7 ms·

Does your history include the Clinton Administration, which ran a surplus?

by sethg 17y ago

anamax 17y ago
> Does your history include the Clinton Administration, which ran a surplus? Yes, it does. Clinton benefitted from the end of the cold war and a repub congress. They couldn't figure out how to spend the "savings" fast enough. (A Repub president with a dem congress might have had the same problem.) What "war" do you see ending that will produce comparable savings? (Obama is winding down Iraq on Bush's schedule.)
- patio11 17y ago
  Clinton benefited from the end of the Cold War and having a Republican Congress, but he benefited a lot more from the surge in government tax receipts caused by the contemporaneous economic boom. In constant 2000 dollars, in 1992, the US took in 1.2 trillion. In 2000, we took in 2 trillion. You presumably didn't remember the 150 billion added in yearly expenditures over the same interval because it got swallowed by the boom-fueled taxes. Then, the boom ended, as boons are wont to do...
  - guelo 17y ago
    Clinton's deficit also benefited from passing in 1993 "the biggest tax increase in American history"(http://www.factcheck.org/treasury_tax_expert_to_bush_clintons_increase.html http://www.factcheck.org/treasury_tax_expert_to_bush_clinton...) The economy then proceeded to have the longest expansion in American history thus disproving all Republican tax-cut theories, though no one seems to have told them.
    - anamax 17y ago
      > The economy then proceeded to have the longest expansion in American history thus disproving all Republican tax-cut theories, though no one seems to have told them. reply You use "disprove" in a very odd way. No one has said that tax increases necessarily kill economic growth. The claim is that tax increases hurt economic growth. A dollar taxed (or borrowed) and spent by govt accomplishes something. A dollar left in the private sector accomplishes something else. Do you really think that the average govt spending is more valuable than the average private spending?
      - guelo 17y ago
        "The claim is that tax increases hurt economic growth." You still have to square that claim with the fact that the 1993 tax hike was followed by the longest expansion in US history. As far as the value of "average govt spending" vs "average private spending", it obviously depends. When the markets decided that the best use of capital was to build a massive oversupply of houses and condos that was not very valuable, when the government decides to fund more college tuition that's a pretty good investment in society's future. When private money decided to fund Brin and Page that was very valuable, when the government decides to spend billions on unneeded fighter jets that's not valuable at all.
        anamax 17y ago
        > You still have to square that claim with the fact that the 1993 tax hike was followed by the longest expansion in US history. There's no inconsistency. We had the dot-boom, the cold war ended, and we'd thrown a lot of underpriced real-estate onto the market. Any one of those three would have produced significant economic growth. All three at once was a bonanza. > As far as the value of "average govt spending" vs "average private spending", it obviously depends. Yup, it does. However, you're asserting that it doesn't, that govt spending is better. That's what it means to say that tax increases are good. > When the markets decided that the best use of capital was to build a massive oversupply of houses and condos that was not very valuable Not so fast. Fannie and Freddie and govt regulation etc had a huge role in that. I mention regulation because banks that didn't play were punished. Also, govt regulation was behind much of the securitization and "insurance". Fannie and Freddie was a double-hit - regulations basically forced banks to hold their stock, which pretty much guaranteed that they'd all have solvency problems when Fannie and Freddie hit the skids. > when the government decides to fund more college tuition that's a pretty good investment in society's future. Oh really? Do we have a shortage of women's studies majors? A significant fraction of college degrees are dead-weight. The bulk of financial aid goes to tuition increases that it causes.
