How did the economy go from such surpluses to such deficits?

[tcsenter]

Wrong, it was not only projected surplus, we had an actual surplus of $281 billion in year 2000. And had projected surplus of $5.6 trillion by year 2011. Clinton used quite a bit of those surplus to pay off US debt, so those surplus were used in something, not just paper money.

Right, that year before Bush took office. Clinton didn't use a nickel to "pay off" the US debt, Clinton decreased the rate of debt growth, but you have to get debt growth to zero before you can even start to 'pay it off'.

Don't get me wrong, decreasing debt growth is a step in the right direction, but considering the unbelievable revenue growth that dropped into Clinton's lap (not his own doing), he had absolutely no excuse not to reduce debt growth. Its one of those things you'd like to do, if the money is there in excess, and it was, briefly, until the Great 1990s Investor Swindle that was the "greatest economy" fell like the house of cards that it was.

 

[BaliBabyDoc]

Actually, I think you are wrong. I'm reasonably sure the US government actually bought back some of its debt . . . otherwise known as paying it off.

 

[xxxxxJohnGaltxxxxx]

Originally posted by: BaliBabyDoc
Actually, I think you are wrong. I'm reasonably sure the US government actually bought back some of its debt . . . otherwise known as paying it off.

Aye...30-year bonds were being bought back at a premium for awhile...

 

[tcsenter]

Actually, I think you are wrong. I'm reasonably sure the US government actually bought back some of its debt . . . otherwise known as paying it off.

Whether it bought bonds back (because the bull market created an irrestistable opportunity in the bond market), or merely decreased the amount of bonds it sold, none of it is 'paying down debt' until debt growth is actually zero or negative.

Its 'going into debt slower', but still going into debt. Better slower than faster, to be sure.

 

[rchiu]

Ok, lots of people talking without knowing what the heck they are talking about.

This is a table of what's going on with Federal Debt: (straight out of 2003 budget)
Note, the year is in fiscal year, so 2003 is Oct 1, 2002 to Sept 30, 2003

Gross Federal Debt Debt Held by Gov Debt Held by Public
1995 4,920,586 1,316,208 3,604,378
1996 5,181,465 1,447,392 3,734,073
1997 5,369,206 1,596,862 3,772,344
1998 5,478,189 1,757,090 3,721,099
1999 5,605,523 1,973,160 3,632,363
2000 5,628,700 2,218,896 3,409,804
2001 5,769,881 2,450,266 3,319,615
2002 6,198,401 2,657,974 3,540,427
2003 estimate 6,752,033 2,873,595 3,878,438

Debt held by goverment are funds like social security, medicare...etc and debt held by public are the treasury notes and other instruments sold to individuals, companies and foreigner.

Any question that debt held by public (Fed Debt excluding SS and other government funds) was being paid during the last few years of Clinton administration? It did not increase at a slower rate like some people claimed, it was reduced.

 

[xxxxxJohnGaltxxxxx]

You had me at hello.

 

[DealMonkey]

Does everything Bush touch turn to sh!t?

 

[GoingUp]

Originally posted by: XZeroII
Don't listen to anyone here. All they care about is politics and slandering the other guy. If you take an economics course or actually looked at the situation objectively, you would learn... (not in any specific order)

1. The economy moves in cycles. The 1990's were not typical. 10 years w/o a recession was unheard of. Typically, you have approx 4 years of good economy, then a short recessions, then things start to pick up again for another 4 years. It's called the Business Cycle. The number of years of good/bad economy doesn't matter, just that recession is normal.
2. During periods of economic growth, our gov't typically gets more $$$ and with proper spending controls, we should be able to have some surpluses.
3. During recessions, our gov't gets less $$$ and typically runs into debt. Usually we have longer periods of growth than recession, so we make up the debt during our growths.
4. Our economy is said to be going up when GDP is rising. GDP is Gross Domestic Product and it measures how much money is spent on new item purchases. Buying a new car increases GDP. Buying a used car does not. Our economy is said to go down when the GDP goes down.

