0.1% inflation for March

I stated tax revenues went up after the Bush tax cuts and this is completely true. The idea of tax cuts is not to keep tax revenue at the same percent to GDP, lol. It's to give the people their money back and free up capital for private investment. But you do have to control spending, because otherwise, yes, it will cause deficits. The tax cuts weren't the cause. Spending more than the increased revenue created the deficit. In any event, deficits under Biden far exceed those under GWB. Overspending not only causes the deficit, it exacerbates the debt, because now you have to pay for next year's fiscal budget and pay back interest on the debt.

 

Tax cuts are often advertised as leading to higher revenues. They don't. Revenues would have gone up more under Bush had he not cut taxes.

 

Of course tax receipts went up. The cuts were made during a recession. What happens after every recession in human history? A recovery!! And recoveries being in more tax revenue.

Saying his tax cut caused more tax revenue is like saying my midnight polka dance caused the sun to rise the next day.

Also, tax cuts cause spending increases. Look at GWB. He cut taxes, then increased spending. Look at Reagan, he cut taxes and increased spending. Look at Trump, he cut taxes and increased spending.

what about starve the beast. Doesn’t work. It’s the opposite. If you throw away all fiscal restraint measures..such as pay-go, sequestration etc, in order to cut taxes, that also allows you to….INCREASE SPENDING!!!!

 

Actually income tax revenues did not go up after Bush cut income tax rates. They went down for a couple of years and then started rising again, but did not even reach their pre-Bush level until 2006. That's 6 years into Bush's presidency and income tax revenues were essentially at the same level in 2006 as they were in 2000.

 

Look at Obama. He raised taxes and we had record deficits. Look at Biden, he raised taxes and still running record deficits. If you add up all the deficits from 20 years of Reagan, GWB and Trump, they are a fraction of what Obama/Biden have racked up in 10 and a half years. What does that prove? Nothing, other than if you spend more than you take in, you'll run up the debt.

Tribalism eats this forum alive. Once more, Bill Clinton was the last president to manage a balanced budget. He raised taxes too, but was smart enough to understand we didn't need to spend ourselves into oblivion to prosper and worked with the GOP to balance the budget. At the end of the day, it is the people's money, not the government's money. But we'll be on the hook for the debt.

 

Yes we will. And that tally is right around $100K for each and every citizen, double that for each and every taxpayer. Think on that for a minute or two!

 

Obama came in during the Great Recession and Biden during Covid. Blaming them for those early year deficits is idiotic. Talk about tribalism.

Federal Receipts as Percent of Gross Domestic Product

Notice tax pct of gdp increased until 2016, the end of Obamas term. Then it went down through 2020, as a result of the tax cuts. Now it is going back up again.

Let’s look in more detail.

Source of Revenue as Share of GDP

During Clinton last 4 years the numbers ranged from 18.7% of gdp to 20% of gdp, then 2001 was 18.9%. Then came tax cuts, and the pct to gdp has always been lower than those five years until….2022 at 19.6%.

You can see the same trend more pronounced in column one that isolates income taxes. The 5 last Clinton years (including first bush year under same tax policy) were 8.7-9.4%. After that they never came close until 2021 and 2022.

Note the dramatic corporate tax drop off in 2018 and 2019 after Trump corporate tax cut. Down to 1.0% of gdp. It historically ran between 1.5% and 2.5% unless in a deep recession.

 

We always knew May/June numbers would be better due to shelter peaking last May/June.

Used car sales are not our friend again. Not sure what’s driving that market so much.

Heading in the right direction.

We all know the Feds are going to screw this up though if not already.

 

You can make all the excuses you want and massage the numbers any way you like, but the bottom line is the ROI on national debt is extremely bad unless you catch a huge windfall like we did in 1945. No such windfall exists for us now, so we are loading up the debt to unchartered waters without having any feasible means of reducing it. Even Joe Biden is not going to raise taxes enough to balance the budget, as he knows such tax increases would cripple the economy and we'd be in even worse shape a result. Ronald Reagan had to nuke taxes to get our country out of a prolonged period of stagflation and high unemployment. Even with the changes Clinton made, he was still operating largely within the framework Reagan established. We balanced the budget. After that, fiscal responsibility was no longer a priority. Raising taxes won't solve it. Only reducing spending will.

You could even argue Reagan's deficits produced a large windfall, as his were mostly due to increased military spending, which had the effect of ending the Cold War, which allowed us to cut military spending drastically in the years that followed.

 

I will agree that a rising national debt is harmful over the long run. It is difficult though to pinpoint at what point it becomes a major burden or dangerous. 100% of GDP? 150% of GDP? 200?

Japan exists with well over 200. I would not call Japan situation optimal by any means but they seem to get by.

My preference would be to steadily lower the debt, but that would have to take place on both the spending and tax side, including entitlement spending. As long as people like yourself keep making spurious arguments about never raising taxes, and as long as both parties seem completely averse to addressing entitlement spending, the debt will never decrease in relative terms. The best we can hope for it that it will level off, and while not optimal, it may be sustainable for some amount of time.

 

Japan is a pretty good example of ruining an economy with runaway debt. Their monetary policy is severely restricted because of this, which is where we are heading. Japan's GDP hasn't grown since 1994, almost 30 years. If that's what you consider "getting by", wow.

Spending cuts. Not the people's fault the government chooses not to balance its budget with the revenues it currently has. I suppose businesses should keep raising their prices until the customers pay off all their debt? Small issue. There wouldn't be any customers left.

 

Military spending as a percentage of GDP was cut in half after the end of the Cold War. That is the most commonly used metric when assessing a nation's military spend.

 

Japan GDP per capita PPP - 2022 Data - 2023 Forecast - 1990-2021 Historical - Chart

Part of the reason for declining GDP is stagnating population. Looking at GDP It isn’t as bad, although still somewhat anemic growth.

GDP per capita over 30 years Japan has been near 1.0%. The US gdp per capita about 1.5%.

There isn’t anything magical about spending cuts. A lot depends on what and how the money is spent.

 

I think it is plausible to say Reagan hastened the fall of the Soviet Union and accelerated the “peace dividend”, but to your point the effect is likely exaggerated by those who have a dog in the fight.

 

Not only this, but Bush and Clinton agreed in the '92 debates that a smaller military was prudent, given the absence of the Cold War. It's not as if we have to guess why Clinton cut military spending. That's well-documented. The balanced budgets confirm the peace dividend. We're in a place now where I don't see us ever being able to balance a budget again unless the system is turned upside down.

 

I agree with this, but given the trajectory of the Soviet Union economically it probably would have fallen apart eventually anyway. It’s impossible to know for sure.