On Feb 12, 2008, at 12:13 PM, Max B. Sawicky wrote:
> The big swing in the standardized deficit of 2.0% (of GDP) is after
> 1996. In 1996 revenues were 18% and outlays were 20%. 2000 was the
> height of the surplus (1.2%), with revenues of 19.3 and outlays of
> 18.1. So outlays went down more than revenue went up (I suspect in
> good part due to low interest rates hence lower cost of debt
> service.) In 1996 revenues were 18% and outlays were 20%. 2000
> was the height of the surplus (1.2%), with revenues of 19.3 and
> outlays of 18.1.
Not exactly. The swing in the standardized balance was 4.0 points from 1993-2000. 1.6 points of that were from 1993-96, and 2.4 from 1996-2000. The first is 0.5 points per year and the second is 0.6. So the swing was bigger in the second period but not by much. And the 4.0 point swing was almost evenly divided between revenues (up 1.9) and spending (down 2.1).
> In 1996 revenues were 18% and outlays were 20%. 2000 was the
> height of the surplus (1.2%), with revenues of 19.3 and outlays of
> 18.1. So outlays went down more than revenue went up (I suspect in
> good part due to low interest rates hence lower cost of debt service.)
And less borrowing. Interest rates fell - the 10-year went from 6.6% in Jan 93 to 5.16% in Jan 00. But you'd have a hard time winning an argument that the swing to surplus had no effect on long rates. And the smaller stock of debt relative to GDP - from 49% at the beginning of 93 to 34% at the beginning of 01 - was a major factor in the reduction of debt service. Why waste so much money on debt service, anyway? Tax the fuckers, don't pay 'em tribute.
THe military share of GDP went down markedly too - from 5.6% in 93Q1 to 3.8% in 01Q1 (which was the lowest share since before WW II).
> Revs were pushed by the bubble and income gains at the top (incl
> wage & salary). Outlays down by defense spending ebb and Clinton-
> G.O.P. gridlock-cum-coexistence. Beyond the bubble I couldn't say
> what should get credit, but I don't see how it goes to Clinton.
> Barry Bosworth did a piece on the non-repeatable underpinnings of
> the surplus.
There's a lot that sucked about Clinton, but it seems to me the message that you can balance the budget by raising taxes on the richest 1%, thereby lowering debt service and quite possibly interest rates, while doing no harm to the economy (and quite possibly stimulating it) is a good one for our side. What's so wonderful about chronic deficit spending, really?
Doug