Wednesday, May 31, 2023
US DEBT DECREASING UNTIL REAGAN
https://www.crfb.org/blogs/trump-will-face-highest-debt-gdp-ratio-any-new-president-truman
National Debt Graph
How “Voodoo” Caused Most of the National Debt
Here’s how national-debt policy was captured by Wall Street and went crazy. You can see exactly when it happened in this graph. You can even see George H.W. Bush predict it in the video clip below when he was running against Reagan — and then take it back when he became Reagan’s choice for VP.
CBO SAID $1.2 TRILLION DEFICIT JAN 07, 2009. WHO WAS PREZ?
CBO SAID $1.2 TRILLION DEFICIT JAN 07, 2009. WHO WAS PREZ?
Now show me the LAWS Obama passed that caused the deficits please? Almost everything was UNFUNDED TAX CUTS, UNFUNDED WARS, UNFUNDED MEDICARE EXPANSION BY THE GOP THAT COST $119 BILLION THIS YEAR AND RESULTS OF "HANDS OFF REGULATORS" THAT ALLOWED THE US (AND WORLDS) ECONOMY TO CRASH!
The Real Heroes of the 1998 Budget Surplus: Clinton and His Economy
Newt Gingrich would love to claim credit for the 1998 budget surplus, but the facts show he had nothing to do with it, writes Michael Linden.
When Bill Clinton took office in January 1993, the federal budget deficit was projected to be $310 billion that year, or about 5 percent of GDP. The Congressional Budget Office was also projecting that five years later, in 1998, the federal budget would still be in the red to the tune of $357 billion, or 4.5 percent of GDP. At the time, the CBO called the deficit outlook, “grim.”
Five years later, the United States enjoyed its first federal budget surplus in nearly 30 years—an incredible turnaround given the bleak projections at the beginning of the Clinton administration. Who, or what, was responsible for the more than $360 billion fiscal improvement? Was it President Clinton who deserves the credit as is widely believed? Or is it, as recently claimed by then-Speaker of the House Newt Gingrich, he, who by shutting down the government in 1995, eventually forced the budget into the black?
There are, indeed, two main heroes in the story of the remarkable budget surplus of 1998, but neither of them are Newt Gingrich or his Republican Congress. It turns out that their contribution to deficit reduction did more harm than good. No, the true heroes of deficit reduction were, first, President Clinton, whose 1993 budget—passed without a single Republican vote—raised taxes on the wealthy and dramatically altered the nation’s fiscal path, and second, a steadily improving economy. Those two factors, and particularly the interaction between them, account for virtually the entire fiscal improvement. Contrary to the Gingrich assertion, legislation passed by the Republican-led Congress of 1995 through 1997 combined to actually worsen the fiscal situation—albeit slightly.
In order to assign credit (or blame) for shifts in the country’s fiscal fortunes from 1993 to 1998, we scoured Congressional Budget Office reports from that period. Usually, over the course of a single year, the CBO releases three projections of the federal budget, each revised from the previous release to account for changes in legislation, economic conditions, and technical assumptions, and describe each change in some detail. We can see clearly what actually defeated the deficit by compiling and studying the changing CBO estimates of the 1998 budget.
Take President Clinton’s 1993 budget bill—officially known as the Omnibus Budget Reconciliation Act of 1993. OBRA, which mainly raised taxes on wealthy people but also raised the gas tax, extended limits on discretionary spending and cut back on some mandatory spending, was signed into law on August 10, 1993. Just five months prior, the Congressional Budget Office projected a 1998 deficit of $360 billion. One month after the bill passed, the CBO’s new estimate of the 1988 deficit was down to $200 billion. The CBO explained the dramatic improvement this way: “For the first time in two and one-half years, the deficit projections have taken a decided turn for the better… The reconciliation act deserves most of the credit for the improvement over the long run.” Indeed, of the $160 billion improvement from March to September of that year, CBO directly credited OBRA with $143 billion. In fact, OBRA turns out to have been the single largest contributor to the 1998 surplus.
After OBRA, the second largest contributor to fiscal improvement over the period was the rapidly strengthening economy. As the economy improved, the government began to take in more revenue than expected, since taxpayers were making more money, and had to spend somewhat less than expected, as poverty declined and the demand for social services declined with it. Over the course of the five-year period, CBO assigned a total of $102 billion in fiscal improvement directly to the effects of this kind of broad economic growth. There is also another substantial block of fiscal improvement—about $66 billion worth—that CBO classifies as “technical changes” but that are probably best categorized as economic. This $66 billion was the result of revenue collections that exceeded the level that CBO was expecting even with higher economic growth. In part, this occurred because the economic data on which CBO relied was lagging behind the actual boom.
