Deficit Spending - Republican Legacy
The changes in political party holding Congress in 1995 and the White House in the past 20 years reveals the impact on deficits as a function of which party controls:
The source data showing the results of political policies on US revenue and outlay (spending) is available from the US Treasury monthly statements augmented by historical data from the Congressional Budget Office and the
White House. Warning, the White House "estimates" have substantial errors such as the 2002 "estimated -$106 B." deficit that came in at "-$159 B."
Tax Cuts and Balanced Budgets
Reagan Republicans claimed we could tax cut ourselves to a balanced budget.
The US Treasury Monthly Statements shows the results of two tax cuts and two tax balances since 1980. The data shows each tax cut resulted in substantially lower rates of revenue with no impact on rate of spending increase:
For those who may have forgotten, Reagan passed and signed a tax increase
which brought revenue increases in parallel but always below expenses.
Reagan could never submit or 'veto' to a balanced budget.
BTW, Republicans and Republo-Libertarians selectively claim that spending increases occur under Democratic Congresses.
In fact, spending always increased over the past 20 years leaving only the rate of spending change to give any indication of who might be in charge of Congress. But even the rate of spending increases as shown in the years before and after 1995 Republican take over of Congress, gives no indication of which party controlled Congress.
Even-Odd Year Accounting
Although Congressional and Presidential elections occur every even year, the new Congress and While House do not take office until the following January. The benefits of partisan policy changes can only show up in the following odd numbered year. Even that year is diluted since the first four months are under the previous party policies and it takes a couple of months to implement new policies.
Administration and Deficits
There is a claim that Congress increased spending with the implicit claim that Republican Presidents have been incapable of vetoing spending increases. Historical data from the
Congressional Budget Office going back to 1962 shows no evidence of Republican spending vetoes being overridden. Furthermore, the 2001-2002 data shows that only one appropriation bill was passed, the $190 B. farm bill, by a Republican Congress and several administration requested 'supplemental' spending bills which cause a slight increase in spending while the tax cuts took effect:
Most interesting is the complete absence of a Republican Congress impact in 1995 on spending. In short, regardless of who controls Congress, annual spending increases have been fairly constant versus distinct impacts of tax cuts or tax balances to the Federal budget.
Federal Debt
There are two parts to the Federal Debt, the public and 'intergovenmental' debt. The public held debt is the real debt.
The 'intergovernmental' debt is the excess Social Security taxes being collected today at 12% or less, along with the Airport and Highway trust funds.
With an executive 'stroke of the pen,' the 'intergovernmental' debt could be zeroed and convert the Federal Debt to an honest number, the public held debt.
As of December 23, 2002 , ~58% of the total Federal Debt is real, the public held debt:
- $3,647,659,435,575.74 - public debt
- $2,690,390,813,220.63 - intergovernmental debt
- $6,328,050,248.796.37 - total Federal Debt
It is inaccurate to use the total Federal Debt since substantial parts are excess taxes obligated to future expenses like Social Security, highways and airports.
Flat Tax and Social Security FICA
There is one obvious tax inequity, now that Social Security is funding government operations, which is the FICA limit:
- $81,000 - after this, no FICA tax is taken out
This means anyone making $160,000/year pays half the rate of Social Security tax as anyone making less than $81,000/year.
The FICA limit ensures the middle class and everyone below pays the full load, 12% FICA tax.
The fix for Social Security is to:
- Eliminate FICA limit - makes it at least a flat tax
- Cut first $600 of FICA - gives everyone, rich and poor, an equal cut
Conculsions
Some honest Republicans have admitted that that running our country into deficit budgets is part of their plan to force repeal of social legislation. However, in spite of the massive Republican deficits, the repeals they crave have failed. Congress has been and continues to be responsive to the will of the people (the others get new careers.)
What has happened is every Republican tax cut has exploded the Federal Debt. Today, interest payments have become one of the single largest expenses.
Partisan Democratic Expectations
Deficit budgets hold the administration hostage to which party controls Congress and the debt limit. Newt Gingrich tried to use that control to force Bill Clinton into making unreasonable cuts ... but it didn't work. Bill Clinton proceeded to shutdown the government and the Republicans lost seats, rightfully so. It is my fondest, partisan hope that the Republicans will hand GW that rope in 2003 so the full impact will be felt in 2004.
It is my partisan Democratic expectation that the Republicans are not that stupid ... after all, they took out Trent Lott and fired the first GW economic team.
Comments or questions can be addressed to:
Bob Wilson, my SPAM trap account.
I usually check it once or twice per week. Date: December 25, 2002.