While I knew the budget deficit decreased during Clinton's presidency and did a 180 degree turn under Bush, charting spending / revenues of the U.S. during these times one can see why. What surprised me was that during Clinton's presidency, spending decreased 3.7% from 22.1% to 18.4% of GDP, along with a similar increase in revenues.
On the other hand, the budget deficit under the first 7 years of Bush was caused as much by an increase in spending, as it was from a decrease in revenues. In fact, had interest income not decreased over that time (financing the debt has been done at historically low levels due to historically low Treasury Bill / Note / Bond rates), this number would have been closer to 2.5%.
And this doesn't include the record deficit expected in 2008 BEFORE this weekend's Fannie / Freddie bailout.
Source: CBO
And this doesn't include the record deficit expected in 2008 BEFORE this weekend's Fannie / Freddie bailout.
Source: CBO
Its interesting that both Bushs presided over the deficit double whammy of higher spending with lower revenue. It made me wonder about their combined contribution to the deficit.
ReplyDeleteJake - you need to look at the complementary l.t. numbers in the GDP accounts for all Gov sending. Since the end of WW2 it's run about 21-22%, state and local is much bigger than people think, non-defense spending has been relatively constant and the Clinton fiscal discipline was almost entirely due to defense spending cuts. Which we are now regretting almost as much as we're regretting not taking hard but simple decisions in the '90s when they were cheap.
ReplyDeletedblwyo- which complementary l.t. #'s?
ReplyDeleteI'd like to cite this, but the graph says "Reagon", not "Reagan"... fix it, and I'l try to cite it.
ReplyDeletefixed
ReplyDeleteBEA National Income and Product Accts Table 1.16 Real GDP, lines 20-25. Look at government spending as % of GDP and as % of gov spending for line items. I think you'll be rather surprised. You might want to run it back to the '50s.
ReplyDeleteif i'm interpreting the difference between the two data sets correctly...
ReplyDeletebush hasn't received more units of goods as a percent of units of gdp (per the bea), but has spent more as a percent in dollar terms? i guess warfare ain't cheap these days, huh?
Ummm....not quite. Is there some place you wouldn't mind my sending you a spreadsheet and letting you take a looksee ?
ReplyDeletei believe i am looking at the correct data, but feel free to send to me @ econompicdata@gmail.com. basically you are looking at spending in real terms (i.e. unit terms) vs. nominal.
ReplyDeletethe problem with real terms as listed by the BEA is they discount the federal spending by a deflator specific to the federal spending (i.e. if the government was buying planes that are 15% more expensive YoY, they discount at the 15%). this is important when measuring GDP as GDP is just a measure of productivity (units matter!).
however, for our national debt, units of planes don't matter. what matters is how much debt we are in. the nominal chart (1.1.5) shows this clearly and matches up very closely with my chart. if you discount both the nominal gdp and federal spending by a like deflator, the ratio obviously doesn't change.
i hope this makes sense...