The Pardu

The Pardu
Watchful eyes and ears feed the brain, thus nourishing the brain cells.

Friday, September 18, 2015

Connect The Dots USA: Spending, Deficits, Debt et al

During the run-up to the 2010 signing of the Affordable Care Act, (ACAConnect The Dots USA, was a frequent read. The ACA was signed into law and has managed to readout $100 million plus in frivolous US House of Representatives and US Senate votes. The life sustaining law has also withstood two major Supreme Court cases; sadly the GOP still speaks of repealing ;the law.

Connect was also instrumental in galvanizing social media towards participation 2014 mid-term elections. A gallant effort, but the effort was unfortunately met with progressives and Independent stay home (itis) and handed the GOP moderate wins in 2014. Maybe Connect among others of us (on social media) helped to whittle away at the GOP seat dominance in the House and may have helped to ward-off even more US Senate seat losses.

During the recent GOP debate, Donald Trump again mentioned the reality of excessively high US Debt. If someone has an article or video of Donald Trump ;berating the US Debt before Barack Obama won the US Presidency, please share the details. 

Let’s zoom in on the deficit graph to see what happened since this devious “tax cuts” strategy took off in the 1980s when the GOP got control of the White House. President Reagan started slashing tax revenues and discovered it was a lot harder to cut spending (because folks like those govt programs). And the deficit gap widened.

Note that the last five times we’ve had budget surpluses (four of them were Clinton budgets), revenue was near 20% of GDP. But the Clinton surpluses were squandered in the Bush years when revenue dropped to below 15% of GDP and spending soared to 25%.

Remember, GDP in 2014 was about $17 trillion, so each 1% is a $170 billion — a huge difference. Last year, the deficit was just under $500 Billion or 2.8% of GDP, which is down from the whopping 10% of GDP deficit ($1.4 Trillion) when Obama took office. Note that the deficit gap was closed by both bringing down spending AND bringing up revenue.

This bar chart illustrates Obama’s rapidly shrinking deficit as a percent of GDP — that’s the size of the gap between the red spending line and the yellow revenue line in our last graph.
Unfortunately, according to a recent poll in reality-free America, a whopping 73% mistakenly thought the deficit was getting bigger over the last six years. Geez, I sure hope they don’t vote based on that issue!
    Connect The Dots USA
                              September 15 
Here we see all those deficits added together to form the long-term debt. We were paying down the old WWII debt and only had less than $1 Trillion to go. Then Reagan came in with his wild tax cuts and kicked the doors off, leaving a $2.9 Trillion debt to Papa Bush, who quickly ran it up to $4.4 Trillion in just four years.
Clinton was bringing it down with higher taxes and more sane policies. Had “Dubya” done the fiscally responsible thing by consistently applying the then $130 Billion annual surplus toward the country’s “credit card,” we would have had the $5.7 Trillion debt paid off years ago.
d the debt, gave us more tax cuts, two wars, a Medicare drug benefit, a Wall Street bailout (all unfunded mind you), an economy on the brink, a $10.6 Trillion debt with the juice compounding, and a projected 2009 deficit of $1.4 Trillion there to greet Obama on day one.
Republicans are fiscal conservatives? Hello! Three-plus decades ago, they abandoned “balanced budgets” for tax cuts and endless war. Don’t let them get away with invoking the old GOP brand anymore.

During the GOP clown show debate this week, you heard many of the candidates complain about our $18 Trillion in debt and then — sometimes in the same sentence — insist on how we must spend endlessly on more and more military. No one ever mentions a reasonable budget, audit or tax offset for the Pentagon or war activities— just more, more, more. Apparently, under GOP logic, only military spending is not subject to “pay fors” or the law of diminishing returns.

Most folks who scream about the debt don’t realize that we owe more than half of that $18 Trillion debt to ourselves — not to China. And Social Security — far from adding to the deficit or debt — is America’s largest creditor. Failure to grasp this distinction is like not understanding the difference between your home loan and the bank to whom you owe the money.

Social Security gradually redeems its treasury bonds as needed to make up any shortfall from payroll taxes. The rest sits there earning interest — just like if you own treasury bonds in your portfolio. What the federal govt chooses to spend that loan on — waging senseless wars or investing in worthwhile infrastructure — is the debt driver, NOT the Social Security trust fund.

For a quick review of the Social Security balance sheet, see my post on 8/15/15:

As is the model on the TPI: we believe in information feed the brains of those who care to adsorb and assimilate information we no long find on network and cable news.

Yes, President Obama has added to the US Debt. Is it feasible to consider the nation's 44th President's first order of business upon assuming the White House was to reverse the killing years of George W. Bush?

Let's take a look at history as it relates to US Presidents and their debt accumulation.  

The US Deficit and the US Debt are different, but related economic "animals" that feed off each other. 

ederal Deficit


The amount by which a government's expenditures exceed its tax revenues. The difference is made up for by borrowing from the public through the issuance of debtalso called Federal Debt.

Read more:

As we watched and listened to a number of Republican hopefuls rail about the need to increase US militarism, we should wonder: "How are they going to pay for it?"

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