(These next two are theoretical. That means this is what SHOULD happen according to economists)
5. If people have more money, they will spend more money. When people spend more money, GDP goes up.
6. If a business has more money (because people spend more), they will be able to increase production and hire more workers or pay their existing workers more. When they hire more workers or pay existing workers more, more people have more money to spend. See item 5.

This is all stuff you would learn about in your first couple WEEKS of introductory economics. I don't think anyone could argue with what I just said. Learn this stuff before you say another word on anything having to do with our economy.

Here is the more controversial stuff, but it's all simply fact...

7. The economy started going downhill in 1999, during Clinton's term.
8. We fell into a recession approx one month after Bush took office. This means that there is no way that Bush could be in any way responsible for the recession. First because recession is normal and can't be stopped anyway. Second, he also can't possibly be directly or indirectly responsible for it because nothing he could have done would have such a quick impact on the economy.
9. Cutting taxes is one major way to fight recessions. Usually, one of the first things to do when faced with a recessions is to cut taxes. This will leave more money in individual's pockets, thus they will be willing to spend more. Bush implemented round the board tax cuts which means that everyone got a tax break, not just the rich. Please don't bring up that old rhetoric about the rich getting an unfair share of the cuts. That is another issue that I will not discuss because it's too lengthy. Suffice to say, it is not a good arguement.
10. Another way to fight a recession (which I do not personally agree with) is to increase gov't spending. This will send more money to business' as the gov't buys stuff from them. Once the business' have more money, they will hire more people which means that people will have more money to spend, and yadda yadda yadda (if you don't get it, take an economics class). I don't like this method because our gov't is spend happy and I feel like they are just bypassing the system when the do this. Limited increases in gov't spending is ok, but it shouldn't be major.
11. Another way to fight recession is to lower interest rates. Only the prime interest rate can be directly controlled (the rate banks charge each other for overnight loans). This means that people can borrow more (for less) and thus they will have more money and they will spend more, etc...
12. Bush has used all 3 of these tools to fight this recession. Technically, the recession ended long ago, but no one can figure out why unemployment has not risen. Normally, when business' get more money, they will hire more workers, but they have not. One oppinion is that our jobs are going overseas or that immigrants are coming in and taking all our jobs. There is no concrete evidence one way or the other. (my oppinoin: Since no one knows why unemployment has not risen, it is unfair to blame Bush for this.)

I'm sure there is more, but hopefully after reading this you will be more informed and we can stop all this nonsensical bickering.

Thanks for all of the info...

 

[XZeroII]

Originally posted by: rchiu
Ok, lots of people talking without knowing what the heck they are talking about.

This is a table of what's going on with Federal Debt: (straight out of 2003 budget)
Note, the year is in fiscal year, so 2003 is Oct 1, 2002 to Sept 30, 2003

Gross Federal Debt Debt Held by Gov Debt Held by Public
1995 4,920,586 1,316,208 3,604,378
1996 5,181,465 1,447,392 3,734,073
1997 5,369,206 1,596,862 3,772,344
1998 5,478,189 1,757,090 3,721,099
1999 5,605,523 1,973,160 3,632,363
2000 5,628,700 2,218,896 3,409,804
2001 5,769,881 2,450,266 3,319,615
2002 6,198,401 2,657,974 3,540,427
2003 estimate 6,752,033 2,873,595 3,878,438

Debt held by goverment are funds like social security, medicare...etc and debt held by public are the treasury notes and other instruments sold to individuals, companies and foreigner.

Any question that debt held by public (Fed Debt excluding SS and other government funds) was being paid during the last few years of Clinton administration? It did not increase at a slower rate like some people claimed, it was reduced.

If you add them all up, you will notice that debt went up for the gov't in general. People don't care about just one part of the debt, they want to look at the WHOLE picture and the whole picture shows that the gov't was still racking up debt.

