Posts Tagged ‘federal spending’

The federal government is now shrinking as a percentage of GDP, thanks to House Republicans

This chart illustrates some interesting facts.

First, note how federal spending has flat-lined and has even started to dip slightly since Republicans took control of Congress in 2010.

Second, note federal tax revenue has been increasingly steadily since we’ve started to see some economic growth — tepid though this growth is.  Tax revenues are spiking up sharply without substantial tax increases.  Yes, some ObamaCare taxes are starting to kick in.  But this is not substantially affecting the revenue picture.

What does this prove?

It proves that Ronald Reagan and Jack Kemp were right.  If you really want to increase tax revenue to the government , grow the economy. That’s “supply side” economics.

Economic growth produces more revenue for the government because people and businesses pay more taxes when they have more income and bigger profits.

Now, we could and should be doing much better than this.

The so-called economic recovery we are in now is slogging along at half the growth rate of the average economic recovery in America following a recession.  The Reagan economic recovery was three times as robust as the sluggish growth we are seeing now.  The U.S. economy was growing at a 6 percent annualized rate during the Reagan recovery compared to less than 2 percent for this so-called recovery.

The big reason this recovery is so sluggish is ObamaCare.  Businesses have no idea what ObamaCare will cost them, have no idea how much it will cost to add a new employee.  So businesses are setting up their factories overseas where the labor is cheap, or they are waiting to see what the implications of ObamaCare really are.

Third, look at how much federal spending went up under President George W. Bush.  Spending under Bush was increasing at almost the same rate as spending increased during the first two years of the Obama Administration, when Democrats controlled both champers of Congress.  So Bush, it turns out, was one of the biggest spenders in history.

In other words, George W. Bush was a disaster in just about every conceivable way.

He was a rampant spender.  He spent about $2 trillion on the Iraq War, a war we never should have gotten into.  We found no weapons of mass-destruction (which was the supposed reason we went to war).  Saddam Hussein, though certainly a very bad guy, was a bulwark against the even-worse Iran.  He also hated al Qaeda and the radical Islamic terrorist groups.  He killed a lot of terrorists.

So we spent $2 trillion on Iraq to get rid of this guy, and we’re worse off for it.

The result of Bush’s Presidency is that we now have eight years of Barack Obama and a $17 trillion debt, plus a lot of dead and wounded American soldiers.

Wouldn’t you like to have that $2 trillion back?

But the good news is the Republican leaders in the House have managed to control spending.    I’d certainly like to see much more substantial spending cuts — not just hold the line against more spending, which is what’s happening now.

But even if all we do is hold the line against future spending increases, the increased tax revenues produced by economic growth will eliminate the annual budget deficit in a few years.  Of course, then we’ll have to start paying down the $17 trillion (soon to be $20 trillion) national debt.  At least we’ll be heading in the right direction.

Here’s another interesting chart — federal spending as a percent of GDP:


What’s interesting about this chart is that federal spending as a share of GDP is now going down sharply — thanks to a growing economy, sluggish though it is.  After federal spending hit a high of 25 percent of GDP in late 2009, it’s been heading down steadily and now stands at 22 percent of GDP, just one percent higher than the 21 percent of GDP the federal government was spending at the end of the President Reagan’s eight years. (Of course, the cost of ObamaCare hasn’t kicked in yet).

Government spending as a share of GDP reached its low point in modern history of 18 percent under the Presidency of Bill Clinton.

The economy was booming under Clinton and the Republican-controlled Congress — which curbed Bill Clinton’s desire to spend.

Reagan likely would have brought federal spending down to the 18 percent it was at the end of the Clinton Presidency, but Reagan had a Cold War against the Soviets to win.

So what’s the lesson here?

It could be that the formula for success is for Republicans to control the Congress and Democrats to control the Presidency.

Why might this be the case?

Because Congress spends the money, not the President. As long as Republicans control Congress (the purse strings), we should be able to keep spending in check and grow our way out of the deficit.

That’s what happened during the Clinton years. And it’s happening again now.

Democrat Presidents also like to take credit for bringing spending under control, even when they have nothing to do with spending.  Even Obama is touting himself as a fiscal conservative and similar to Reagan.  Of course, that’s a laugh.  There’s no limit to what Obama would spend if he could.

But the Republican House won’t let Obama spend more. So Obama is happy to take the credit for bringing spending under control, just as Bill Clinton took credit when he was forced by Congress to rein in spending.

But when Republicans win the Presidency, their tendency is to want to spend like Democrats . . . because they want to please the media and get along with the ruling class. This was certainly the case with both George H.W. Bush (remember “compassionate conservatism”), when spending spiked up dramatically, and George W. Bush, when spending spiked up even more.

I can’t remember which Bush said he wanted to be the “Education President.”  I think both Bushes said that, both misunderstanding the role of the federal government.

Now the Republican Establishment is falling in love with electing a third Bush to the Presidency, Jeb Bush.

No thanks.  Frankly, I’d rather just continue with what we have now.


CHARTS: Here’s what Obama is calling “catastrophic” cuts imposed by the sequester

You heard President Obama’s hysterical press conference yesterday about “catastrophic” spending cuts imposed by the sequester.

