Wednesday, September 21, 2005

Criminally Full of Shit

Intelligent people who support the Republican party in a lukewarm manner (there aren't too many who support the Republicans in a toasty manner) tend to be pretty vague about their reasons for supporting the Republicans to the degree that they do. This allows them to dodge the tough questions about why, exactly, they would lend their support to a party that, as these folks will admit when pressed, does not seem to share very many of their priorities.

One thing that makes life easier on these people is that the Democratic party is often obviously full of shit. And pointing out the various, often hilarious ways in which the Democrats are full of shit allows our tepid Republican-supporters to reassure themselves periodically that supporting the GOP does not mean that they are world-class suckers.

Let's stipulate that the Democrats are full of shit. Put that behind us. However, the painful reality that we need to force these folks to face up to is that the Republicans are Criminally Full of Shit.

Over the next fifteen minutes (and possibly longer if I feel like it) I will be chronicling one (possibly more) of the various ways in which this Criminal Shitfulledness is manifested in the Republicans' current piloting of our Ship of State. To show my versatility, I will do this while installing Windows 2000 on a Dell desktop AND while talking on the phone with Apple about my iPod AND while wrangling with my real estate agent via email regarding our move-out date (it's a busy week.) I will do this in an extra pissed-off manner because today my favorite pair of shoes (black Kenneth Coles for which I paid a whopping seven dollars at the Value Village) has died. Rest in peace KC's, you served me well.

CFOS File I - Budget Bamboozlement

Fact: The much-ballyhooed White House plan to halve the deficit over five years is in fact a plan to steadily increase the deficit, just as all Republican presidents have consistently done since Ronald Reagan.

A distinction must be made here, as it must be in most cases, between the rabid wingnut position and the position of honest conservatives who support the GOP because they dislike Democrats.

The rabid wingnut position on deficits is somewhere between the Dick Cheney position, "Deficits don't matter," and the Grover Norquist position, "Deficits are good because the proper goal of federal budget policy is to bankrupt the government."

These arguments are fairly easy to defeat, since they are basically insane. However, I don't reccommend engaging such a person in any kind of political debate, or really even talking to them at all. There is no point to it because here you are dealing with someone who is basically either a member of a cult or one of its leaders, and you can talk to them for a thousand years and nothing will ever come of it, except you may get a headache as you die of old age.

Instead, you should focus your energy on people who believe that the GOP really has a desire and a plan to reduce the federal deficit.

Exhibit A in debunking this myth is The Deficit Graph, pictured below with helpful markings:

The Deficit Graph

The first thing you will notice about this graph is that, contrary to protestations that you will hear from conservatives blaming Congress for any and all budget problems, the federal budget certainly seems to behave in characteristic ways under any given president.

Proportionality being what it is, it's hard to draw many conclusions from the graph about any president before Reagan. Once we get to Ronnie, though, we can see some pretty obvious things happening.

First, Reagan brought us the Modern Era of extremely large deficits. Before Reagan, all postwar presidents had run fairly modest deficits, with some variation among administrations mostly having to do with external conditions.

When the Reagan administration came along, they completely changed the way the budget process worked. They did this by selling a snake-oil that they called "supply-side economics," which predicted that by decreasing marginal tax rates, the government would increase its revenue.

This may sound really stupid, but in fact you can demonstrate that at SOME unknowable marginal tax rate, decreasing tax rates will increase government revenue. The leap the Reaganites made was to assume that this would work in actual practice, at the marginal tax rates that existed at the time. They offered no evidence of this because none existed.

It didn't work. Many, many Republicans, both rabid and lukewarm, will claim that it did work. But it didn't. And the evidence that it didn't work is right there in the graph. Reagan increased the size of the federal deficit to levels that had not existed since the end of World War II by drastically slowing the growth of federal revenue while allowing federal expenditures to grow at the same rate as before. There are many people who will dispute this characterization, and they fall into two categories, people who don't know what they are talking about, and liars.

So Reagan made the deficit much bigger. At the tail end of his administration, some of the damage was repaired, but in the end the deficit when he left office was approximately double the size it was when he took over.

