Balanced budget credit???

Newt claiming credit for balancing the budget during the Clinton era is laughable. I'll give him credit for helping to get Clinton's welfare reform passed with Republican support and very little Democrat support, but other than that, nothing else significant towards balancing the budget was accomplished by the GOP during Newt's reign.

Most of you are probably too young to know how we got where we were at the time so I'll summarize. By the way, I consider myself a completely unbiased independent who trys to look at the facts, and nothing but the facts...

Basically, for many decades, up until the end of the Carter era, we were having relatively small budget deficits each year. Each one added to the national debt and it was growing. There was interest among both parties in balancing the budget and paying down the debt. As a matter of fact, the final budget proposal President Carter gave to Congress as he was leaving office was a balanced budget. Of course, after Congress got through with it, it was not balanced.

Along comes a Republican with a "supply side" theory that claimed cutting taxes would generate more than enough new tax revenue that the net result would be a gain, thereby lowering the deficit. Of course Republicans loved this idea and jumped on it. Most economists dismissed it as hogwash.

Reagan adopted it, was elected, and pushed for an immediate 30%, across the board tax cut. Congress (Republicans and the boll-weevil Southern Democrats) passed a modified version of it, basically a 10% cut for two years, ending with a 5% cut the third year for a net result of a 25% tax cut. In addition, the tax rates were indexed to inflation.

What was the result? The "supply side" theory was proven to be a complete failure. Budget deficits soared to heights never even imagined before. During the 12 years of Republican leadership (Reagan 8, Bush 4) the national debt quadrupled.

Folks that don't understand the balance between taxes and revenues will argue that tax revenues actually increased and they would be correct. The problem with that argument is that it ignores the fact that tax revenues nearly always rise from year to year due to multiple factors such as more people in the workforce (paying taxes), wages rising due to inflation (paying higher taxes bases on higher wages), etc. Bottom line is that we did not see the "normal" increase in tax revenue that we would have seen had the tax rates not been cut. We immediately experienced budget deficits that shot straight through the roof.

Numerous tax increases were enacted during Reagan's tenure (called them revenue enhancements) but they were all too small to make much difference. One can only imagine how bad it would have been had Reagan's 30% tax cut been passed initially and the Congress did not pass, and Reagan sign, the tax increases they did manage to pass during that time frame.

What about cuts in spending? That would have helped but it did not occur. The Republicans were even bigger spenders than the Democrats. Both parties like to spend. Neither party likes to cut. One party talks about cutting spending but never actually does it. The other party doesn't even talk much about it. The end result is that there is virtually no difference between the two parties in the spending arena.

How did we eventually get to a balanced budget/surplus?

Do you remember President Bush's pledge, "Read my lips. No new taxes."? Well, he saw the problem and allowed the Democrats to convince him to sign a significant tax increase towards the end of his term. That had an immediate impact as our annual budget deficits saw a significant drop. That move probably cost Bush his reelection but it was very good for our nation.

Along comes Clinton, promising to reform welfare, balance the budget, etc. Prior to the Republicans gaining a majority in Congress, Clinton managed to get a tax increase on the wealthy passed. There was absolutely no tax increase on the middle class and nobody in my circle of family/friends had to pay a dime more in taxes. It was a modest tax increase for those who could certainly afford to pay more in taxes. All that aside, as a result of that bold move our annual budget deficts were cut in half during Clinton's first term and we reached a budget surplus during his second term and we were paying down the national debt. Yes, welfare reform, as passed by the GOP and signed by President Clinton after several modifications, helped somewhat.

My point is that Newt, currently claiming to have balanced the budget without increasing taxes, is lying through his teeth. Multiple tax increases were necessary to balance our budget and correct the failed "supply side" experiment.

You completely skipped over one very important item that contributed to Clinton's "balanced budget": massive cuts in military spending.

Because of that important omission, I won't even consider the rest of your screed...except to say that all of our rising deficits can be attributed to increases in spending.

To follow-up and further illustrate the utter folly of supply-side economics I'll continue here.

How did we get from budget surplus back to deficit spending? Very simple. When "W" Bush was elected president, a huge tax cut was passed. As under Reagan, it had an immediate impact on tax revenue and we immediately saw a switch from budget surplus to budget deficit. For anyone who thinks supply-side economics works, here's double proof that most economists were right in their assessment that it would not work. Oh yea, candidate George Bush, while campaigning against Ronald Reagan, called it "Voodoo Economics." Although he had to embrace it when selected as Reagan's running mate, he was correct when he referred to it as Voodoo Economics...

