Monday, March 07, 2005

Debt Build Up

I was reading a page on the mythological balanced budget of Bill Clinton. There's seems to be a great deal of literature dedicated to building a myth that the Democrats are some how fisically responsible and their evil Republicans are not. My experience is that neither party is fiscally responsible, and prefer the word dysfunctional to evil when describing US politics.

Clinton inherited an economy that was the envy of universe. The information revolution that coincided with Clinton's presidency generated more money than the government expected to take in. This resulted in several momentus events. The first was a decrease in the rate of increase of the deficit. Achieving a second derivative ranks among the greatest goals ever achieved by any politician in political history.

However, when I look at economic history. It seems that achieving this second derivative was more a matter of the economy outpacing expectations than leadship. The second thing that happened was that Congress submitted a "balanced budget." The catch, of course, is the US did not live with its budget. The Debt to the Penny Page by the US Treasury doesn't show a year since 1960 when the debt did not increase.

The "balanced budget" was almost more of a set up than an indication of financial restraint. Budgets are forward looking. This budget had the assumption that the stock market bubble of 2000 and the Y2K spending frenzy would continue. Both were false assumptions.

Comparing the first four years of Clinton to the first four years of Bush shows Clinton's debt rising from $4,064,620,655,521.66 to $5,224,810,939,135.73. This is a 28.5% increase. The first four years of Bush show $5,674,178,209,886.86 in 2000 rising to $7,379,052,696,330.32 at the end of the fiscal year in 1994. This is an increase of 30.0%.

Neither figure is acceptable!

I think George Bush has done a horrible job on the deficit. His tax cuts weren't real. To be real, the tax cuts would have to come from cuts in spending.

Neither party shows great resolve toward debt reduction. Comparing a 28.5% increase in the deficit with a 30.0% increase in deficit simply shows that neither party making any headway against uncontrolled deficit spending.

1 comment:

mungojelly said...

Why make the sacrifices that would be required to actually balance the budget?? US sheep-citizens are happy enough with "we balanced the budget!" (democrats) VS "we're the small government party!" (republicans). They'll believe either or both in absence of the reality. Propaganda is cheap.