This Whole Debt Limit Thing

[Bri]

The US debt increases faster than the deficit.
http://en.wikipedia.org/wiki/File:2010_Budget_-_Deficit_and_Debt_Increases.png

Look at the bush budgets (2007 – 2009) and you can see just how much larger this gap was under Bush then the Obama Budgets.

I'm not sure that has anything to do with what I was talking about. icerat was asking about the change in the calculations of deficit projections that Obama enacted when he took office, and whether or not those changes would have shown up on the graph that was cited earlier in the thread as a sudden increase in debt after the new calculation was put into place. Since the changes Obama enacted only had to do with how deficit projections are calculated, it wouldn't cause a jump in the graph between Bush and Obama (any data to the left of the dotted line are based on historical data, not on the calculation in question).

-Bri

 

[icerat]

First, let me beg you to please learn to use the quote feature properly before responding, since your post made it look like most of what you posted was written by you, when in actually most of your post came from my post to you. It was confusing.

I know how to use the quote feature. It's called a mistake, ok? mea culpa.

Second, were you not paying attention to what was going on in the economy in late 2008 and early 2009, and all the non-military spending that was approved about that time? THAT explains the huge bump that occurred in the charts that I supplied.

My point was the bump was almost exactly the same size in a chart that *did not* included military spending in the earlier figures, hence my query.

The 2005 WP article was talking about a projected estimate for the 2005 deficit, not the actual. The 2010 Heritage article was using "actuals". Guess it just turned out to be lower than estimated. And I think you meant $427.6 billion, not $472.6 billion, or would you like to supply your source for that number?

$427 billion in 2005 is $472.6 billion in 2010 dollars.

So I plugged in $1 as the amount of money in your inflation calculator.

It really is much easier just to plug in the actual number you know. Less chance of error.

But yes, looks like you're correct about the military spending. No need to be snippy you know, it was an inquiry for the sake of clarification, that's why I started it "one question"

 

[BeAChooser]

The US debt increases faster than the deficit.
http://en.wikipedia.org/wiki/File:2010_Budget_-_Deficit_and_Debt_Increases.png

Look at the bush budgets (2007 – 2009) and you can see just how much larger this gap was under Bush then the Obama Budgets.

Oh boy … we get another economics lesson from someone who has proven time and again that he knows next to nothing about economic history.

So Lomiller wants to claim that the gap between national debt and deficits was larger under Bush than it's projected to be under wonderful Mr. Obama's policies.

Let's see ... his Wikipedia chart shows the gap will be $250-$400 billion each year from 2012 on. So he must be claiming it was bigger than that during Bush's term.

But notice that Lomiller didn't actually show you what the gap was during most of Bush's term. Yes, in 2008 it was larger. And about that large in 2007.

But then 2007 was the start of the recession and 2008 was it's middle … and included a lot of foolish stimulus spending (all of it voted for by Senator Obama).

So here's a chart in the same format as the one Lomiller supplied but which actually shows the debt/deficit gap during all of Bush's years in office:

http://floridapundit.com/wp-content/uploads/2010/01/Deficits_vs._Debt_Increases_-_2009.png

The reason the 2009 number differs between the two charts is that 2009 wasn't over when the chart above was published.

And you can see that except for 2007 and 2008, the gap between the debt and deficit was much smaller than $350-$400 billion dollars during most of Bush's term … more like $200 billion or less.

And that might explain why debt is projected to do this thanks to Obama:

http://www.heritage.org/budgetchartbook/national-debt-skyrocket

 

[MattusMaximus]

Yet another something we see eye-to-eye on...this madness must end.

I keep hoping that as the deadline draws nearer, the less fanatical Republicans begin defecting to support Obama's plan and keep the default from happening.

I'd be completely unsurprised if this were to happen on, say, Aug 1st. Keep some semblance of "I didn't want to, but I felt I had no choice. It was either give in to their demands or the Country go into default. Someone had to be the bigger man and agree to compromise". And, ya know, as ******** as that excuse is, I'd be happy to see it.

Ditto. I am also hoping that this will happen, and I would be surprised if this, or some variant of it, didn't happen. To me the really interesting thing will be to see how the Tea Party types vote and react to such a development. We could very well see a small-scale implosion of the GOP over this kind of scenario.

 

[MattusMaximus]

Okay, seriously. You guys are sourcing National Review, Rush Limbaugh, the Heritage Foundation, and (most of all) biggovernment.com. Do have any idea how unconvincing that is? You might as well cite Mad Magazine.

This ^

Nothing like sitting in an echo chamber listening to yourself talk, eh?

 

[Bri]

No, the CBO chart is based on the assumptions that the White House gives the CBO. And one of those assumptions is that increasing taxes won't negatively impact business and therefore taxes ... and therefore revenue.

It's Garbage in ... Garbage out.