Now for some perspective . . .

Note that federal spending still goes up every year under the sequester, even while household incomes continue to decline.

January posted the sharpest decline in personal incomes for Americans in 20 years, and the worst decline in after-tax incomes since 1959. American households have lost nearly $5,000 in annual income under Obama. But the federal government continues to grow and spend more regardless.

The federal government is now borrowing 46 cents out of every dollar it spends. If Obama were really concerned about the “children,” as he always claims, he’d be concerned about the mountain of debt he’s piling onto their backs.

Every baby born today in America owes $55,000 on the national debt debt. This number doubles every seven years at the current rate of spending.

If Republicans in Congress cave on this modest spending restraint mechanism known as the sequester, there really is no hope for the country.

Here was Obama’s presser on the sequester . . .

Government is unpopular already. But how much more unpopular would it be if we actually had to pay for it?

President Obama keeps telling us how great government is.  He’s having a tough time selling this message even though we are getting all this government at a 42 percent discount.

That is, we are getting government for 42 percent less than it actually costs because the federal government is borrowing 42 cents of every dollar it spends.

Obama’s big bureaucratic government vision is becoming less and less popular by the day.

Recent Rasmussen polls show that . . .

So  Most Americans think government is much too big and spends way too much.  Most Americans also think government is too inefficient and is often counter-productive.

Right now, government might not seem so bad because we really aren’t feeling the true cost of government. Politicians have learned that they can spend money like drunken sailors and pass the bill (42 cents of every dollar they are spending) on to future generations to pay.

So many Americans might not be thrilled with what we’re now getting from our government, but they feel we are at least getting something, so are willing to put up with it.  You can live pretty well on your credit card for a while, until the bill comes due and the piper must be paid.

But what if we actually had to start paying what government really costs with a, well, about a 90 percent tax increase?

Of course, a tax increase on that level would collapse the economy overnight, so the revenue would not actually come in. Capital and businesses would flee the country. We would rapidly implode to banana republic status.

But a 90 percent tax increase is about what it would take to pay for the federal government we are now getting.

How popular do you think government would be then?

Obama and Feds eat up most of new debt limit in one day. So now what?

WASHINGTON TIMES: U.S. debt shot up $239 billion on Tuesday — the largest one-day bump in history — as the government flexed the new borrowing room it earned in this week’s debt-limit increase deal.

The debt subject to the statutory limit shot way past the old cap of $14.294 trillion to hit $14.532 trillion on Tuesday, according to the latest the Treasury Department figures, which are released on the next business day.

That increase puts the government already remarkably close to the new debt limit of $14.694, which means one day’s new borrowing ate up 60 percent of the $400 billion in space Congress granted the president this week.

Debt numbers go up and down regularly, depending on what the Treasury Department is redeeming or issuing on any day, but have been on a steep upward trend for the past decade as spending has ballooned and revenues have fluctuated.

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Sen Coburn admits there are no spending cuts in debt deal law for 2012

Actually, there are no spending cuts at all, ever, period

This chart shows why federal spending never goes down under any plan.

The Ryan plan boasts $6.2 trillion in savings over 10 years. So that takes the projected national debt in 2021 from about $28 trillion all the way down to $22 trillion.

So we get a $22 trillion debt under the Ryan Plan . . . 10 years from now — instead of the $28 trillion debt Obama wants to give us.

Doesn’t sound like much of a plan to me.

And this is Paul Ryan’s chart.

So there’s really not a whole lot of difference between the Ryan budget plan and Obama’s spendaholism. Yet Dems, such as Nancy Pelosi and Joe Biden, call Ryan’s plan economic terrorism against the elderly and the poor.

The best we can say about the Ryan plan is that it’s a little bit less worse than the Obama budget.

So . . . not so good.

I like Paul Ryan. He’s a really smart dude. But we can do better than this.

Back to the drawing board.

OBAMANOMICS: Losing the Future

MARK STEYN: I always enjoy the bit in Planet of the Apes where a loinclothed Charlton Heston falls to his knees as he comes face to face with a shattered Statue of Liberty poking out of the sand and realizes that the eponymous simian planet is, in fact, his own — or was. Also the bit in Independence Day where Lady Liberty gets zapped by space aliens. And in Cloverfield when she’s decapitated by a giant monster. And in The Day After Tomorrow when she’s flash-frozen after polar-ice-cap melting brought on by a speech from Dick Cheney. I’ve been enjoying such moments since, oh, the short story “The Next Morning” in the 1887 edition of Life, illustrated with a pen-and-ink drawing of a headless statue with the smoldering rubble of the city behind her. The poor old girl was barely off the boat from France, and she’d already been pegged as the perfect visual shorthand for societal collapse.

But the United States Postal Service has now gone the Hollywood apocalyptics one better and produced a somewhat subtler image of civilizational ruin. The other day the post office apologized for its new stamp honoring Lady Liberty. Due to an unfortunate error, the stamp shows not the 19th-century Statue of Liberty that stands in New York Harbor but the 1990s replica that stands at the New York–New York Casino in Las Vegas.

