What happened to the surplus?

[Puppycow]

Two things jump out at me from this table.

First, taking it at face value, it shows an increase of approximately 35% in spending, and a decrease of approximately 18% in revenues. Or to put it in absolute terms, it shows an increase in spending of $935 billion, with a decrease in revenue of only $496 billion.

So, contrary to what you claim this table shows, what it really shows is that between increased spending, and decreased revenue, that it is the increased spending that is the bigger problem, by aproximately a factor of two.

Yes, but the 18% decrease in revenue is despite a roughly 18% growth in real GDP. The real economy of the US in 2011 is roughly 18% larger, but real tax revenue is 18% less, so it's really more than just an 18% drop, relative to GDP.

Another way to show this is the difference between 19.5% and 14.8%, which is 4.7%. 4.7 is 24% of 19.5 and 32% of 14.8, so you could say that revenues as a percentage of the economy are 24% less than in 2001, or that revenues in 2001 were 32% higher as a percentage of the economy than they are today.

So it really is closer to half increased spending (most of which is driven by the demographics of people getting older) and half decreased revenue.

Second is the asterisk next to the number for “Discretionary: Security” for 2001, which references a footnote that reads “Adjusted for inflation, but not population growth”. Why is only this number adjusted, and what effect does this have on the comparison to the corresponding 2011 number? Specifically, by adjusting the 2001 “Discretionary: Security” number for inflation would make that number larger than without such an adjustment, making the increase of the 2011 number over the 2001 number less than what would be shown without this adjustment. Not making the same adjustment for the other 2001 numbers would result in those increases appearing to be proportionally larger, compared to how they would appear of the same adjustment had been made. This certainly creates an impression to anyone who is paying enough attention to notice this detail, that the numbers have been dishonestly tampered with in order to support a conclusion that, if presented honestly, the numbers would not have supported.

It is not the only number that has been adjusted in fact. If you look at the top of the chart it says that Fiscal 2001 numbers are adjusted for inflation and 9.1% population growth. The Security number OTOH, has only been adjusted for inflation. This may be because it is not obvious that spending on security should be proportional to population, whereas spending on domestic programs such as Social Security, should be.

 

[Puppycow]

I wonder where those numbers came from.

According to the Citizen's Guide to the Federal Budget: Fiscal Year 2001


2011 budget spending is 3.69 trillion. And the increase all came from defense and mandatory spending. Discretionary spending remained the same?

Don't forget that the numbers in the chart are adjusted for inflation and for 9.1% population growth.

 

[Puppycow]

Shouldn't we expect both spending and revenue to increase over a 10 year period? Why didn't revenue increase?

The Bush tax cuts.

 

[Puppycow]

Hate to tell you, there was no surplus.

There would have been, except Bush gave it back or something. Then there were supplemental appropriations and emergency supplemental appropriations. All of these, which were passed under Bush, wiped out the surplus and that's why there was a deficit.

 

[Puppycow]

Discretionary spending dramatically increased.

Only the defense part of discretionary spending.

Your chart says it didn't which just causes your whole premise to unravel.

Note that the chart is adjusted for inflation and population growth.

Moreover, revenue is down due to incomes being down and since the tax code is highly oriented towards incomes, revenue has dropped. Tax cuts have little to do with that.

Can you provide some evidence for this assertion? Real GDP is considerably higher than in 2001.

 

[Grizzly Adams]

Because a lot of the costs (SSA and Medicare for example) are roughly proportional to population.

So what? Why does that fact mean anything with regard to how much greater outlays are than receipts? If we had (for example) a $100 billion deficit in 1994 and a $100 billion deficit in 2011, does the number change because we went from 275 million to 300 million people?

I don't see why it would.

 

[Puppycow]

So what? Why does that fact mean anything with regard to how much greater outlays are than receipts? If we had (for example) a $100 billion deficit in 1994 and a $100 billion deficit in 2011, does the number change because we went from 275 million to 300 million people?

I don't see why it would.

The per capita share of it does. Not to mention the fact that 1994 dollars are different from 2011 dollars due to inflation.

 

[lomiller]

The Bush tax cuts.

And the tax cuts in the Stimulus, but this is the last year for those IIRC. Additionally tax revenue during a recession usually drops faster the economy itself because of falloffs in corporate profits and money made in the stock market.

The structural part of that revenues drop can be attributed to the Bush tax cuts though.

 

[lomiller]

So what? Why does that fact mean anything with regard to how much greater outlays are than receipts? If we had (for example) a $100 billion deficit in 1994 and a $100 billion deficit in 2011, does the number change because we went from 275 million to 300 million people?

I don't see why it would.

Of course going from 275 million to 300 million would make a difference. The amount of debt a country can sustain is directly related to it’s population. (among other things)

The difference here is that if you want to keep social security spending constant as population increases you need to cut what you pay out to each person. Defence doesn’t work this way, individuals don’t receive less defence just because the population increases.

 

[Grizzly Adams]

The per capita share of it does. Not to mention the fact that 1994 dollars are different from 2011 dollars due to inflation.

