« Open Thread (Merry Christmas!) | Main | Still More Fiscal Discipline »

December 25, 2006

Comments

"Are we done with Reagan? OK: let's move on to Clinton."

I seem to remember a President in between them. And under whose watch a rather large tax increase was passed, in spite of how his lips read. My memory of the 1990 budget deal is that it got far greater support among Democrats than Republicans, and if my insomnia keeps up, I may add some evidence to support it.

Some results:

House Democrats 181-74-3 in favor, Republicans 47-126-2 opposed.

Senate Democrats 35-20-0 in favor, Republicans 19-25-1 opposed.

Well that was a deceitful little posting.

You think perhaps that a post-Cold War 30% reduction in military spending had any effect? A reallocation of 2% of GDP from non-productive defence activity into the productive economy?

But of course, these facts aren't politically useful so whoops! They don't exist any more.

non-productive defence activity

I thought the argument was that it was productive, it was just us liberals who didn't realize that the world was a dangerous place and wanted to sing kumbaya all day. Get your talking points straight, please.

But of course, these facts aren't politically useful so whoops! They don't exist any more.

What "a" said!

Also hilzoy, I noticed you didn't run a regression analysis, submit your post for peer review, solicit alternative views, or bake a pie and mail it to anonymous blog commenters prior to putting up your post. Thus, regression analysis, peer review, alternative views and pies no longer exist.

Curses. No pie?

The Congress has the right and the power to set its own, of course, but in practice I don't really think it's fair to attribute what we normally call the Reagan defense buildup to the Democrats, or the cuts in defense of the '90s to Newt Gingrich.

I agree 100%. I would never credit Democrats with Reagan’s defense buildup nor blame Newt for Clinton’s cuts. :)

a: In 1989, defense spending was 61.9% of discretionary federal spending. In 1992, it was 53.9%, and in 1993 (still working with a budget passed in 1992, under Bush, I think) it was 50.2%. It hovered between 47 and 51% throughout the 1990s.

In other words: most of the cuts that came after the end of the Cold War happened under GHWBush, if this table is any guide.

OCSteve: the thought that led to this post was, in fact: "sure; the Reagan deficits were due to the Tip O'Neill military build-up." ;)

Off-topic - hilzoy, might I suggest that you collect you and/or katherine's writings on torture/rendition/etc. in one post much like Balkin's place did here?

It would be much appreciated (and apologies if you have done this and I missed it).

In future debates on this topic, can we proceed based on these facts rather than in defiance of them?

If conservatives disagree, could we get a fact based explanantion as to why?
______________

a:

You think perhaps that a post-Cold War 30% reduction in military spending had any effect? A reallocation of 2% of GDP from non-productive defence activity into the productive economy?

How about explaining how that effect somehow renders insignificant The Omnibus Budget and Reconciliation Act of 1993? The deceit is to constantly relegate that to the memory hole (as well as the Republican prediction that it would wreck the economy).

I would agree that increased military spending in the long term is bad for the economy and tax revenues. In fact, that was one of the rational aspects of Bush I policy (implemented by Cheney, of all people) -- to reduce defense spending post-Cold War. Of course, what was essentially the same level of defense spending under Clinton is now knocked as putting us in peril (or referenced by OCSteve as a counterpoint -- that Republicans perhaps are forced into deficit spending because of alleged Democratric underspending on the military). So was that level of military spending a good idea or a bad one? IOKIYAR?
_____________

Further thoughts on conservative nonsense about this issue -- that the 90s budget surpluses were just due to the good luck of an overheated economy. Except that the Republicans predicted that The Omnibus Budget and Reconciliation Act of 1993 would instead wreck the economy. I guess the economy would have really gone crazzy if it had not been passed, and the surpluses even greater, right?

And just maybe the robust 90s economy was due in part to sane government fiscal policy adopted earlier in the decade? Zounds, what a radical concept.

I'm not sure exactly how one would go about directly measuring responsibility for federal spending levels. One obvious thing to do would be to find figures for the budgets various Presidents actually submitted, and compare them to what actually passed.

There's something else you need to consider. A proposed budget contains certain assumptions.

If I plan for spending x amount on food stamps at y% amount of growth, then those are my numbers. But if growth only reaches y-2%, the extra claims for food stamps under a poorer economy have to be paid. Congress has to appropriate this money by law, taking the fall for money spent beyond the proposed budget. The new numbers become their numbers.

This is the idea behind the "rosy scenario" when budgets are proposed. Simply shift blame to the big spenders in Congress.

I guess the economy would have really gone crazzy if it had not been passed, and the surpluses even greater, right?

i've seen that assertion made.

cleek:

i've seen that assertion made.