There are actually two different scenarios the CBO looks at. We can look at the actual document in question:

http://www.cbo.gov/ftpdocs/122xx/doc12212/06-21-Long-Term_Budget_Outlook.pdf

On the very first page, there are two projections. The Alternative Fiscal Scenario appears to be the one used by the Heritage Foundation. Here's the description of that scenario:

The budget outlook is much bleaker under the alternative fiscal scenario, which incorporates several changes to current law that are widely expected to occur or that would modify some provisions of law that might be difficult to sustain for a long period. Most important are the assumptions about revenues: that the tax cuts enacted since 2001 and extended most recently in 2010 will be extended...​

So it appears that the numbers used by the Heritage Foundation includes the extended tax cuts. The Extended-Baseline Scenario assumes that the tax cuts would expire. And the difference between the two seems to indicate that changes to taxes would make a difference as far as the deficit is concerned.

-Bri

 

[BeAChooser]

I know how to use the quote feature. It's called a mistake, ok? mea culpa.

Good. Glad to hear that.

$427 billion in 2005 is $472.6 billion in 2010 dollars.

Sounds about right. So what?

Quote:
So I plugged in $1 as the amount of money in your inflation calculator.

It really is much easier just to plug in the actual number you know. Less chance of error.

Seems to me, you're the one that made the error … claiming that $412 in 2004 dollars is $456 in 2010.

But yes, looks like you're correct about the military spending. No need to be snippy you know, it was an inquiry for the sake of clarification, that's why I started it "one question"

Fair enough. I'm now so used to dealing with clueless liberals with an agenda, that my "snippiness" is becoming almost second nature. I'll have to watch that.

 

[BenBurch]

There are actually two different scenarios the CBO looks at. We can look at the actual document in question:

http://www.cbo.gov/ftpdocs/122xx/doc12212/06-21-Long-Term_Budget_Outlook.pdf

On the very first page, there are two projections. The Alternative Fiscal Scenario appears to be the one used by the Heritage Foundation. Here's the description of that scenario:

The budget outlook is much bleaker under the alternative fiscal scenario, which incorporates several changes to current law that are widely expected to occur or that would modify some provisions of law that might be difficult to sustain for a long period. Most important are the assumptions about revenues: that the tax cuts enacted since 2001 and extended most recently in 2010 will be extended...​

So it appears that the numbers used by the Heritage Foundation includes the extended tax cuts. The Extended-Baseline Scenario assumes that the tax cuts would expire. And the difference between the two seems to indicate that changes to taxes would make a difference as far as the deficit is concerned.

-Bri

So in effect, Heritage Foundation is saying we MUST raise taxes?

 

[lomiller]

Let's see ... his Wikipedia chart shows the gap will be $250-$400 billion each year from 2012 on. So he must be claiming it was bigger than that during Bush's term.

But notice that Lomiller didn't actually show you what the gap was during most of Bush's term. Yes, in 2008 it was larger. And about that large in 2007.

Budgets past 2012 are not yet a gleam in anyone’s eye so it’s idiotic to use them for a discussion on how accounting practices in them impact deficit vs Debt increase. The 2012 budget won’t be finalized for months yet so it’s difficult to draw any firm conclusions from it.

What we *can* say is this: Obama implemented accounting practices that puts things in the budget that Bush was leaving out. The budgets on the books show Obama’s budgets being much more reflective of debt increases then the Bush’s budgets.

 

[BenBurch]

Budgets past 2012 are not yet a gleam in anyone’s eye so it’s idiotic to use them for a discussion on how accounting practices in them impact deficit vs Debt increase. The 2012 budget won’t be finalized for months yet so it’s difficult to draw any firm conclusions from it.

What we *can* say is this: Obama implemented accounting practices that puts things in the budget that Bush was leaving out. The budgets on the books show Obama’s budgets being much more reflective of debt increases then the Bush’s budgets.

Is anybody surprised that Bush lied about this?

 

[Bri]

So in effect, Heritage Foundation is saying we MUST raise taxes?

I wouldn't say that. They are assuming in the graph shown in the article that we won't allow the Bush tax cuts to expire (which is reasonable and the CBO considers that the most likely scenario). However, if you compare the two graphs from the CBO, it seems to undercut the theory that changes to the tax cuts won't have an effect on the deficit.

I think the argument that the Heritage Foundation is trying to make is that if you raise taxes it causes people to choose to make less money and therefore the overall amount of revenue collected remains the same. It seems to me that if people have the opportunity to make more money they will do so unless taxes are so high that they no longer have an incentive to make money (which would occur only if taxes were much higher than anyone is considering). I don't buy the Heritage Foundation's argument, and neither do most economists (including many right-leaning economists) who believe that we must both increase revenue and cut spending in order to balance the budget.

-Bri

 

[Kestrel]

So in effect, Heritage Foundation is saying we MUST raise taxes?

As long as the tax increases target the poor and working class, the Heritage Foundation might not object.

 

[BeAChooser]

On the very first page, there are two projections. The Alternative Fiscal Scenario appears to be the one used by the Heritage Foundation.

Yes, and you'll notice in the very first chart in that CBO document that the Extended-Baseline Scenario assumes tax revenues climb with spending for as far into the future as they project ... to 23-24 percent of GDP.

It's as I said. The Whitehouse assumption is totally contrary to what 60 years of history shows revenues do regardless of tax policy ... that revenue average about 18% of GDP regardless.