But the chart said it adjusted for inflation AND population growth. And it wasn't a per capita accounting of the debt.

 

[Grizzly Adams]

Of course going from 275 million to 300 million would make a difference. The amount of debt a country can sustain is directly related to it’s population. (among other things)

The chart says nothing about how much debt the country is theoretically able to sustain now versus then. It says this is how much debt we had then, and this is how much we have now. How is that number made any different with population growth?

Put another way: the chart shows absolute dollars, not per capita spending. What adjustments need to be/were made for population? Or, yet another way to ask: if the population stayed exactly the same between the two years in the chart and we still spent exactly as much as we did in the same areas, how would the numbers be different?

 

[BeAChooser]

Then there were supplemental appropriations and emergency supplemental appropriations. All of these, which were passed under Bush, wiped out the surplus and that's why there was a deficit.

Did you miss the fact (from my first post) that the actual deficit went back up in FY2001 ... which was a year based on Clinton's budget proposals, not Bush's? Even discounting the supplemental appropriations and emergency supplimental appropriations that Bush added before Sept 30, 2011, the actual debt was already headed back up. So it's unfair to blame Bush for the trend. And those supplemental appropriations were needed ... or are you suggesting we shouldn't have bothered reacting to 9/11?

 

[RecoveringYuppy]

Put another way: the chart shows absolute dollars, not per capita spending. What adjustments need to be/were made for population? Or, yet another way to ask: if the population stayed exactly the same between the two years in the chart and we still spent exactly as much as we did in the same areas, how would the numbers be different?

They would be different in that the blame would then be all on Bush era policies. Bush isn't responsible for the growth in the population of the US, he therefore shouldn't be held accountable for the growth in spending that is due to population growth.

 

[Grizzly Adams]

They would be different in that the blame would then be all on Bush era policies.

Silly partisanship aside, what difference does it make with respect to the actual numbers??

 

[RecoveringYuppy]

Silly partisanship aside, what difference does it make with respect to the actual numbers??

The chart says nothing about how much debt the country is theoretically able to sustain now versus then. It says this is how much debt we had then, and this is how much we have now. How is that number made any different with population growth?

Put another way: the chart shows absolute dollars, not per capita spending. What adjustments need to be/were made for population? Or, yet another way to ask: if the population stayed exactly the same between the two years in the chart and we still spent exactly as much as we did in the same areas, how would the numbers be different?

You seem to be asking me to assume that the numbers are the same and then asking me how the same numbers would be different. The answers is if the numbers were the same they wouldn't be different.

The question you asked didn't seem to make sense, so I answered the question I thought you intended. The question I assumed is "Why did they adjust for population?". The answer: "They are trying to assess the cost of Bush policies, not the cost of population growth".

 

[Grizzly Adams]

So is the number listed for 2001 or 2011 not the actual amount spent in real dollars?

 

[RecoveringYuppy]

So is the number listed for 2001 or 2011 not the actual amount spent in real dollars?

No, of course not. The numbers for 2001 are adjusted as explained a dozen or so times starting with the very first post. They factor out a* source of expense that Bush policies were not responsible for.

*Actually two sources, but no one seems to be questioning the inflation part of this.

 

[JoeTheJuggler]

No, of course not. The numbers for 2001 are adjusted as explained a dozen or so times starting with the very first post. They factor out a* source of expense that Bush policies were not responsible for.

*Actually two sources, but no one seems to be questioning the inflation part of this.

I'd answer that adjusted dollars are in fact real dollars.

Unadjusted dollars makes comparisons over time (where the value of the dollar and population has changed) less meaningful (or even misleading). Adjusting the numbers this way, makes for valid comparisons.

 

[RecoveringYuppy]

I'd answer that adjusted dollars are in fact real dollars.

Unadjusted dollars makes comparisons over time (where the value of the dollar and population has changed) less meaningful (or even misleading). Adjusting the numbers this way, makes for valid comparisons.

I agree that the adjustments make the numbers more meaningful. If the only adjustment was for inflation I think there would be a case to say they are real dollars. I'm not familiar with adjusting for population being a proper use of the phrase "real dollars" but I could be wrong about that.

ETA: by my understanding of the phrase, 9 of the 12 values in the table are "real dollars". The top one in column 1 and all of columns 2 and 3. Those don't seem to be the numbers in question though. The adjustment to the 3 other numbers in column 1 seem to be in dispute.

 

[lomiller]

The chart says nothing about how much debt the country is theoretically able to sustain now versus then. It says this is how much debt we had then, and this is how much we have now. How is that number made any different with population growth?

When you supply deficit/debt numbers population and economy size is an essential part of the context. Without this context the numbers are meaningless and you may as well ignore them.

This is so obvious that there should be no need to state it explicitly in the discussion. If you have been discussing such numbers without realizing this then you probabaly haven't understood what was being said. How nonsensical would it be to see someone say “Greece only owes only 1% of what the US does so they don’t have a debt problem”.