You are saying that the debt is ok because the US is larger, and the ratio is less than Reagans.

My point is DEBT IS WRONG. I didn't like it with Reagan, Clinton, Carter, Bush 1 or 2. I do not give Obama a pass.

You saying that the ratios make Obama better means nothing to me. Tell me why debt is good, and spending over 4 trillion is a good idea. You can talk about the jobs that were created. Compare that to the same unemployment rate as when he took office.
https://www.google.com/publicdata/explore?ds=z1ebjpgk2654c1_&met_y=unemployment_rate&idim=country:US&fdim_y=seasonality:S&dl=en&hl=en&q=unemployment%20rate

President Obama has not slowed his spending. We have another 4 Trillion coming. Does that change your opinion of the ratio to GDP?

RickyP, I truly hope that the President can cut the deficit in half like he has promised. Based upon the projected budgets from the President, do you think it is possible he can fulfill his promise? I don't see it.

Debt is not 'WRONG' per se. A large debt is not good, but debt is not wrong at all. Capitalism relies on debt, companies are built upon debt.

Rapidly growing debt is a problem, for sure. But at the same time, when you have an economy that has a deep recession and is recovering, there's little you can do to stop a deficit from increasing - tax receipts fall with the economy; Welfare payments increase simply due to unemployment.

So, it's not just whether deficits were around or debt went up, it is why. Reagan inherited a faltering economy and indeed the deficit went up as various means were tried to deal with it. Bush I came in just before a crash, and so his deficits shot up. Clinton cut deficits and reduced the debt burden. Bush II had a small wobble at first, but after then growth and deficits were increasing for a fair period, before the big crash.

The recovery is clearly not yet done, so we can't expect deficits to come down quickly. What's more, the things that would reduce the deficit if done quickly would also risk the economy - cutting spending on entitlements means less disposable income for millions of US consumers, cutting government jobs means more pressure on employment, increased taxes places a burden on the economy. Also, there seems to be a mantra that because long term fiscal problems place pressure on the economy in the long term, that a short term rectification would improve the short term economy. It won't - it would indeed have a knock on for the future, but in reality the short term relationship is more the other way around.

The priority should be, frankly, to sort out the economy. Now, Ray Jay is willing to give Reagan a pass for 'fixing' the American economy. But that's only obvious in retrospect - for the first few years, things seemed to get worse, there was the early-80s recession, interest rates kept rising, deficits and debt soared, tax cuts had to be reversed. It was only in the second term that things became noticeably better (and even then the early-90s recession was a side-effect we should not forget).

The latest GDP figures for the US were not good (but yet better than for the UK which declined at an annual rate of 1.2% rather than 1%), and to me that means the real issue is the economy as a whole. Now, there seem to be some good points in the private sector, and that means policy needs to be carefully worked so as not to cut any green shoots there.

By the way, here's the debt profile of the US since the war, first in real dollars, and then as a proportion of GDP. Certainly the point where debt starts to rise after a period of decline or stasis is pretty obvious:

I’ve been too busy to respond, but there’s a lot here.

I agree with the lefty group that It is encouraging that deficit to GDP is going down; however the trend lines are scary. Our medical expenses will increase dramatically over the next several years. Interest rates may go up, and that may be beyond anyone’s control. Obama really has to deal with this and not just kick the can.

Ricky:

bbauska

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

No. But thats why its all been backed up by evidence...

I don’t think you’ve provided evidence. You’ve provided a lot of opinion. These are very different things.

Ricky:

ray

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.

What does this mean? When the army spends money on tanks and bullets thats not really spending?
A buck spent is a buck spent.

The point that Geo, Dr. Fate, and I are making is that whereas the media has trumpeted a decline in federal defense procurement spending as a cause of the GDP decline, the truth of the matter is that total federal spending continues to increase.

Other thoughts:

Regarding austerity, it drives me crazy that the term is continually used but not defined. It seems like any decrease in government spending is automatically defined as austerity, but it is not necessarily so. For example, even the contemplated sequestrations would only reduce 10 years’ worth of budgets by $1.2 trillion, with the hit to the current year of about $80 billion. We have a $3.8 trillion budget for 2013, so this represents a 2.1% reduction in expenditures. It’s less than the annual budget increase. I realize that many expenditures are somewhat fixed, but the notion that such a cut is devastating (i.e. austere) doesn’t pass the common sense test to me. I’ve worked for many private companies that have had to cut expenditures by more than that because of a business downturn, and survived. Government seems unwilling to make any hard choices (e.g. do we fund elderly heath, or a muscular military, or poor kids?), which in fact is the function of government.
I also think we have to be careful about only looking at federal spending in the aggregate. It isn’t only about how much Obama or Reagan spent. It’s also about whether the spending has been productive, and helpful to the economy. If you spend $100 on loans to companies that eventually go bankrupt and lay off most of their employees, you haven’t created value.