But there is another reason why the economic boom produced even more revenue than expected, and again, it had absolutely nothing to do with Newt Gingrich. I’ll let the CBO report from September 1997 explain: “Over the past four years, growth in revenues has consistently outpaced that of gross domestic product (GDP) by 2 to 3 percentage points. Several factors have contributed to that outcome. The tax increases enacted in the Omnibus Budget Reconciliation Act of 1993 were the main causes in 1994 and 1995. Also, the personal and corporate income tax bases grew faster than GDP over the period, especially in 1996 and 1997. Higher income taxpayers experienced above-average income growth, which boosted revenues because their income is taxed at higher marginal rates.”
In other words, the rapid growth in personal and corporate income, especially among those at the top of the income ladder, interacted with the higher tax rates that Clinton and the Democratic Congress enacted in 1993. The result was even more revenue flowing into the treasury than just the economic factors or the new tax system alone would have predicted.
All together, OBRA plus direct economic factors, plus even higher than expected revenues from their interaction combined to produce a $311 billion fiscal improvement. That $311 billion wiped away more than 85 percent of the deficit. No help from Newt Gingrich required.
The remaining $50 billion or so of deficit reduction came mainly from lower than anticipated health care spending, lower than anticipated debt service payments, and other technical adjustments.
Notice that legislation crafted by the GOP-led Congress had no net impact whatsoever on the 1998 balanced budget. But that isn’t quite fair. There were several bills passed by Gingrich’s Congress that did impact the budget projections for 1998. It’s just that—and pay attention to this next part— their combined effect was to increase the deficit that year
https://www.americanprogress.org/article/not-so-fast-newt/
1993 Deficit Reduction Plan without a Single Republican Vote.
September 1993
The Omnibus Budget Reconciliation Act of 1993 has made a substantial dent in the annual budget deficits and in the accumulation of federal debt. Last winter, CBO projected that the deficit would grow from $290 billion to $360 billion over the 1992-1998 period, and that debt held by the public would swell from 51 percent to 62 percent of GDP. Now, the deficit is projected to fall to $200 billion over those years, and the debt is expected to reach only 55 percent of GDP.
...The Budget Enforcement Act of 1990 capped discretionary budget authority and outlays through fiscal year 1995, and the Omnibus Budget Reconciliation Act of 1993 extended the caps through 1998. Under these caps, nominal discretionary outlays in 1998 would be no higher than in 1993; in real terms, discretionary outlays would be cut by 14 percent over this period.
https://www.cbo.gov/sites/default/f...3-1994/reports/09-1993-outlookentirerpt_0.pdf
THAT'S PAY-GO (NO INCREASE IN SPENDING WITHOUT CUTS OR REVENUES) THE GOP GOT RID OF UNDER DUBYA AND DONNIE!!!!
PAYGO, which stands for “pay as you go,” is a budget rule requiring that tax cuts and mandatory spending increases must be offset (i.e., “paid for”) by tax increases or cuts in mandatory spending.
To Establish Fiscal Discipline, President Clinton:
"The deficit has come down, and I give the Clinton Administration and President Clinton himself a lot of credit for that. [He] did something about it, fast. And I think we are seeing some benefits."
— Paul Volcker, Federal Reserve Board Chairman (1979-1987), in Audacity, Fall 1994
"Clinton's 1993 budget cuts, which reduced projected red ink by more than $400 billion over five years, sparked a major drop in interest rates that helped boost investment in all the equipment and systems that brought forth the New Age economy of technological innovation and rising productivity."
— Business Week, May 19, 1997
No, the true heroes of deficit reduction were, first, President Clinton, whose 1993 budget—passed without a single Republican vote—raised taxes on the wealthy and dramatically altered the nation’s fiscal path, and second, a steadily improving economy. Those two factors, and particularly the interaction between them, account for virtually the entire fiscal improvement. Contrary to the Gingrich assertion, legislation passed by the Republican-led Congress of 1995 through 1997 combined to actually worsen the fiscal situation—albeit slightly.