        guelo 17y ago
        I never said that tax increases are good in general, Republicans are the ones that claim that every tax increase is going to result in the end of the republic. My personal belief is that at the margins taxes have little effect on overall economic growth, especially when they are targeted at the upper income levels, and they are generally a better way of paying for government than financing it with debt which seems to be Republican's preferred way of paying based on the trickle down theory that tax cuts to the rich will pay for themselves by stimulating the economy and thus increase tax receipts. When I look at the economy that resulted from Bush's tax cuts (i.e. a slow jobless recovery) vs Cliton's tax increase my conclusion is that there's very little correlation between taxes and growth and that we are very far on the left side of the Laffer curve. On the housing issue, we disagree very much on the cause of the problem. I believe the problem was the deregulation that allowed the creation of entities like AIG Financial Products which was probably the major sink of risks that drove the bubble, and also there was a catastrophic market failure that allowed Wall Street to run their companies into the ground for short term gain. But there's no way to deny that a LOT of private capital was directed at the building of useless condos.
- philwelch 17y ago
  Will the repayment of the TARP loans fix anything?
  - pmorici 17y ago
    Well, like 50 billion in TARP funds were paid back in the past few weeks and in response the government is looking for ways to spend the money. So I think the answer to your question is no it won't because the government is apparently dead set on squandering the money one way or another.
philwelch 17y ago
The Clinton "surplus" was created by raiding the Social Security trust fund. While every administration in the history of Social Security has raided the trust fund, nearly every administration in that period also ran a deficit, so the problem didn't really come up before. The president who continues running a surplus while leaving the trust fund alone (say, in a "lock box") would get full credit for running a true surplus. That may have been Gore, had he been elected. Or maybe he would have gone apeshit over 9/11 too and spent us into a deficit again. In any case, the best we can reasonably hope for is kind of a seasonal surplus, where the government runs a surplus during boom times and a deficit during recessions. That might average out to a roughly balanced budget over the course of 10-20 years. What really happens is that in boom times, the government rushes for ways to spend all their new tax revenues, and in recessions, the government looks for ways to run up spending in order to fix the recession.
- dminor 17y ago
  Nobody "raids Social Security" -- please stop perpetuating this silly meme. Social security and other entitlement surpluses are automatically loaned to the government in exchange for non-marketable debt. The alternative would be a larger deficit, for which you'd sell more UST bonds, which the entitlement programs would then buy since they need a safe place to park their surplus. Voila, you're basically right back where we are now - entitlement surpluses funding a portion of the deficit. We don't need a lock box, we just need a more accurate definition of deficit.
  - anamax 17y ago
    > The alternative would be a larger deficit, for which you'd sell more UST bonds, which the entitlement programs would then buy since they need a safe place to park their surplus. It's not clear that UST bonds are a safe place.... SS has made a lot of promises. It's unclear that they'll be satisfied. And, to be fair, there's no legal obligation to satisfy them. The whole "we lent the money to the federal govt" angle will make it harder to fix SS.
  - philwelch 17y ago
    The alternative would be to actually balance the federal budget before taking into account entitlement surpluses, something that not even Clinton ever accomplished. It's a huge violation of the idea of a trust fund to invest that trust fund in loans to oneself.

