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,...

Ray Jay wrote:We agree. There is always revisionism going on.

According to monthly spending data from the Treasury Dept., total federal spending — which includes transfer payments and other federal outlays not counted by the BEA — increased by $98 billion in Q4 compared with Q3. And spending was up $31 billion when compared with Q4 2011.

According to the CBO, spending this year will account for 22.4% of GDP, a level reached only eight times since 1946 — four of which occurred under Obama.

In the two hundred years B.R. (before Ronald Reagan) the entire accumulated debt of all of our previous presidents amounted to 909.1 Billion dollars. So B.R., our countryÕs National Debt had not yet reached one trillion dollars - that stack of dollar bills had not yet reached the moon. Now, remember, that figure included all the debt accumulated from George Washington through Jimmy Carter. That 909.1 Billion dollars included all the monies borrowed for the American Revolution, the Civil War, World War I, World War II, Korea and Vietnam.

By the time that Ronald Reagan left office in 1988 the National Debt was 2,601.3 Billion or 2.6 Trillion. In just eight years Ronald Reagan had more than doubled what all the previous presidents from Washington through Carter had accumulated in the prior 200 years.

Some politicians claim that the National Debt doesnÕt really matter because it is money that we owe to ourselves. So even when the federal government just pays the interest on the National Debt it is infusing dollars into our economy - like giving a tax cut to the rich. But since Reagan, unfortunately, this is no longer true.
Before Reagan our governmentÕs borrowing was financed by Americans. After Reagan our National Debt became so enormous that Americans didnÕt have enough money to finance the GovernmentÕs borrowing - so we borrowed from foreign countries. Or would it be more economic to say that we sold our debt to foreign countries. In other words, we sold the mortgage, or foreigners bought our mortgage. Now countries like Saudi Arabia, Japan, China, the U.K etc. own a good part of our mortgage. If in the last few decades, it has appeared to you that your government has been acting like a foreign country, this may be a part of the reason

Doctor Fate wrote:For example, the idea that somehow spending has been reduced under President Obama--or the idea that Q4's decline was due to a dip in government spending.

bbauska wrote:Freeman, since you brought up Republicans not wanting deficit reductions unless there is a Democratic president (mind you, I am not a Republican); do you think that Clinton and or Obama have reduced the debt?

http://www.skymachines.com/US-National-Debt-Per-Capita-Percent-of-GDP-and-by-Presidental-Term.htm

Clinton $4,535,687,054,406 (starting)
Clinton $5,662,216,013,697 (ending)
Obama $12,311,349,677,512 (starting)
Obama $16,432,730,050,569 (current)

Doctor Fate wrote:

bbauska wrote:Freeman, since you brought up Republicans not wanting deficit reductions unless there is a Democratic president (mind you, I am not a Republican); do you think that Clinton and or Obama have reduced the debt?

http://www.skymachines.com/US-National-Debt-Per-Capita-Percent-of-GDP-and-by-Presidental-Term.htm

Clinton $4,535,687,054,406 (starting)
Clinton $5,662,216,013,697 (ending)
Obama $12,311,349,677,512 (starting)
Obama $16,432,730,050,569 (current)

That Obama "starting" number is excessively generous. It blames all of 2009 on Bush. So, the Stimulus was "Bush's" as was a lot of other stuff he had nothing to do with. Go back to President Obama's inauguration date and I think you'll be adding close to $2T to the total.

Don't cheat the Man of his glory!

It was $10.626 trillion on President Bush's last day in office, which coincided with President Obama's first day.

geojanes wrote:

Doctor Fate wrote:For example, the idea that somehow spending has been reduced under President Obama--or the idea that Q4's decline was due to a dip in government spending.

Change in GDP:
..............................................................................3Q12....4Q12
Real GDP growth..................................................+3.1%.–0.1%
Major components: Contributions/subtractions (percentage points)
Consumer spending..............................................+1.1...+1.5
Business spending and inventories......................+0.9...–0.1
Trade (exports minus imports)..............................+0.4...–0.2
Federal, state, and local government spending.....+0.7...–1.3
Annualized quarterly change, rounded.

Gov't bought less and or paid fewer salaries. Social security payments, welfare, and other transfer payments are NOT counted in government spending component of the GDP. Increases in that spending may be captured in consumer spending, however, as it is spent.

bbauska wrote:Freeman, since you brought up Republicans not wanting deficit reductions unless there is a Democratic president (mind you, I am not a Republican); do you think that Clinton and or Obama have reduced the debt?

http://www.skymachines.com/US-National-Debt-Per-Capita-Percent-of-GDP-and-by-Presidental-Term.htm

Clinton $4,535,687,054,406 (starting)
Clinton $5,662,216,013,697 (ending)
Obama $12,311,349,677,512 (starting)
Obama $16,432,730,050,569 (current)

I don't think you use Southern Europe as a model for the US, RJ. Where the red zone is going to be higher because we have a far stronger economy

Just because you, geo and freeman say it does not make it so

So the decline in GDP is not because of a decline in federal spending in total, but spending on defense procurement did decline precipitously. I believe that many (including me) were confused by this and assumed that there was some decline in federal spending.