You also have to look at the composite of policies and how they influence the productive economy. Have you over-regulated? Have you lowered or increased marginal tax rates? Have you negotiated free trade agreements?

It’s true that I evaluate Reagan on a hindsight basis. I don’t argue with success. If Obama’s policies are wise so that we come out of it as his supporters claim, people will give Obama the credit. Perhaps our deficit as a % of GDP will continue to decline. Perhaps unemployment will go to Reagan levels. Perhaps productivity will get out of its funk and hit 4% per year. But for now, it just doesn’t look that way.

There is a lot of news on this stuff today which I haven't sifted through yet.

ray

I don’t think you've provided evidence

three pages ago I linked to the same charts Danivon just posted as substantiation for the claims I made.

It’s true that I evaluate Reagan on a hindsight basis. I don’t argue with success.

Do you think its a success to have increased the accumulated debt to the extent he did....?

Other than those bitchy rejoinders I think you hit the nail on the head here.

Regarding austerity, it drives me crazy that the term is continually used but not defined

This is exactly the problem. The courage to actually make choices.And to understand how they will impact on the economy. And to defend them intelligently and honestly in a public debate.

And that's my real beef with Sunny Ron. If he had delivered his economic magic within the realm of fiscal responsibility ... i.e. avoided increasing the debt to GDP ratio as enormously as he did ... he'd be a true hero. Instead what he did was make that kind of debt increase politically acceptable.
And in doing so, he validated a couple of myths that were propagated during his tenure. (The Laffer Curve for instance. Welfare Cadillacs being another.)
These notions still exist today and prop up beliefs that can't be corrected no matter how hard one tries...
When a large percentage of the electorate is under the misapprehension that taxes are not a fundamental responsibility of a complex society ... and that somehow everything can be paid for by lowering taxes .... reality is a hard sell.

We agree that politics is about the courage to make choices. But we disagree on a few things:

1. The Laffer curve really did work with Reagan. Tax rates went down but tax collected went up.

That doesn't mean it will always work, but it does mean that it worked when Reagan did it, presumably because he did it appropriately, or maybe he was just lucky, or perhaps it works up to a point.

2. You have to evaluate Reagan on the totality of the statistics. Yes debt went up. But it was still at manageable levels, and everything else fell into place. In addition to the statistics (what you call evidence ) that I have provided, take a look at median household income http://www.davemanuel.com/median-household-income.php Inflation adjusted, they went from $45,260 to $50,624. Obama has increased our debt even more, but median household income has gone down.

If we get away from ideology, that additional $5,000 can really help a lot.

ray

The Laffer curve really did work with Reagan. Tax rates went down but tax collected went up.

Bull.

It was thought that at that time in US history, the tax rates and current budget fell within the window of what Laffer predicted. When Reagan attained the Presidency, he did indeed pursue an aggressive program of tax reduction—however, the required corresponding budget discipline was ignored as he went on a military borrowing and spending spree. Apologists for Reagan (and supply-side economics in general), of course, blamed the Democratic-led Congress for the spending.

http://rationalwiki.org/wiki/Laffer_curve

From Laffer his own self:
But Laffer's O.K. with that. "The Laffer Curve should not be the reason you raise or lower taxes," he says. Perhaps not, but it does make for great campaign promises.

Read more: http://www.time.com/time/magazine/artic ... z2K820Z0jd

ray

2. You have to evaluate Reagan on the totality of the statistics. Yes debt went up. But it was still at manageable levels, and everything else fell into place

See, you keep, missing the main point Ray. After Sunny Ron, no one worried about debt accumulation. Because Ron didn't and he succeeded so well.
Anyone can borrow short term prosperity. But Ron disguised this as something sustainable. And it became unassailable logic that doing it the way Ron did it was a successful strategy.
Ron began the long term strategy of living beyond one's means that snow balled .... But without Ron's abundant communication skills selling the bunkum ... it wouldn't have occurred.

Its the same logic that lead the deregulation binge. Financial institutions don't need strict regulation because the markets operate on an inherent logic. Except it didn't work out that way, as some people found a way to make their money and run and leave others holding the bag of nearly worthless mortgage back securities...
This too, was felt back in reagan's day. In fact the Savings and Loans disaster was the largest bail out in US history till TARP. And it was essentially the same damn thing. Deregulation run amok.
Institutional memory, especially in Congress, being what it is .... no lesson was learned.
Indeed the lesson learned from Ron, is that deficits, and debt, don't matter.
Except, they do. Eventually.....