Does your history include the Clinton Administration, which ran a surplus?

by sethg 17y ago

Does your history include the Clinton Administration, which ran a surplus?

> Does your history include the Clinton Administration, which ran a surplus? Yes, it does. Clinton benefitted from the end of the cold war and a repub congress. They couldn't figure out how to spend the "savings" fast enough. (A Repub president with a dem congress might have had the same problem.) What "war" do you see ending that will produce comparable savings? (Obama is winding down Iraq on Bush's schedule.)

patio11 17y ago
Clinton benefited from the end of the Cold War and having a Republican Congress, but he benefited a lot more from the surge in government tax receipts caused by the contemporaneous economic boom. In constant 2000 dollars, in 1992, the US took in 1.2 trillion. In 2000, we took in 2 trillion. You presumably didn't remember the 150 billion added in yearly expenditures over the same interval because it got swallowed by the boom-fueled taxes. Then, the boom ended, as boons are wont to do...
- guelo 17y ago
  Clinton's deficit also benefited from passing in 1993 "the biggest tax increase in American history"(http://www.factcheck.org/treasury_tax_expert_to_bush_clintons_increase.html http://www.factcheck.org/treasury_tax_expert_to_bush_clinton...) The economy then proceeded to have the longest expansion in American history thus disproving all Republican tax-cut theories, though no one seems to have told them.
  - anamax 17y ago
    > The economy then proceeded to have the longest expansion in American history thus disproving all Republican tax-cut theories, though no one seems to have told them. reply You use "disprove" in a very odd way. No one has said that tax increases necessarily kill economic growth. The claim is that tax increases hurt economic growth. A dollar taxed (or borrowed) and spent by govt accomplishes something. A dollar left in the private sector accomplishes something else. Do you really think that the average govt spending is more valuable than the average private spending?
    - guelo 17y ago
      "The claim is that tax increases hurt economic growth." You still have to square that claim with the fact that the 1993 tax hike was followed by the longest expansion in US history. As far as the value of "average govt spending" vs "average private spending", it obviously depends. When the markets decided that the best use of capital was to build a massive oversupply of houses and condos that was not very valuable, when the government decides to fund more college tuition that's a pretty good investment in society's future. When private money decided to fund Brin and Page that was very valuable, when the government decides to spend billions on unneeded fighter jets that's not valuable at all.
      - anamax 17y ago
        > You still have to square that claim with the fact that the 1993 tax hike was followed by the longest expansion in US history. There's no inconsistency. We had the dot-boom, the cold war ended, and we'd thrown a lot of underpriced real-estate onto the market. Any one of those three would have produced significant economic growth. All three at once was a bonanza. > As far as the value of "average govt spending" vs "average private spending", it obviously depends. Yup, it does. However, you're asserting that it doesn't, that govt spending is better. That's what it means to say that tax increases are good. > When the markets decided that the best use of capital was to build a massive oversupply of houses and condos that was not very valuable Not so fast. Fannie and Freddie and govt regulation etc had a huge role in that. I mention regulation because banks that didn't play were punished. Also, govt regulation was behind much of the securitization and "insurance". Fannie and Freddie was a double-hit - regulations basically forced banks to hold their stock, which pretty much guaranteed that they'd all have solvency problems when Fannie and Freddie hit the skids. > when the government decides to fund more college tuition that's a pretty good investment in society's future. Oh really? Do we have a shortage of women's studies majors? A significant fraction of college degrees are dead-weight. The bulk of financial aid goes to tuition increases that it causes.
        guelo 17y ago
        I never said that tax increases are good in general, Republicans are the ones that claim that every tax increase is going to result in the end of the republic. My personal belief is that at the margins taxes have little effect on overall economic growth, especially when they are targeted at the upper income levels, and they are generally a better way of paying for government than financing it with debt which seems to be Republican's preferred way of paying based on the trickle down theory that tax cuts to the rich will pay for themselves by stimulating the economy and thus increase tax receipts. When I look at the economy that resulted from Bush's tax cuts (i.e. a slow jobless recovery) vs Cliton's tax increase my conclusion is that there's very little correlation between taxes and growth and that we are very far on the left side of the Laffer curve. On the housing issue, we disagree very much on the cause of the problem. I believe the problem was the deregulation that allowed the creation of entities like AIG Financial Products which was probably the major sink of risks that drove the bubble, and also there was a catastrophic market failure that allowed Wall Street to run their companies into the ground for short term gain. But there's no way to deny that a LOT of private capital was directed at the building of useless condos.
philwelch 17y ago
Will the repayment of the TARP loans fix anything?
- pmorici 17y ago
  Well, like 50 billion in TARP funds were paid back in the past few weeks and in response the government is looking for ways to spend the money. So I think the answer to your question is no it won't because the government is apparently dead set on squandering the money one way or another.

philwelch 17y ago

The Clinton "surplus" was created by raiding the Social Security trust fund. While every administration in the history of Social Security has raided the trust fund, nearly every administration in that period also ran a deficit, so the problem didn't really come up before. The president who continues running a surplus while leaving the trust fund alone (say, in a "lock box") would get full credit for running a true surplus. That may have been Gore, had he been elected. Or maybe he would have gone apeshit over 9/11 too and spent us into a deficit again. In any case, the best we can reasonably hope for is kind of a seasonal surplus, where the government runs a surplus during boom times and a deficit during recessions. That might average out to a roughly balanced budget over the course of 10-20 years. What really happens is that in boom times, the government rushes for ways to spend all their new tax revenues, and in recessions, the government looks for ways to run up spending in order to fix the recession.

dminor 17y ago
Nobody "raids Social Security" -- please stop perpetuating this silly meme. Social security and other entitlement surpluses are automatically loaned to the government in exchange for non-marketable debt. The alternative would be a larger deficit, for which you'd sell more UST bonds, which the entitlement programs would then buy since they need a safe place to park their surplus. Voila, you're basically right back where we are now - entitlement surpluses funding a portion of the deficit. We don't need a lock box, we just need a more accurate definition of deficit.
- anamax 17y ago
  > The alternative would be a larger deficit, for which you'd sell more UST bonds, which the entitlement programs would then buy since they need a safe place to park their surplus. It's not clear that UST bonds are a safe place.... SS has made a lot of promises. It's unclear that they'll be satisfied. And, to be fair, there's no legal obligation to satisfy them. The whole "we lent the money to the federal govt" angle will make it harder to fix SS.
- philwelch 17y ago
  The alternative would be to actually balance the federal budget before taking into account entitlement surpluses, something that not even Clinton ever accomplished. It's a huge violation of the idea of a trust fund to invest that trust fund in loans to oneself.