...OBRA, which mainly raised taxes on wealthy people but also raised the gas tax, extended limits on discretionary spending and cut back on some mandatory spending, was signed into law on August 10, 1993. Just five months prior, the Congressional Budget Office projected a 1998 deficit of $360 billion. One month after the bill passed, the CBO’s new estimate of the 1988 deficit was down to $200 billion. The CBO explained the dramatic improvement this way: “For the first time in two and one-half years, the deficit projections have taken a decided turn for the better… The reconciliation act deserves most of the credit for the improvement over the long run.” Indeed, of the $160 billion improvement from March to September of that year, CBO directly credited OBRA with $143 billion. In fact, OBRA turns out to have been the single largest contributor to the 1998 surplus.
https://www.americanprogress.org/article/not-so-fast-newt/
- Enacted the 1993 Deficit Reduction Plan without a Single Republican Vote.
"The deficit has come down, and I give the Clinton Administration and President Clinton himself a lot of credit for that. [He] did something about it, fast. And I think we are seeing some benefits."
— Paul Volcker, Federal Reserve Board Chairman (1979-1987), in Audacity, Fall 1994
"Clinton's 1993 budget cuts, which reduced projected red ink by more than $400 billion over five years, sparked a major drop in interest rates that helped boost investment in all the equipment and systems that brought forth the New Age economy of technological innovation and rising productivity."
— Business Week, May 19, 1997
No, the true heroes of deficit reduction were, first, President Clinton, whose 1993 budget—passed without a single Republican vote—raised taxes on the wealthy and dramatically altered the nation’s fiscal path, and second, a steadily improving economy. Those two factors, and particularly the interaction between them, account for virtually the entire fiscal improvement. Contrary to the Gingrich assertion, legislation passed by the Republican-led Congress of 1995 through 1997 combined to actually worsen the fiscal situation—albeit slightly.
...OBRA, which mainly raised taxes on wealthy people but also raised the gas tax, extended limits on discretionary spending and cut back on some mandatory spending, was signed into law on August 10, 1993. Just five months prior, the Congressional Budget Office projected a 1998 deficit of $360 billion. One month after the bill passed, the CBO’s new estimate of the 1988 deficit was down to $200 billion. The CBO explained the dramatic improvement this way: “For the first time in two and one-half years, the deficit projections have taken a decided turn for the better… The reconciliation act deserves most of the credit for the improvement over the long run.” Indeed, of the $160 billion improvement from March to September of that year, CBO directly credited OBRA with $143 billion. In fact, OBRA turns out to have been the single largest contributor to the 1998 surplus.
https://www.americanprogress.org/article/not-so-fast-newt/
Tuesday, October 4, 2022
James Kennedy and Alan Greenspan, on the effect of mortgage equity withdrawals (MEWs) on the growth of the US economy.
Notice that in both 2001 and 2002, the US economy continued to grow on an annual basis (the "technical" recession was just a few quarters). Their work suggests that this growth was entirely due to MEWs. In fact, MEWs contributed over 3% to GDP growth in 2004 and 2005, and 2% in 2006. Without US homeowners using their homes as an ATM, the economy would have been very sluggish indeed, averaging much less than 1% for the six years of the Bush presidency. Indeed, as a side observation, without home equity withdrawals the economy would have been so bad it would have been almost impossible for Bush to have won a second term.
The Economic Blue Screen of Death - Thoughts From The Frontline - Investment Strategies Analysis Intelligence for Seasoned Investors.
https://www.mauldineconomics.com/frontlinethoughts/the-economic-blue-screen-of-death-mwo101708
RIGHT WING BS, LOOK AT LOAN PERFORMANCE BUBS
GSE Critics Ignore Loan Performance
TIMEFRAME:
Q When did the Bush Mortgage Bubble start?
A The general timeframe is it started late 2004.
From Bush's President's Working Group on Financial Markets MARCH 2008
The Presidents Working Group's March policy statement acknowledged that turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007
Q Did the Community Reinvestment Act under Carter/Clinton caused it?
A "Since 1995 there has been essentially no change in the basic CRA rules or enforcement process that can be reasonably linked to the subprime lending activity. This fact weakens the link between the CRA and the current crisis since the crisis is rooted in poor performance of mortgage loans made between 2004 and 2007. "
http://www.federalreserve.gov/newsevents/speech/20081203_analysis.pdf
FACTS on Dubya's great recession
https://www.usmessageboard.com/threads/facts-on-dubyas-great-recession.362889/
https://www.usmessageboard.com/threads/president-trump-crushes-obama-in-first-four-months-comparison.594112/page-8#post-17258248
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