PDA

View Full Version : Economics What makes up or debt? How did it get there?


HonestChieffan
07-25-2011, 12:09 PM
I find this rather interesting.
http://www.americanthinker.com/blog/2011/07/cbo_how_we_swung_from_56_trillion_projected_surpluses_to_62_trillion_actual_deficits.html

July 25, 2011
CBO: How We Swung From $5.6 Trillion Projected Surpluses to $6.2 Trillion Actual Deficits
Yossi Gestetner


In early 2001, the Congressional Budget Office projected that the USA will accumulate a total of $5.6 trillion in budget surpluses from 2002 through 2011, but the government instead racked up $6.2 trillion in new debt in this very time. This is an $11.8 trillion swing in a mere ten years.

The CBO works with numbers available at the time of the calculations without factoring in potential troubles such as a 9/11 Terror Attack, business corruption and so on. These eventualities were not considered when the agency projected the trillions in surpluses a decade ago. Regardless and for what it is worth, here is how the $12.03 trillion* turnaround happened according to the CBO (the numbers are approximate):

30.6% of the turnaround took place in the Bush Republican Years (2001 through 2006) with an annual average of $612 billion.

15.2% took place in the Bush Democrat-controlled years (2007 and 2008) with an annual average of $914 billion.

54.1% took place since Obama became President (in early 2009) with an annual average of $2.167 trillion.

Here is the breakdown by others factors:

$8.605 trillion of the $12.03 trillion* turnaround accrued due to Legislative changes such as new spending, new programs and the "cost" of tax cuts. The rest accrued due to economic and technical changes, such as recessions.

20.3% ($1.750 trillion) of the $8.60 trillion Legislative Turnaround is due to the increased outlays and reduced income of the 2001, 2003, and 2004 Bush Tax Cuts of which billions went to expand the Child Tax Credits for the poor and reducing tax rates for the Middle Class.

4.54% ($391 billion) of the $8.60 trillion Legislative Turnaround is due to the cost and reduced revenue of the 2010 Tax Act passed in the Lame Duck session.

3.03% ($261 billion) of the $8.60 trillion Legislative Turnaround is due to tax changes of the American Recovery and Restoration Act (better known as The Stimulus).

Combining the "cost" of all tax changes since 2001 (including the 2001, 2003, 2004 Bush Tax Cuts for the rich, middle class, and the poor; the Stimulus and Lame Duck Session tax provisions), amounts to $2.402 trillion dollars; which is only 27.9% of the Surplus-to-Deficit swing that accrued due to Legislative Action through the last eleven years.

Additionally, the $2.40 trillion is only twenty percent of the total Surplus-to-Deficit swing of since 2001.

Some Context: The total $2.402 trillion "cost" of all tax changes since 2001 (which includes changes for the poor, middle class and '95% of working Americans' as Obama likes to say), amounts to an annual average "cost" of $218.45 billion, which is only 15.9% of the average annual $1.368 trillion deficits the US has in the last three budgets (2009, 2010 and 2011).

The Medicare Prescription Drug Program added $272 billion through 2011.
Whichever way you twist and turn the numbers, the facts remain clear: A) The bulk of the $12.0 trillion turnaround from projected surplus to actual deficits through the last eleven years took place after the Democrats came to power in 2007 and more so when Obama became President. B) Only a small percent of it is due to tax cuts, including tax cuts for the poor, middle class and '95% working Americans,' tax changes that the Democrats would certainly not advocate should be rolled back. Or maybe they would...
__
*While the first budget of President Bush was FY 2002, he had an effect on FY 2001 which started just months before he became President. Similarly, the first budget year of the Democrat Congress was FY 2008, but Pelosi/Reid had an effect on the FY2007 budget. President Obama had an effect on the 2009 budget despite the fact that it started a few months before he came into office. Therefore, the above calculations actually run on an eleven year stretch with a surplus-to-deficit turnaround of $12.03 trillion. FY 2001 counts as the first of Bush's six years, and 2009 counts as the first of the three Obama years. After all, Obama was a member of the Senate Majority since early 2007. It is therefore fair game to place it at his feet FY 2009 from its start).

