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The last pre-GFC Bush II year of 2007 had a federal budget deficit of $163B. The budget deficit in 2016, Obama’s last year, was $587B. The last pre-Covid Trump

The last pre-GFC Bush II year of 2007 had a federal budget deficit of $163B. The budget deficit in 2016, Obama’s last year, was $587B. The last pre-Covid Trump I year of 2019 had a $984B deficit. After Covid, Biden’s final full year deficit was $1.83T. There’s a non-zero correlation between any number of policy choices by both parties and the GFC or Covid, but it’s hard to see these primarily as anything but exogenous shocks.

jmclnx 2mo ago
You forget the huge bank bailouts caused by Bush's policies in 2008. That is why it spiked. Obama brought it down during his admin. Without that spending, the recession of 2008 would have been the same or worse as the depression of the 1930s.
- twoodfin 2mo ago
  This is what I meant by stories you could tell. Other folks blame Glass-Steagall repeal, which happened during the Clinton administration. The Big Short blamed it on the invention of the MBS a couple decades earlier. IAE, nobody thinks it was a mistake to make a massive fiscal investment in 2008 to avert a depression, as you say. It’s hard to say that is a meaningful signal about the budgetary prudence of the GOP vs. Democrats. Similarly, if Covid had hit in 2016, it wouldn’t have discredited Obama’s budgetary acumen if he spent a trillion on backstopping the economy against it.
  - jmclnx 2mo ago
    I personally blame that repeal, but I an not an economist so I really cannot prove my belief. I just hope we are not walking into another 2008, I think we are, but again my economic knowledge is just a crystal ball and a magic 8 ball :)
    - twoodfin 2mo ago
      I wouldn’t worry too much. Imagine if all this capital investment in AI were instead being focused on solar build out. The vibes would be much more positive, but the return on capital for solar panels frankly looks paltry compared to what LLM tokens by the quadrillions can do.
runako 2mo ago
> last pre-GFC Bush II > last pre-Covid Trump I Sure, if you exclude the big increases, you can draw different conclusions. GFC was not an exogenous shock, and even if it was, a) Bush was in office setting policy the prior 6 years and b) the specific response was not preordained (for ex: it is not part of the Constitution that rich people must pay lower tax rates than they did in 1982, that invariant is a policy choice).
- twoodfin 2mo ago
  Sure, but absent the GFC, Bush-era tax rates + spending choices pushed the deficit to a low % of GDP we’d kill for right now. Do you think lower high-income marginal rates caused the GFC?
  - mattnewton 2mo ago
    I think deregulation of the banking sector at the very least contributed to the G in the GFC which congresses under Clinton and Bush did.
  - runako 2mo ago
    No. Look at what I wrote: > b) the specific response was not preordained (for ex: it is not part of the Constitution that rich people must pay lower tax rates than they did in 1982, that invariant is a policy choice). We did not have to blow up the deficit (as badly) as a result of the GFC. That was a specific set of policy choices that the Bush team made, in part to preserve the capital gains tax cuts and low corporate tax rates. (If a corporation is a person for some purposes under the law and can claim some personhood rights, why are they not subject to the person's tax code?) It is also a policy choice to tax capital gains, chiefly for very rich people, at a lower marginal rate than income earned through other means. It is not in the Constitution that our tax policy must favor the very rich. One could imagine a world in which the response was along the lines that "this is a once-in-a-century crisis, so rich people and corporations will have to make the sacrifice of paying GOP Reagan 1981 tax rates for a few years to help us build a stronger foundation for the future." Notably, CBO did expect (at the time) the Bush budget to increase the federal debt by roughly a third over a decade. It was well known and discussed at the time that the Bush budget would inflate our debt burden. > pushed the deficit to a low % of GDP we’d kill for right now Empirically, we would not. We are allowed to choose the entire composition of the House every two years, a third of the Senate is up for reelection with the same frequency, and the White House every four years. In no election of the last half-century or so has fiscal prudence been a major issue. If we would "kill" to lower the budget deficit, the easy first step would be to not re-elect the president who presided over the largest increase in the deficit in our history (by percentage: W Bush; by $: Trump). As much as one might wish it were otherwise, voters simply do not care.

