit for out lasting the Soviets. But the military build up by Reagan was largely unnecessary. The Soviet still would have crumbled.
Eisenhower resisted the military industrial complex. Reagan gave in to them.

We agree. There is always revisionism going on.

And yet nothing about Obama and the debt that is being built up... (which is my point)