mnchiefsguy
07-25-2011, 12:15 PM
Wow. The only up side I can think of is that if so much of it has been done in the last two years, that maybe some of this stuff has not been spent yet, but is in the pipline, so maybe there is hope? Spending has got to be cut, there is just no way around it.

cdcox
07-25-2011, 12:20 PM
This is great information, but incomplete. For someone who went into so much detail on $2.4 trillion, it begs the question why you would just gloss over the other $10 trillion? I find such selective accounting suspicious. I'm guessing some of that was due to lost revenue through a poor economy that was years in the making. Chase every dollar down, then we can draw some conclusions.

HonestChieffan
07-25-2011, 12:29 PM
This is great information, but incomplete. For someone who went into so much detail on $2.4 trillion, it begs the question why you would just gloss over the other $10 trillion? I find such selective accounting suspicious. I'm guessing some of that was due to lost revenue through a poor economy that was years in the making. Chase every dollar down, then we can draw some conclusions.



???

2bikemike
07-25-2011, 01:45 PM
I wish I could find the article where it showed the seriously flawed projection of revenue the Budget gurus predicted.

Maybe it was on here that I read it.

orange
07-25-2011, 02:14 PM
"$8.605 trillion of the $12.03 trillion* turnaround accrued due to Legislative changes such as new spending"

I'm guessing the lion's share of that "new spending" was Bush's Iraq Adventure. I wonder why the author didn't mention that? It almost sounds like he has an agenda. :hmmm:

HonestChieffan
07-25-2011, 02:18 PM
"$8.605 trillion of the $12.03 trillion* turnaround accrued due to Legislative changes such as new spending"

I'm guessing the lion's share of that "new spending" was Bush's Iraq Adventure. I wonder why the author didn't mention that? It almost sounds like he has an agenda. :hmmm:

Sort of like saying it was Bush's adventure and ignoing it had full legislative approval and support. Agenda?

Oh....lest we get sidetracked.....no comment on the Obama % in under 3 years? No, lets move on.

Amnorix
07-25-2011, 02:19 PM
*While the first budget of President Bush was FY 2002, he had an effect on FY 2001 which started just months before he became President. Similarly, the first budget year of the Democrat Congress was FY 2008, but Pelosi/Reid had an effect on the FY2007 budget. President Obama had an effect on the 2009 budget despite the fact that it started a few months before he came into office. Therefore, the above calculations actually run on an eleven year stretch with a surplus-to-deficit turnaround of $12.03 trillion. FY 2001 counts as the first of Bush's six years, and 2009 counts as the first of the three Obama years. After all, Obama was a member of the Senate Majority since early 2007. It is therefore fair game to place it at his feet FY 2009 from its start).

So Obama gets all of 2009 even though he wasn't President at the start? Hrmm...

Maybe it's just easier because it's impossible to start on the actual date of the start of the term. That's alot better than "because it's 'fair game'", which sounds alot like "because we like the way the numbers work out when we do it this way", to my mind.

I'd certainly agree that everyone, including Obama, has a very healthy share of responsibility. There's moer than enough blame to go around. Can we find a solution?

Amnorix
07-25-2011, 02:22 PM
Oh....lest we get sidetracked.....no comment on the Obama % in under 3 years? No, lets move on.


A huge reason for the deficit under Obama is the reduced tax revenues during his three years, which is the result of the recession.

As a percentage of GDP, tax revenues are at the lowest point they have been in something like 15 years. While we usually average something like 18-20% of GDP, we're currently operating at under 15% of GDP. That's many billions of non-existent revenue, exacerbating the deficit situation.

Meanwhile, we're incurring massive increased spending to try to resuscitate the economy. None of this is much different than what a Republican would likely have done while in office. None of this is unexpected.