Sunday, October 14, 2007

Those tax and spend Republicans

I was reading the New York Times story this morning about embattled Congressional Republicans and noted the line about how "Republicans have been scrambling for a health care response at a time when they had hoped to be pounding Democrats over excessive spending and re-establishing their image as the party of fiscal restraint." And I thought how bogus.

That thought led me to thinking, I wonder where the data is to demonstrate that this point is bogus. So, thinking I was looking for raw data I could put into Excel and create my own graphs, I started Googling. It didn't take me long to find that someone had already done this work.

At right is federal taxation as percent of GDP sorted by year. Party leadership is at bottom. Blue is Democrat; Orange is Republican. Top row is President; middle is House; Bottom is Senate.

Next chart is federal spending as percent of GDP sorted by year. And the third chart is federal deficit as percent of GDP sorted by year. All three of these through FY 2004. I haven't independently confirmed data; I am trusting the presentation from http://traxel.com/deficit/

The most generous analysis of this data that taxing and spending is randomly distributed independent of who is running the store. But that is generous to the Republicans.

Actually, in defense of the Republicans, they fare reasonably well on the taxation side. They seem to want to tax us less. But the lower taxes have not halted their spending. The top ten spending years - across three different Presidential administrations have been Republican years in the White House -- seven of them with Republican Senates (tempering the counter argument that spending is something Congress does that the White House can't stop.)

And with low taxes and high spending, the deficit has been a disaster under the Republicans. Fourteen of the fifteen worst deficits in recent history have been under Republican Presidents, the lone Democrat entry on that list was Clinton's FY 93 budget that was pretty much inherited from the GWB administration (none of the top 14 Republican Presidential deficits were immediately inherited from a Democrat.)

The Republicans do a great PR job of labeling Democrats as "tax and spend", but only the "tax" part of the label has any potential legitimacy. Spending - and spending when there is no cash in the bank to pay for it - has been a Republican trait for quite some time now.

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3 Comments:

Blogger Jeff said...

Ah, the fact-crushing beauty of an effective narrative!

The scenario IHOP lays out makes me somewhat sympathetic towards Grover Norquist and his cohort, who honestly would like to see a "starve the beast" approach to smaller government through slashed tax rates. However, like us activist Democrats who toe the line but somehow still end up with a bunch of assholes who won't do what we tell them, the Republican elected officials are only committed to spending cuts when they're not in power, to the chagrin of their activists.

Does anybody think it's really possible to shrink government? Are there any historical examples of this happening in a gradual manner? Entitlements have certainly been slashed over the last 30 years, but it's my sense that most if not all of that "entitlement dividend" has gone straight into military boondoggles and bridges to nowhere--in other words, the pie slices have changed size, but the size of the pie has continued to increase.

8:33 AM  
Blogger hurtleg said...

Jeff,
You say, "Entitlements have certainly been slashed over the last 30 years"

Can you give some concrete examples that involve real money. I am not aware of any. Fights over 'cuts' are really arguments over how much the increase will be year on year.

When I say real cuts I mean something involving at least a couple of billion dollars. I am sure there are some small programs that have been cut from time to time.

I hope you are right and something has serious has been cut, but I am skeptical.

As to IHOP's point I think the betrayal of small government principles by Bush and the Congrassional Republicans are why the party is so demoralized right now. The war is not the issue (in the Republican party).

I know I was frustrated in '06 because there was no one to vote for. The current republicans were corrupt and overspenders. The problem is the democrats are just as bad. Jack Murtha, Mr. Abscam, leading reform. What a joke.

1:25 PM  
Blogger Jeff said...

Hurtleg,

"As to IHOP's point I think the betrayal of small government principles by Bush and the Congrassional Republicans are why the party is so demoralized right now."

But IHOP's point is that this isn't a novelty of the Bush administration.

Regarding your question of me:

This is according to Human Events:

"Finally, it is important to remember that Reagan did sharply cut domestic discretionary programs. These fell from 4.7% of GDP in 1980 to 3.1% by 1988. A cut of similar magnitude in today's economy would reduce federal spending by more than $200 billion annually. By contrast. Bush has raised domestic discretionary spending from 3.1% of GDP to 3.8% this year-equivalent to almost $ 100 billion of added spending per year."

GDP in 1988 was a little over $5 trillion, so that's multiple billions cut, even then. To my point, overall spending didn't decrease, and actually increased due to runaway military spending. We've never discussed this, but you would probably say that that was justified as a way of spending the USSR into the grave. I think that's mostly propaganda for reasons we could go into in another discussion, but also because, even in that 10-year interlude between the collapse of the old History's Greatest Threat to American Democracy and the debut of the new History's Greatest Threat to American Democracy, the decrease in military spending wasn't all that large. At the high point of Vietnam spending in 1969, it was 71% of discretionary spending (8.7% of GDP). At the high point of Reagan's build-up in 1985 it was 61% (6.1% of GDP). Since then, the low-point was in 2001 with 47% (3% of GDP).

I'm not sure how much sense it makes to discuss these numbers in the aggregate, but it seems crazy to me that in peacetime 1985 we were spending on "defense" 89% of what we were spending at the height of Vietnam, and that in 2001, after the complete disappearance of our mortal enemy, we were spending 66% of what we were spending in 1969. It doesn't look quite as egregious in terms of GDP, which is appropriate, since there's no reason to assume that global threats were growing in proportion to our economic output.

I'm not a pacifist, but i think we should have a military appropriate to a Republic rather than an Empire. But the main point is that overall spending never seems to get cut, just shifted around on the basis of the interest groups represented by the parties. Democrats spend more on social programs, many of which, admittedly, are either poorly administered or ineffective. Republicans spend more on armaments, vast quantities of which Pentagon planners haven't even requested. It's just the cumulative effect of individual pork projects.

And yet, until recently, Republicans were able to maintain a reputation for being cost cutters on the basis of the fact that they favor all tax cuts. But, as Milton Friedman pointed out, a tax cut not offset with a spending cut = a future tax increase. This is as much a law of political science as it is an accounting identity. Republicans employ a shell game to pass themselves off as fiscal conservatives, but wanting to cut the pet projects of your opponents or of congressmen from other districts doesn't make you a fiscal conservative.

11:11 AM  

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