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$38B in alleged spending cuts from Obama-Boehner budget deal achieved with Enron-style accounting tricks

Budget deal axes Obama ‘czars’ . . . who have already been axed.

ASSOCIATED PRESS: The [so-called] historic $38 billion in budget cuts resulting from at-times hostile bargaining between Congress and the Obama White House were accomplished in large part by pruning money left over from previous years, using accounting sleight of hand and going after programs President Barack Obama had targeted anyway.

Such moves permitted Obama to save favorite programs – Pell grants for poor college students, health research and “Race to the Top” aid for public schools, among others – from Republican knives, according to new details of the legislation released Tuesday morning.

And big holes in foreign aid and Environmental Protection Agency accounts were patched in large part. Republicans also gave up politically treacherous cuts to the Agriculture Department’s food inspection program.

The details of the agreement reached late Friday night just ahead of a deadline for a partial government shutdown reveal a lot of one-time savings and cuts that officially “score” as cuts to pay for spending elsewhere, but often have little to no actual impact on the deficit.

As a result of the legerdemain, Obama was able to reverse many of the cuts passed by House Republicans in February when the chamber approved a bill slashing this year’s budget by more than $60 billion. In doing so, the White House protected favorites like the Head Start early learning program, while maintaining the maximum Pell grant of $5,550 and funding for Obama’s “Race to the Top” initiative that provides grants to better-performing schools.

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So Mark Levin was right with his first take on the Budget Deal — calling it an ‘historic scam’

Mark Levin is calling the the John Boehner, Barrack Obama, Harry Reid budget deal an ‘historic scam.” Says there aren’t $38 Billion in cuts in spending between now and the end of the year.

Karl Rove is calling it a $78 Billion cut because it’s $78 Billion less than Obama wanted. So if Obama wants $200 Billion more in spending, and we only give him $100 Billion more, is that a $100 Billion cut?

By Rove’s logic, it is.

Levin is right. The more we look at this budget deal, the more it looks like an “historic scam.”

WATERLOO: Out-of-control deficit rockets up 16 percent in first half of year

AFP: The US budget deficit shot up 15.7 percent in the first six months of fiscal 2011, the Treasury Department said Wednesday as political knives were being sharpened for a new budget battle.

The Treasury reported a deficit of $829 billion for the October-March period, compared with $717 billion a year earlier, as revenue rose a sluggish 6.9 percent as the economic recovery slowly gained pace.

The Treasury argued that the pace of increase in the deficit was deceptive because of large one-off reductions in expenditures made during the first half of fiscal 2010, compared with previous and subsequent periods.

Those included a $115 billion reduction in funds spent on the Troubled Asset Relief Program (TARP) — the financial institution bailout program — in March 2010.

But 2011 so far has also seen significant increases in spending on defense, Social Security, health and debt service, while receipts have not grown as fast.

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Mark Levin explains why Obama-Boehner budget deal is an ‘historic scam’

Mark Levin is calling the the John Boehner, Barrack Obama, Harry Reid budget deal an ‘historic scam.” Says there aren’t $38 Billion in cuts in spending between now and the end of the year.

Karl Rove is calling it a $78 Billion cut because it’s $78 Billion less than Obama wanted. So if Obama wants $200 Billion more in spending, and we only give him $100 Billion more, is that a $100 Billion cut?

By Rove’s logic, it is.

Levin is right. The more we look at this budget deal, the more it looks like an “historic scam.”

Federal Debt Jumped $54.1 Billion in 8 Days Prior to Boehner-Obama ‘Historic’ Deal to Cut $38.5 Billion for Rest of Year

Not Serious

CNS: The federal debt increased $54.1 billion in the eight days preceding the deal made by President Barack Obama, Senate Majority Leader Harry Reid (D.-Nev.) and House Speaker John Boehner (R.-Ohio) to cut $38.5 billion in federal spending for the remainder of fiscal year 2011, which runs through September.

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The U.S. Government Now Borrows 42 Cents of Every Dollar It Spends!

Here Paul Ryan Lays Out a Serious Plan to Get Government Spending Under Control.

PAUL RYAN-WALL STREET JOURNAL: Congress is currently embroiled in a funding fight over how much to spend on less than one-fifth of the federal budget for the next six months. Whether we cut $33 billion or $61 billion—that is, whether we shave 2% or 4% off of this year’s deficit—is important. It’s a sign that the election did in fact change the debate in Washington from how much we should spend to how much spending we should cut.

But this morning the new House Republican majority will introduce a budget that moves the debate from billions in spending cuts to trillions. America is facing a defining moment. The threat posed by our monumental debt will damage our country in profound ways, unless we act.

No one person or party is responsible for the looming crisis. Yet the facts are clear: Since President Obama took office, our problems have gotten worse. Major spending increases have failed to deliver promised jobs. The safety net for the poor is coming apart at the seams. Government health and retirement programs are growing at unsustainable rates. The new health-care law is a fiscal train wreck. And a complex, inefficient tax code is holding back American families and businesses.

Read more here >>>

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