 

[SuperTool]

Originally posted by: XZeroII

Originally posted by: rchiu
Ok, lots of people talking without knowing what the heck they are talking about.

This is a table of what's going on with Federal Debt: (straight out of 2003 budget)
Note, the year is in fiscal year, so 2003 is Oct 1, 2002 to Sept 30, 2003

Gross Federal Debt Debt Held by Gov Debt Held by Public
1995 4,920,586 1,316,208 3,604,378
1996 5,181,465 1,447,392 3,734,073
1997 5,369,206 1,596,862 3,772,344
1998 5,478,189 1,757,090 3,721,099
1999 5,605,523 1,973,160 3,632,363
2000 5,628,700 2,218,896 3,409,804
2001 5,769,881 2,450,266 3,319,615
2002 6,198,401 2,657,974 3,540,427
2003 estimate 6,752,033 2,873,595 3,878,438

Debt held by goverment are funds like social security, medicare...etc and debt held by public are the treasury notes and other instruments sold to individuals, companies and foreigner.

Any question that debt held by public (Fed Debt excluding SS and other government funds) was being paid during the last few years of Clinton administration? It did not increase at a slower rate like some people claimed, it was reduced.

If you add them all up, you will notice that debt went up for the gov't in general. People don't care about just one part of the debt, they want to look at the WHOLE picture and the whole picture shows that the gov't was still racking up debt.

How much of that debt growth was from government operations day to day operations, and how much of it was from interest on previous debts?
Let's look at period from 1999 to 2000. In 1999, the debt was 5.6 Trillion, that means that at 5% per year, we paid roughly 280 Billion in interest in 1999, yet by 2000, the debt only increased by 28 Billion, which means the government was running around 200B in operating surplus for that year.

 

[Vic]

"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largess of the public treasury. From that time on the majority always votes for the candidates promising the most benefits from the public treasury, with the results that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world's great civilizations has been 200 years. These nations have progressed through this sequence: from bondage to spiritual faith; from spiritual faith to great courage; from courage to liberty;from liberty to abundance; from abundance to selfishness; from selfishness to complacency; from complacency to apathy; from apathy to dependency; from dependency back again to bondage."
--Sir Alex Fraser Tyler (1742-1813) Scottish jurist and historian

 

[rchiu]

Originally posted by: XZeroII
If you add them all up, you will notice that debt went up for the gov't in general. People don't care about just one part of the debt, they want to look at the WHOLE picture and the whole picture shows that the gov't was still racking up debt.

Well, that depends on what your definition of debt is. If you owns a company that have 10 subsidiary, and one subsidary owes another 10 billion dollar in debt. You can write the debt off if you want since those are all intercompany trasfer.

The debt held by government is the same thing, the government owes for example Social Security Fund 500 billion in IOU, the government can get rid of the Social Security fund and not pay a dim if it wants to. Of course that is not politically realistic but from financial point of view, that does not hurt the country's ability to meet its financial obligation.

The debt held by public is another story. Those are real financial obligation that the government has to meet or else the country goes bankrupt. That is the real measure of the financial liquidity of the country.

Plus the debt held by public is the one that you pay interest on and that's the one you want to pay off.

Clinton's Admin paid off portion of debt held by public with surplus three years in a roll, and if I am not mistaken, he was the only President to have done that.

 

[Mursilis]

Clinton paid down the debt? Let's review the Constitution, shall we?

Art. I, Sect. 9:
No money shall be drawn from the treasury, but in consequence of appropriations made by law; and a regular statement and account of receipts and expenditures of all public money shall be published from time to time.

And who makes the laws?

Art. I, Sect. 8:

The Congress shall have all power . . . To make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this Constitution in the government of the United States, or in any department or officer thereof.

So if there was a surplus (I'd debate there wasn't, except by using shady accounting, but that's another thread), a Republican Congress gets the credit.