George H.W. Bush pulled the exact same trick, but over the course of just four years, doubling the size of the deficit again. When Bush left office, the deficit was seen to be approaching unmanageable levels, leading Bush to renege on his "no new taxes" pledge and also giving Ross Perot the key issue that led to him getting a substantial number of votes in the 1992 election.

When Bill Clinton took over, he immediately put together a team of economics professionals to help him understand how to get the government out of the red and allow the administration to place Social Security, Medicare and Medicaid on a sound financial footing. The plan they came up with was threefold - raise taxes, cut large numbers of workers from the federal payroll, and invest a portion of the Social Security trust fund in equities rather than investing it all in T-Bonds.

Republicans reacted as if Clinton had proposed the creation of a network of free heroin distribution centers across the continental United States. They howled about how the Clinton budget would bankrupt the United States, cause the second Great Depression, and bring about the end of everything good and righteous about our noble nation.

The third prong of the Clinton plan (investing Social Security money in the stock market) was unpopular and got mothballed, but the first two prongs were passed, and the result was that over the eight years Clinton held office, through four Congresses under several different combinations of friendly and opposition control, Clinton decreased the federal budget deficit every year, culminating in a 2000 budget surplus of 236 billion dollars.

During the 2000 campaign, Al Gore reccommended using the surplus to increase payments to the Social Security trust fund, while George W. Bush touted a plan to "give the money back" by lowering taxes primarily on extremely wealthy people. Bush took office and made good on his promise, passing his massive tax cuts with ease. He even had the audacity to use a version of the old Reagan snake-oil pitch, telling us that the tax cuts would "pay for themselves" by stimulating economic growth and thus increasing federal revenue.

Surprise! It didn't work. Bush II became the first president to actually decrease federal revenue, and he did it in a big way. The result is that the deficit for fiscal 2004 was a staggering 412 billion dollars.

So we can see pretty easily, first of all, that the 2004 Bush campaign promise to halve the federal deficit sets the bar pretty low, considering that if Bush achieves this lofty goal he will have increased the budget deficit during his two terms by over 400 billion dollars, by far the worst fiscal record of any president in modern history.

The trouble is, merely by using the numbers I'm using I'm actually Criminally Full of Shit. As bad as the Bush record (and the GOP record generally) looks using these numbers, in reality it's much, much worse.

You see, these numbers, which are the numbers we usually hear, include normal federal budget numbers AND Social Security numbers, when in fact Social Security is a completely separate deal and has nothing to do with the general fund. It's funded by its own tax receipts (the payroll tax) and even has its own investment account, the Social Security Trust fund, which contains billions of dollars worth of T-Bond securities to insulate it against the coming retirement of the baby boomers.

Social Security runs a surplus due to some hefty tax increases passed under the Reagan administration. Reagan didn't mind these tax increases because they are only paid on the first 90,000 or so of income, thus the tax burden of the payroll tax falls much more heavily on the poor than does the income tax, which funds the federal budget. Since neither Reagan nor anybody in the GOP gives a shit about poor people, they never howl about this obvious injustice. (Sadly, since the Democrats are mostly rich guys, they don't bother making much noise about it either.)

So when we consider Social Security and the general fund together, we're not getting a great picture of what is really happening with the federal budget. After all, the Social Security surplus is used to buy government debt, so from a general-fund perspective, that money is a zero-sum proposition.

If you look at the real federal budget numbers, which you can do at the handy CBO Historical Budget Data Webpage, you will see that the actual federal surplus in 2000, Clinton's last year, was a mere 86.3 billion dollars. The rest of the 236 billion dollar surplus was due to Social Security.

This was still a nice turnaround from the Bush I number, which was actually a 340 billion dollar deficit. Not chump change, to be sure, but look at what his son has achieved in the same time frame.

That's right, the federal budget deficit for 2004 was 567 billion dollars. George W. Bush took an 83 billion dollar surplus and turned it into a 567 billion dollar deficit. That is a staggering achievement, folks, up there with the very worst management disasters in history.