Ricky, you are not making any sense (to me). I'm not missing "the main point". I'm disagreeing with it. You can't blame Reagan for what happened after his presidency by Presidents who pursued similar but different policies. That makes as much sense to me as blaming Eisenhower for Vietnam or Bush I for the 2nd Iraq war. History is a guide, but every President makes his own decisions based on current reality.

Tax rates went down (a lot) and income tax receipts went up (a lot) under Reagan. That's the point and you haven't provided any evidence to refute it. Spare the additional lectures on deregulation and the S&L crisis, etc. etc. Please, can't you just stick to one topic. Your pattern is to diverge when you are not successfully making your case.

Anyway, here's an interesting article from today's WSJ on the budget deficit #s. http://online.wsj.com/article/SB1000142 ... 64998.html

It suggests that the situation is not as dire as I had been thinking.

here you go ray. A comprehensive look att your claim. It eseentially shows how the idea that tax cuts raised revenue is false. There are a lot of complicatiing factors, like the fact that he also raised taxes...There were 13 increases versus 11 decreases... And that doesn't include the increase in payroll taxes.
But the problem is that everyone "remembers" that tax cuts raised revenues...

http://www.econdataus.com/taxcuts.html

The argument that the near-doubling of revenues during Reagan's two terms proves the value of tax cuts is an old argument. It's also extremely flawed. At 99.6 percent, revenues did nearly double during the 80s. However, they had likewise doubled during EVERY SINGLE DECADE SINCE THE GREAT DEPRESSION! They went up 502.4% during the 40's, 134.5% during the 50's, 108.5% during the 60's, and 168.2% during the 70's. At 96.2 percent, they nearly doubled in the 90s as well. Hence, claiming that the Reagan tax cuts caused the doubling of revenues is like a rooster claiming credit for the dawn.

Furthermore, the receipts from individual income taxes (the only receipts directly affected by the tax cuts) went up a lower 91.3 percent during the 80's. Meanwhile, receipts from Social Insurance, which are directly affected by the FICA tax rate, went up 140.8 percent. This large increase was largely due to the fact that the FICA tax rate went up 25% from 6.13 to 7.65 percent of payroll. The reference to the doubling of revenues under Reagan commonly refers to TOTAL revenues. These include the above-mentioned Social Insurance revenues for which the tax rate went UP. It seems highly hypocritical to include these revenues (which were likely bolstered by the tax hike) as proof for the effectiveness of a tax cut.

Hence, what evidence there is suggests there to be a correlation between lower taxes and LOWER revenues, not HIGHER revenues as suggested by supply-siders. There may well be valid arguments in favor of tax cuts. But higher tax revenues does not appear to be one of them.

My claim is supported by your quote:

Furthermore, the receipts from individual income taxes (the only receipts directly affected by the tax cuts) went up a lower 91.3 percent during the 80's.

They also went up per capita. How can income tax receipts going up 91.3% during the 80's after Reagan lowered the tax rates be a refutation of my argument?

They also went up per capita. How can income tax receipts going up 91.3% during the 80's after Reagan lowered the tax rates be a refutation of my argument?

Because

They went up 502.4% during the 40's, 134.5% during the 50's, 108.5% during the 60's, and 168.2% during the 70's. At 96.2 percent, they nearly doubled in the 90s as well.

The 91.3 % growth didn't account for growth due to the growing economy.... relative to the growing economy revenues went down.... Which was why a deficit happened.

Ricky, now you are embarrasing yourself. First of all, you aren't using inflation adjusted numbers which the authors of the source that you are quoting warn against. In fact, if you read further down, they say:

Of course, these results are likely skewed by the high inflation that occurred during the 70's. Hence, it makes more sense to look at the "real" (inflation-adjusted) rates. The second table shows that the real growth rate from 1981 to 1991 was 17.72%. The 10-year growth rate increased in the following years to a high of 37.75% from 1984 to 1994.

2nd, the point of the marginal income tax rate cuts is not to increase taxes relative to the growing economy. The point of lowering marginal income tax rates is that they create a growing economy which results in higher absolute taxes collected, even though rates are lower. And that's precisely what happened during the Reagan years. Desperate to make your pont, you've moved the goal posts.

The problem as I see it with trying to prove that by lowering taxes Reagan recouped a substantial amount back in increased revenues is that Reagan substantially increased spending at the same time. Thus, it is impossible to know as to what extent the tax cuts resulted in increased revenues because the increase in tax revenues could have come from tax cuts, or higher spending, or some combination of tax cuts and higher spending, or some combination of tax cuts and higher and other factors unrelated to what the government is doing, or from other factors unrelated to what the government is doing. You have an impossible causation hurdle there, RJ.

Well. It caused deficits. and added to debt.
and thats a fack jack.

rickyp wrote:Well. It caused deficits. and added to debt.
and thats a fack jack.

"It" did not cause deficits. You haven't proven that at all. And the word is fact, jact. ;)