Which leads to that paradox -- how can people who are nuts be so logically consistent?

Happy Jack: If I recall correctly, that's one reason Carter and Clinton had sounder budgets than Reagan or either Bush - they used better-founded projections, so ran into fewer "unexpected" problems.

how can people who are nuts be so logically consistent?

the shining star of Faith In Reagan's Greatness is so bright and huge that not even towering pillars of Solid Fact can cast shadows in its presence.

just a guess.

1m in ur fantasee, bein da Gippur

"a: In 1989, defense spending was 61.9% of discretionary federal spending. In 1992, it was 53.9%, and in 1993 (still working with a budget passed in 1992, under Bush, I think) it was 50.2%. It hovered between 47 and 51% throughout the 1990s."

The discretionay/non-discretionary stat is always misleading in this context. First all funding is discretionary on a forward looking basis--especially in a long term outlook. Just because it would be completely unfair (though not impossible) to cut Social Security benefits for people who are relying on them today doesn't mean we couldn't phase in cuts for ten and twenty years from now. (And in fact Congress regularly does things like raise the retirement age which has the exact fiscal effect of a benefit cut). Allegedly non-discretionary spending has been skyrocketing for decades. A mild decrease in discretionary percentage is a much bigger decrease in actual percentage.

That is just a general comment on statistics, not a comment on which President did the most defense cutting. My impression at the time was that Bush cut too deep and Clinton took that as license to cut even deeper.

As for who is to blame, once again I would return to my 130% theory. Americans are not rational about the federal budget because politicians have successfully decoupled the spending and the paying in most peoples' minds. Who is to receive credit for spending or tax policy? The dynamic is as follows: Either the President or Congress feels it gets the mandate to do something; the other branch feels electoral pressure to respond; they do so but try to temper it with their preferences. Because politicians are more subject to political winds than economic reality, this dynamic wins.

This explains the issue much better than the current explanation above. Democrats passed Reagan's defense spending because they thought they would lose if they didn't. Democrats got the fiscal responsibility bug in the 1990s because they realized that Perot's voters would tend to break for Republicans if they didn't--not because the same old Democratic Senators suddenly got good sense. The basic reason why hilzoy's graph shows intersecting outlay and revenue lines only during two especially lucky periods is because the American public really does want higher spending and lower taxes. We have so divorced the two ideas that they function (for electoral purposes) separately.

You can blame that on the lower tax Republicans if you want, but unfortunately it is the same Democrats who were decrying Bush's tax cuts who are now saying that on their expiration that frees up money for new programs. It doesn't if running a deficit is a problem. If it isn't a problem, the tax cut vs. spending question isn't about what is good for the deficit, but rather boring policy choices in the typical vein.

Ugh:

I have lots of very pleasant fantasies, not one of which features Ronald Reagan. Those particular non-waking moments I call "nightmares".

Please keep these distinctions clear.

1m in ur fantasee kn1temare, bein da Gippur

Seb: the reason I used the percent of discretionary funding stats was not because I had any particular allegiance to their division between discretionary vs. non-discretionary, but because they have been treated that way, and so looking at various different things as percentages of the discretionary budget makes it easier to see which have grown or shrunk as a percentage of the total. (I mean: I could have played with the numbers for the whole budget, calculated change rates over time, seen which changes exceeded or were less than the change in total spending, and of those which changed by especially striking amounts, but that seemed like a lot more work for basically the same result.)

but unfortunately it is the same Democrats who were decrying Bush's tax cuts who are now saying that on their expiration that frees up money for new programs

or even to simply pay for existing programs!

As for who is to blame, once again I would return to my 130% theory. ... This explains the issue much better than the current explanation above.

Would you care to explain how the 130% theory accounts for the 30 year correlation between Republican presidents and enormous deficits vs. Democratic presidents and small or no deficits?

Your argument is interesting in explaining a certain phenomena, but does not explain the last 30 years. Unless, perhaps, you acknowledge when saying this: Americans are not rational about the federal budget because politicians have successfully decoupled the spending and the paying in most peoples' minds -- one should substitute "Republicans" in place of "politicians".

No Democrat has had the gall to state that "deficits don't matter."

Would you care to explain how the 130% theory accounts for the 30 year correlation between Republican presidents and enormous deficits vs. Democratic presidents and small or no deficits?

What's even more important is that if the "130%" theory is even partly true, then the party that at least acknowledges you usually have to raise taxes when you raise spending is the one with more fiscal discipline.

The other party sells tax cuts and increased spending along with free lunches and magical ponies for everyone.