 

[wirelessenabled]

Originally posted by: Red Dawn
The Democrats are Tax and Spend and the Republicans are Tax Cut and Spend. I think the Republicans forgot that they were suppose to be fiscally Conservative.

Republicans are Borrow and Spend.

 

[wirelessenabled]

Originally posted by: XZeroII
Don't listen to anyone here. All they care about is politics and slandering the other guy. If you take an economics course or actually looked at the situation objectively, you would learn... (not in any specific order)

1. The economy moves in cycles. The 1990's were not typical. 10 years w/o a recession was unheard of. Typically, you have approx 4 years of good economy, then a short recessions, then things start to pick up again for another 4 years. It's called the Business Cycle. The number of years of good/bad economy doesn't matter, just that recession is normal.
2. During periods of economic growth, our gov't typically gets more $$$ and with proper spending controls, we should be able to have some surpluses.
3. During recessions, our gov't gets less $$$ and typically runs into debt. Usually we have longer periods of growth than recession, so we make up the debt during our growths.
4. Our economy is said to be going up when GDP is rising. GDP is Gross Domestic Product and it measures how much money is spent on new item purchases. Buying a new car increases GDP. Buying a used car does not. Our economy is said to go down when the GDP goes down.

(These next two are theoretical. That means this is what SHOULD happen according to economists)
5. If people have more money, they will spend more money. When people spend more money, GDP goes up.
6. If a business has more money (because people spend more), they will be able to increase production and hire more workers or pay their existing workers more. When they hire more workers or pay existing workers more, more people have more money to spend. See item 5.

This is all stuff you would learn about in your first couple WEEKS of introductory economics. I don't think anyone could argue with what I just said. Learn this stuff before you say another word on anything having to do with our economy.

Here is the more controversial stuff, but it's all simply fact...

7. The economy started going downhill in 1999, during Clinton's term.
8. We fell into a recession approx one month after Bush took office. This means that there is no way that Bush could be in any way responsible for the recession. First because recession is normal and can't be stopped anyway. Second, he also can't possibly be directly or indirectly responsible for it because nothing he could have done would have such a quick impact on the economy.
9. Cutting taxes is one major way to fight recessions. Usually, one of the first things to do when faced with a recessions is to cut taxes. This will leave more money in individual's pockets, thus they will be willing to spend more. Bush implemented round the board tax cuts which means that everyone got a tax break, not just the rich. Please don't bring up that old rhetoric about the rich getting an unfair share of the cuts. That is another issue that I will not discuss because it's too lengthy. Suffice to say, it is not a good arguement.
10. Another way to fight a recession (which I do not personally agree with) is to increase gov't spending. This will send more money to business' as the gov't buys stuff from them. Once the business' have more money, they will hire more people which means that people will have more money to spend, and yadda yadda yadda (if you don't get it, take an economics class). I don't like this method because our gov't is spend happy and I feel like they are just bypassing the system when the do this. Limited increases in gov't spending is ok, but it shouldn't be major.
11. Another way to fight recession is to lower interest rates. Only the prime interest rate can be directly controlled (the rate banks charge each other for overnight loans). This means that people can borrow more (for less) and thus they will have more money and they will spend more, etc...
12. Bush has used all 3 of these tools to fight this recession. Technically, the recession ended long ago, but no one can figure out why unemployment has not risen. Normally, when business' get more money, they will hire more workers, but they have not. One oppinion is that our jobs are going overseas or that immigrants are coming in and taking all our jobs. There is no concrete evidence one way or the other. (my oppinoin: Since no one knows why unemployment has not risen, it is unfair to blame Bush for this.)

I'm sure there is more, but hopefully after reading this you will be more informed and we can stop all this nonsensical bickering.

Back to Econ 1A for you.

For example, buying a used car does add to GDP. 2/3 +/- of the economy is the service sector where no visible goods are produced.

As far as the paragraph about govt spending money goes, the classical way this is implemented is for the Fed to redeem bonds which puts more money into the economy, which increases economic activity, not the govt spending money directly