And the flaws in the Extended-Baseline scenario are even worse than that. The Extended-Baseline also assumes there will be no GDP consequence to having higher tax rates.

In short, the Whitehouse scenario is pure FANTASY.

In contrast, the alternative scenario (equivalent to Heritage's) shown in the 2nd chart is far more realistic.

It assumes that revenues will remain at the historical average of 18%. And results clearly indicate that what's coming is disaster if that's true and Obama's spending programs remain in place. Because the fact is that, with or without the Bush tax cuts, history shows that revenues will only be about 18% of GDP.

Also, without the Bush Tax cuts, GDP will go ... if history is again any guide ... down. I suspect that the CBO did not account for that in the alternative scenario.

In other words, things will be even worse than the alternative scenario projects ... unless the "tea party" republicans win this battle.

 

[lomiller]

I'm not sure that has anything to do with what I was talking about. icerat was asking about the change in the calculations of deficit projections that Obama enacted when he took office, and whether or not those changes would have shown up on the graph that was cited earlier in the thread as a sudden increase in debt after the new calculation was put into place. Since the changes Obama enacted only had to do with how deficit projections are calculated, it wouldn't cause a jump in the graph between Bush and Obama (any data to the left of the dotted line are based on historical data, not on the calculation in question).

-Bri

My understanding is that Supplemental appropriations don’t get included in the deficit numbers, irrespective of whether we are discussing projections or final numbers, and the wiki article on the US budget supports this saying it one of the primary reasons why Debt increases are greater than the budget deficit.
http://en.wikipedia.org/wiki/United_States_federal_budget

The national debt represents the outstanding obligations of the government at any given time, comprising both public and intra-governmental debt. Differences between the annual deficit and annual change in the national debt include the treatment of the surplus Social Security payroll tax revenues (which increase the debt but not the deficit), supplemental appropriations for the Iraq and Afghanistan wars, and earmarks.

By putting items like the Iraq/Afghanistan wars into the budget proper and not dealing with them as supplemental appropriations the accounting rules Obama is using are going to make the deficit considerably more reflective of income vs expense then it was under bush, and this isn’t just limited to projections.

 

[Bri]

By putting items like the Iraq/Afghanistan wars into the budget proper and not dealing with them as supplemental appropriations the accounting rules Obama is using are going to make the deficit considerably more reflective of income vs expense then it was under bush, and this isn’t just limited to projections.

OK, but the question concerned a graph of historic spending data. The question was whether you'd be able to see a sudden increase in spending on that graph when the changes in the calculation went into effect.

-Bri

 

[BeAChooser]

However, if you compare the two graphs from the CBO, it seems to undercut the theory that changes to the tax cuts won't have an effect on the deficit.

No, it does not, for exactly the reasons I just pointed out to you.

I think the argument that the Heritage Foundation is trying to make is that if you raise taxes it causes people to choose to make less money and therefore the overall amount of revenue collected remains the same. It seems that if people have the opportunity to make more money they will do so

Except that 60+ years of history show they won't increase revenues for any significant amount of time above 18%, on average. The assumption given to the CBO by the Whitehouse that revenue can climb to 23-24% of GDP and stay there is outright silly. It's fantasy that shows a complete lack of regard for human nature. So don't try to preach to us about human nature.

I don't buy it

Then you are denying 60+ years of economic history. Why is it that, regardless of the subject, liberals can NEVER learn from history? They insist on living in a fantasy land.

 

[lomiller]

OK, but the question concerned a graph of historic spending data. The question was whether you'd be able to see a sudden increase in spending on that graph when the changes in the calculation went into effect.

-Bri

It would depend on what you looked at. These items had been previously been bypassing the budget and therefore did not show up in the budget deficit so if you looked there you would see a sudden increase. If you looked at total expenditures or the total debt increase then no there would be no difference.

For historical graphs, deficits would appear smaller than if they were calculated under the rules Obama now uses but the total debt would remain unchanged. IOW instead of the ~$500 billion deficit reported in 2008 you would have seen a number closer to $800 billion. Likewise, if the Bush accounting rules had continued to be used the deficits reported for 2010 and 2011 would have been smaller by several hundred billion.

 

[Bri]

Except that 60+ years of history show they won't increase revenues for any significant amount of time above 18%, on average.

There is no evidence that anyone would actually choose not to earn as much money because their tax rates go up a few points. And again, there are a LOT of experts (including conservatives) who come away with a completely different conclusion from the same data.

-Bri

 

[Bri]

If you looked at total expenditures or the total debt increase then no there would be no difference.

The graph in question showed total expenditures, not deficits.

Also, I would imagine that a graph showing historical deficit data would be more likely to use historical expenditures minus historical revenues than the calculation used to project future deficits.

-Bri

 

[ladmo]

There is no evidence that anyone would actually choose not to earn as much money because their tax rates go up a few points. And again, there are a LOT of experts (including conservatives) who come away with a completely different conclusion from the same data.

-Bri

Agreed, this is why income tax bracketing is a huge topic in Washington.