BTW - You summed up Sebastian perfectly when you wrote: "Your argument is interesting in explaining a certain phenomena, but does not...". I believe that Seb, sui generis, main tactic is to throw a single objection, claim it calls hilzoy's (or some other liberals) whole "premise" into question, but then repeatedly fail to explain why his objection doesn't contravene a mountain of other evidence (read the recent healthcare topic for an example).

Tax and spend vs. borrow and spend, which one is worse for the country?

Tax policy under the Bush administration and its Congressional enablers has been a total clown show. The same with fiscal policy. And don't forget that all the projections of the budget deficit include the AMT, which is set to explode and will cost billions to fix.

If Republicans really wanted to shrink the gov't, they would raise taxes to cover the budget, but good luck with that.

Hil: It was a softball, I could not resist. I’m weak :)

I would never credit Democrats with Reagan’s defense buildup

OCSteve,
in Joyner's comments to the the link that hilzoy gives, he points out the following

Yes, it’s a great irony of the Carter presidency that he earned a reputation as an enemy of the military. That he was a Naval Academy grad and spent 11 years working for Hyman Rickover is somehow overlooked, as is the fact that his SECDEF, Harold Brown, was the architect of the Offset Strategy that successfully traded gold for blood.

big changes in the levels of surpluses and deficits seemed to coincide with changes in Presidents, not with changes in control of Congress,

And our sample size for this is...what exactly? I don't mean to be rude, but this is ridiculous. The Congress as a whole has changed hands precisely twice in the last fifty-plus years, and since one of them hasn't actually happened yet, trying to draw any conclusions requires some rather impressive generalizations.

That doesn't necessarily mean that Presidents don't have more control than Congress these days, but that particular argument is so ridiculous I couldn't let it stand.

Andrew: it was part of my reasoning, but only part. There was also, as I noted, my memory of the various budget wars that led to that spending, which I tried to document here. Like, as I said, the Tip O'Neill military build-up, the conservative Republican 1993 tax hike, the Newt Gingrich cuts in defense spending and 100,000 cops on the street programs, the Walter Mondale tax cut of 1981, etc.

Which is why I specifically noted that I wasn't disputing your larger argument. But that particular premise just caught my attention.

"And our sample size for this is...what exactly?"

The same size it's been for all these decades Republicans have been calling Democrats "fiscally irresponsible" people who love to "tax and spend," if I'm not mistaken.

but that particular argument is so ridiculous I couldn't let it stand.

Since I have, more or less, advanced it, I guess I don't think it's ridiculous. Sure, you can't base it on a statistical analysis of changes in party power, for lots of reasons, including inadequate data.

But you can look at recent political history in conjunction with the numbers to get a pretty good idea. It was Reagan, after all, who introduced the notion of supply-side, i.e, self-financing, tax cuts, and proceeded to see a huge increase in the deficit, which carried over into the Bush I years. An attempt by Bush I to do something about it earned him great scorn from Reaganites.

Clinton viewed deficit reduction as important. He sought and got a tax increase. The deficit shrank. And there is no need to go into W's history.

So it is clear that, for the last quarter century Republican Presidents have seen the deficit as utterly unimportant (except for one brief moment in GHW Bush's term), and acted accordingly, while the only Democrat in the White House thought deficit reduction quiet important, and also acted accordingly.

It is also clear that the differences in the results were quite astonishing. So while I think that Sebastian's 130% theory has some merit, I think that Clinton deserves considerable credit for shying away from it, while Reagan and Bush II, with their tax-cut as free lunch cureall approaches embraced it wholeheartedly.

Yes. The sample size is small. Four Presidents. So you can sensibly object to overgeneralizing into all of history. But what happened under each of these four, and their budget views, is quite plain.


hilzoy: I haven't read all that you wrote here yet, but I'd like to point you to a compilation on the economic performance of Democratic vs. Republican presidents that Dwight Meredith (who currently writes at wampumblog) did on his blog PLA in 2002. Avedon Carol at the sideshow lists a set of links to all posts here.

Among many other things, he also did a comparison exactly along the lines that you proposed, to compare the budget submitted by the president to the one ultimately passed by Congress. Unfortunately I haven't found the exact post.

But the upshot is: in general, the President's budget request and the budget that is finally passed are usually only a couple of percentage points apart, as far as overall spending is concerned.
According to his analysis, spending levels are set by the President, to the largest part by far.

ShiningRaven: thanks; I hadn't seen that. It's a wonderful resource, and my hat is off to Dwight for doing it. (For anyone who's interested: the link is to a series of comparisons of the various Presidents between Kennedy and Clinton on a variety of indicators: unemployment, inflation, federal spending, debt and deficits, no. of federal employees...)

The comments to this entry are closed.

Blog powered by Typepad