jmclnx 2mo ago

You forget the huge bank bailouts caused by Bush's policies in 2008. That is why it spiked. Obama brought it down during his admin. Without that spending, the recession of 2008 would have been the same or worse as the depression of the 1930s.

twoodfin 2mo ago
This is what I meant by stories you could tell. Other folks blame Glass-Steagall repeal, which happened during the Clinton administration. The Big Short blamed it on the invention of the MBS a couple decades earlier. IAE, nobody thinks it was a mistake to make a massive fiscal investment in 2008 to avert a depression, as you say. It’s hard to say that is a meaningful signal about the budgetary prudence of the GOP vs. Democrats. Similarly, if Covid had hit in 2016, it wouldn’t have discredited Obama’s budgetary acumen if he spent a trillion on backstopping the economy against it.
- jmclnx 2mo ago
  I personally blame that repeal, but I an not an economist so I really cannot prove my belief. I just hope we are not walking into another 2008, I think we are, but again my economic knowledge is just a crystal ball and a magic 8 ball :)
  - twoodfin 2mo ago
    I wouldn’t worry too much. Imagine if all this capital investment in AI were instead being focused on solar build out. The vibes would be much more positive, but the return on capital for solar panels frankly looks paltry compared to what LLM tokens by the quadrillions can do.

runako 2mo ago

> last pre-GFC Bush II > last pre-Covid Trump I Sure, if you exclude the big increases, you can draw different conclusions. GFC was not an exogenous shock, and even if it was, a) Bush was in office setting policy the prior 6 years and b) the specific response was not preordained (for ex: it is not part of the Constitution that rich people must pay lower tax rates than they did in 1982, that invariant is a policy choice).

twoodfin 2mo ago
Sure, but absent the GFC, Bush-era tax rates + spending choices pushed the deficit to a low % of GDP we’d kill for right now. Do you think lower high-income marginal rates caused the GFC?
- mattnewton 2mo ago
  I think deregulation of the banking sector at the very least contributed to the G in the GFC which congresses under Clinton and Bush did.
- runako 2mo ago
  No. Look at what I wrote: > b) the specific response was not preordained (for ex: it is not part of the Constitution that rich people must pay lower tax rates than they did in 1982, that invariant is a policy choice). We did not have to blow up the deficit (as badly) as a result of the GFC. That was a specific set of policy choices that the Bush team made, in part to preserve the capital gains tax cuts and low corporate tax rates. (If a corporation is a person for some purposes under the law and can claim some personhood rights, why are they not subject to the person's tax code?) It is also a policy choice to tax capital gains, chiefly for very rich people, at a lower marginal rate than income earned through other means. It is not in the Constitution that our tax policy must favor the very rich. One could imagine a world in which the response was along the lines that "this is a once-in-a-century crisis, so rich people and corporations will have to make the sacrifice of paying GOP Reagan 1981 tax rates for a few years to help us build a stronger foundation for the future." Notably, CBO did expect (at the time) the Bush budget to increase the federal debt by roughly a third over a decade. It was well known and discussed at the time that the Bush budget would inflate our debt burden. > pushed the deficit to a low % of GDP we’d kill for right now Empirically, we would not. We are allowed to choose the entire composition of the House every two years, a third of the Senate is up for reelection with the same frequency, and the White House every four years. In no election of the last half-century or so has fiscal prudence been a major issue. If we would "kill" to lower the budget deficit, the easy first step would be to not re-elect the president who presided over the largest increase in the deficit in our history (by percentage: W Bush; by $: Trump). As much as one might wish it were otherwise, voters simply do not care.