Many uncomfortable Bush supporters will claim that this is a result of external factors, not policy choices. This is just bunk, and they probably know it. But leave that point aside for the moment and pop over to the also extremely handy CBO Current Budget Projections Webpage and take a look at the CBO projections for the next ten years. These projections assume no change in current policy.

Here we can see two things. One, the White House claim that they are going to cut the budget in half in five years is a little off. If we include the Social Security numbers in our calculations, the budget deficit does decrease from 412 billion in 2004 to 218 billion in 2011. That's almost half, though 2004-2011 is eight years, not five. But we'll allow them this little bit of fudging. Five years vs. eight is, after all, a rather Democrat-sized fib.

But we can quickly draw a second conclusion that should start to make our GOP-lite readers a little nervous. The On-Budget deficit, that is, the deficit without taking into account Social Security, doesn't change much at all during the period from 2004 to 2011. Indeed, the shrinking deficit would be almost completely the result of the increasing Social Security surplus. You'll recall with us at this point that Social Security is the program that Bush keeps threatening to "save."

So in fact the fiscal policy of the Bush White House is to continue running massive general account deficits until the end of their term, making no effort of any kind to repair the unprecedented damage they have done to the solvency of the federal government, whose stewardship responsibilities they inherited at a historical solvency zenith.

Almost unbelievably, it actually gets worse.

You'll notice that after 2012, the outlook gets much rosier. The general fund is still running a high deficit, but not nearly as high as 2011 and before. That's because the current projections reflect the fact that the deep tax cuts passed by Bush are mostly set to expire in 2011, a provision that was added for the express purpose of creating artificially rosy budget projections. The GOP has announced that a major policy goal of the current congress is to extend these tax cuts permanently. If that does wind up happening, we can all head back to the CBO web page to watch that final number - the total public debt accrued from 2006-2015 - skyrocket from two trillion dollars up to some unforeseeable (but definitely really, really, huge) number.

So if you read this blog and you vote Republican, or if you vote for someone other than the Democrats on the theory that "Democrats are just as bad," please, please take two hours over the next couple of weeks to look over the historical budget numbers. Break them down however you want, by control of congress, control of White House, or any other delimiter you want to use.

If you're honest with yourself, you'll come to the only conclusion the numbers allow - another four years of a Republican controlled White House after Bush leaves office will mean the continued erosion, possibly terminal erosion, of the solvency of the U.S. government. And even if you don't care about food stamps, Social Security, aid to indigent children, or any of the other programs that keep people from starving in the fucking street, think about your precious War on Terror, and how much easier it's going to be for all the people who want to come kill you to do just that, once the government can't pay its bills. Think about the fact that you'll never again be able to invade some defenseless, poor country just because you don't like their president's beard, or the word he uses for god.

For fuck's sake I don't care what you think about, just think. For one goddamn second, think.

I told you I'd be extra pissed off. That's all for today.

The Ape Man

8 comments:

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Uncle said...

For some of us it's all a bit too familar. We were all fed the lie of the "golden asterisk" and watched the deficit soar.

BigBuddhaPuppy said...

Paper money for a paper president...

Anonymous said...

Excellent article. Do you plan to update this?

Anonymous said...

I'm not disagreeing, per se, but that graph data would be far more accurate (and informative) if it showed the congressional and senate party majorities at the time.. after all, the president alone does not a deficit make - he just has the power to veto it. That huge rise out of the cellar in the Clinton admin is difficult to lay at his feet, since the republicans had control of the purse strings; likewise, the Reagan and GHWB eras had Dem majorities for alot of the time I believe. However, the latest drunken sailor binge spending is solely upon a republican president and a large republican majority conress and senate. Also... the growing "invisble" inflation (not tied to the CPI) is probably the major cause of the appearance of the growth in terms of how "far" from zero the deficit has swung. This is the inflation that is apparent in, say, the cost of real estate and not aparent in the cost of a television set, former having risen about 500% in about 40 years, but the latter has actually gone down - hence if you judge inflation on consumer items alone, with a US dollar not based on gold (since Nixon) you have the appearance of stagnant inflation, and a growing "asset" market. Anyhow, nice article, excellent points - just thought I'd throw some thoughts your way in case you do update it.

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