Walter In Denver

Repeat It Often Enough

One of the biggest obstacles in debating government budget policy is the wealth of misinformation spread by the pro-spending sides of the debate. I don't necessarily want to blame everyone for using untruths, some of them are so pervasive the person using them doesn't even know he's not being truthful.

Reading Atrios this morning I ran across this article by Brad DeLong discussing Bob Rubin's (and Pres. Clinton's) economic policy. He sets up the article by looking at the Reagan years:

The "Reagan Revolution" did not shrink the size of the federal government: in 1980 when Ronald Reagan ran for president federal spending (gross of offsetting receipts) was 22.7% of GDP; in 1992 when Bill Clinton ran for president federal spending was 23.2% of GDP. The "Reagan Revolution" did change the shape of federal spending: one-third of domestic federal spending outside of the entitlement programs went missing between 1980 and 1992, replaced primarily by debt interest and secondarily by higher military spending. (A truly amazing fact, and testimony to the strength of the military-industrial complex: defense took a higher share of GDP in 1992 after the collapse of the Soviet Union than it had taken in 1980). Higher debt interest came from the huge debts run up to finance Reagan's unfunded tax cuts.

(Emphasis mine) The American political left might still be operating under the delusion that Reagan cut spending, but I can't recall anyone else making the claim.

Note the language in the highlighted portion. The tax cut was 'unfunded.' Using that term says a lot about the writer's political ethics. Where some might think the taxpayers fund the government, he takes the opposite view, that government must fund a tax cut. Also, when comparing spending during the Clinton and Reagan administrations he uses numbers as percentage of GDP. Since GDP grew faster than inflation that means spending has gone up considerably more than the .5% you see in those numbers.

But most importantly let's look at the relationship between the tax cuts and deficit spending. A little on-line searching found this chart, product of a joint effort by the Urban Institute and the Brookings Institution. The chart shows total federal income and spending by year. Here are some relevant numbers:

Federal income, 1981: $599,272,000,000
Federal income, 1989: $991,190,000,000
Add the first Bush administration and you're up to $1,154,401,000,000 in 1993.

I don't think I can call that anything but a substantial increase. During the intervening years only once, from '82 to '83, did federal revenue decrease, and that was followed by a sharp jump in '84. By now you've probably guessed, the only reason the deficit grew is because spending grew even more. Here are those numbers:

Outlays, 1981: $678,249,000,000
Outlays 1989: $1,143,683,000,000
Outlays 1993: $1,409,512,000,000

Yup. Sure enough the deficit grew. Toward the end of DeLong's article he adds:

Rubin's policies made it possible for George W. Bush to return us to the budgetary ground zero of 1992 through enormous tax cuts for the $200,000+ a year crowd and through big boosts to federal spending--a lot of which looks like Republican pork...

Once again, he's half right. It's all about the spending. I would substitute the word 'puny' where he uses 'enormous,' but again that has a lot to do with a person's set of ethics.

A shorter version of DeLong's article is set to run in the American Prospect.

Update: Fixed math error, 11AM. Didn't put enough zeroes in the earlier version.

Posted by Walter at December 21, 2003 09:15 AM