Next, to make matters worse, when we entered the Iraq war, spending soared and there was no tax increase to pay for the war. Deficits soared even more. Some folks try to claim that the Bush deficits were due to war spending, not the tax cuts. They are sadly mistaken as the budget surplus was squandered prior to us going to war in Iraq. The war just made it worse.

Next, as the GOP had driven our economy into the ditch due to the tax cuts without corresponding spending cuts, banking deregulation, etc., and Congress passing auto and financial bailouts supported by both Bush and Obama, budget deficits soared to the astronomical levels where they remain today.

How do we fix it?

The GOP's hard line of "no tax increases" is going to prevent us from fixing it. It will take a combination of spending cuts and tax increases. Nobody, from either aisle, has the guts to repeal the Bush tax cuts but we need to get taxes back to where they were under President Clinton. We need to cut spending but there are too many different opinions on exactly what should be cut, therefore it won't get done.

Both parties say we need to "grow our economy" and they are right. That will help a little bit but the deficit is so huge right now that growing our economy would hardly make a dent in the deficit. As long as the GOP keeps touting "free trade" we will not be able to grow our economy very much. We need "fair trade." Policies that help to bring better-paying manufacturing jobs back to this country are what is needed. Anything short of that will not work. When we import goods made by people who make super low wages we are just inching back towards low wages ourselves. The GOP is trying to speed up that process by their all-out attack on our labor unions. Union membership is low right now because we've lost so many manufacturing jobs. People forget or simply don't know, Unions created the middle class. Unions gave us jobs with "living wages" where you could actually support a family. They gave us health insurance benefits as well as paid vacations. Unions helped create more jobs as better paid workers could purchase more goods and services. New small businesses sprung up all over the country. All businesses prospered. As Unions diminish, wages spiral downwards, benefits such as employer-furnished health insurance go away, job security becomes a thing of the past, etc. As wages trend downward tax revenues decrease, businesses fail because Americans can no longer afford to buy new cars, the latest electronics gadgets, bass boats, motorcycles, etc. It's a never-ending downward spiral.

The quick fix would be to raise tax revenue immediately and then systematically work on cutting spending, or at least slowing down the growth of spending.

I may sound biased but I only try to look at the facts. The direction the GOP wants to take us will eventually kill the middle class and take us back to the two-class society that once existed in our land, the haves and the have-nots.

Democrats have their faults also but I was trying to keep on the budget deficit topic for this thread.

Mycroft said:

You completely skipped over one very important item that contributed to Clinton's "balanced budget": massive cuts in military spending.

Because of that important omission, I won't even consider the rest of your screed...except to say that all of our rising deficits can be attributed to increases in spending.

Click to expand...

Ah, defense spending. Another area of GOP lies/deceit.

You are correct in the fact that defense spending decreased during the Clinton era. That, along with the tax increases, certainly helped us reach budget surplus. The facts prove your other "assumption" incorrect though if you are trying to say that our rising deficits can be attributed to increases in spending alone and that tax cuts were not the biggest factor.

Back to defense spending and a lesson that most do not know because of the right-wing propaganda that has been imposed on us for years and that the media has never done a decent job of trying to correct. By the way, these are facts, not opinion...

To start with, in order to judge whether defense spending is increasing or decreasing, you must look at it in terms of inflation-adjusted dollars. Many folks try to distort the argument by giving figures related to "percent of GDP" or other methods of playing games with numbers that simply serve to mislead and confuse.

I'll give a comprehensive history of defense spending, beginning with the Nixon/Ford years.

Defense spending hit a peak in '68 (prior to Nixon). Defense spending decreased all eight years under Nixon/Ford and hit a low around '77. Carter became president during '77 and increased defense spending every year during his four years (contrary to what the right-wing propaganda has been). Reagan accelerated Carter's defense build-up and it hit another peak during the '86 - '89 time frame. Defense spending, due to the end of the Cold War, started being cut during Reagan's final year and during all of the Bush and Clinton years, reaching a low around 2001, when it started increasing again under "W" Bush due to our involvement in two wars. It is at it's highest point ever right now under President Obama and we should be able to start cutting as we are pulling out of Iraq and will soon be pulling out of Afghanistan.

Most right-wingers will try to dispute these facts but, short of trying to use misleading "percent of GDP" data, will simply not be able to hide the real truth.

Too bad the "biased" media has done a terrible job of exposing the right-wing propaganda and lies that have prevailed on this issue over the years. Most folks have no idea what the truth is.