February 01, 2010
Obama's Budget: Big Deficit: Big Picture
Pres. Obama submitted his budget for the next fiscal year starting in September. It is a record breaking 3.8 Trillion dollars. Of that 3.8 Trillion dollars, 1.3 Trillion is to be borrowed, representing the deficit for this new budget proposal. These are staggering numbers. However, there is a bigger short and long term picture to be appreciated here before marching off into tax payer suicide pacts. Let’s examine these big pictures absent the political spin, B.S., and talking points.
Short Term Big Picture:
Think this budget and deficits would have been different under Pres. McCain? If you say yes, you would be wrong according to former CBO official under the Bush administration and economic advisor to Sen. John McCain, Douglas Holtz-Eakins. Mr. Eakins said in a CNN interview this afternoon that Obama's first and second year budgets were mandated by the circumstances the new president faced, and if McCain were president, the budgets in year one and two of his presidency would not be very different in amount.
As Pres. Obama reminded House Republicans last week, he inherited a 1.3 (actually 1.2) Trillion dollar deficit from the Bush administration, the Great Recession, two wars, and massive losses in tax revenues resulting from both the Bush tax cuts for the wealthy and the enormous loss in economic tax revenues due to a depressed economy with losses in payroll, business, and corporate taxes. In his first year, neither Obama nor McCain, as president, could suspend previous legislation allocating spending for everything from putting people on the Moon to subsidizing extended unemployment benefits for the millions of American workers out of work.
Obama's first year was spent much as McCain would have spent it, wrestling with Congress over the failing American auto industry, the threat of a financial sector and mortgage industry meltdown, and Iraq and Afghanistan, as well as insuring the nation remained safe from further attack. There was little time in 2009 for a new president to put together a long term deficit reduction plan and fight for it with Congress, the real porkers in all this budgetary process.
In the short term, rescuing the economy from becoming the next Great Depression was, and is, job #1 on the fiscal front, and few objective and informed persons would argue with this priority. All evidence on the economic front indicates the Recovery and Reinvestment Act (Stimulus Bill) is, in fact, facilitating a stronger economy the latter half of 2009,. and will be stronger still in 2010, when close to 2/3 of the allocated Stimulus money will be spent. Consumer confidence is up smartly, manufacturing is growing again as indicated by the ISM numbers, stock prices have gained enormously from their lows in March of 2009, reflecting both higher corporate profits and expanding demand going forward.
Unemployment rate figures stopped rising in Nov. of 2009 and the rate is holding steady at 10%. In January of 2009, 11,919,000 American workers became unemployed. This number grew each month through October of 2009 reaching a peak at 15,612,000 unemployed workers age 16 up, seasonally adjusted. It began to fall in Nov. and stood at 15,267,000 in Dec. (Numbers from the U.S. Bureau of Labor Statistics: Table A-9)
Corporate earnings and profits combined with increased consumer demand will mean more corporate hiring in 2010. More troublesome will be small business hiring, which accounts for the majority of hiring in America. For small businesses which are capable, automation to replace hiring has, and will continue to be, a trend going forward in manufacturing and some service sector businesses. A previous example from the 1990's was ATM machines replacing bank and credit union tellers.
The reason rescuing the economy is absolutely essential during, and after, a recession as a fiscal matter is simple and straight forward. A depressed economy both decreases federal tax revenues and increases demand by voters and citizens for federal assistance during periods of unemployment. The single most important short term priority of the federal government to get its fiscal house back in balance is to get the economy growing again. One estimate has the federal revenue short fall due to this Great Recession at 3 Trillion dollars. Given the 1.3 trillion dollar deficit in Obama's 2011 budget request, it becomes abundantly clear why Pres. Obama and a Pres. McCain would have pursued deficit spending to shore up the economy and get it growing again. No other single pursuit could do as much to curtail deficit spending while insuring unemployed American workers did not suffer financial disaster during their time of unemployment.
The Long Term Picture:
Jim Nussle, former Office of Management & Budget (OMB) under Pres. GW Bush, said today in a TV interview, that America can have a conversation with themselves about fiscal management and national debt and rectify the situation, or, America will have that conversation with its lenders, like China, at some point in the not too distant future. It was pointed out that Russia attempted to sway China to put a crimp on lending to America as this Great Recession was well underway. Fortunately, for America, China refused Russia's persuasions. But, we are tempting fate to assume China's disposition toward American debt and borrowing will remain this favorable.
Assuming there are no budgetary changes going forward, the Congressional Budget Office (CBO) estimates over the next decade, the projected cumulative deficit in Obama's budget is some $8.5 trillion dollars. That would result in a national debt of 20 trillion dollars. This projection is based on the absence of any health care reform that drives down the costs of Medicare, the absence of any Soc. Sec. reform, no further cuts in spending beyond those in this year's budget, and revenues based on an average of about 3.2% GDP growth.
That is a lot of assumptions and tea leaf reading to arrive at what is, for the most part, an irrelevant projection of debt growth over 10 years. It is Irrelevant in the sense that the future will not unfold as the CBO projects. Their crystal ball is no better than yours or mine. Such projections are more useful as political ammunition against any sitting president, and voter apathy over fiscal matters, than as a reflection of the future.
The American people are not going to stand idly by and watch the debt grow to such proportions, nor will the minority Party in Congress, regardless of whether it be the GOP or Democratic Party. The opportunity cost of such borrowing gets prohibitively high before we reach 20 trillion in debt. As our debt to China grows, our ability to negotiate with China diminishes, on any issue, at all. As our debt grows, the amount we spend on interest each year to service that debt also grows.
How much more could our government provide business and working Americans and students if it had not paid out 200 billion dollars in interest on our national debt, 50% of which was paid to foreign investors in the Middle East and China and elsewhere. That is the opportunity cost in dollars of carrying these levels of debt. Those dollars cannot, and will not, be spent in tax rebates, lowering tax rates, or spending on education or health care for Americans in need.
Net interest costs paid on the public debt declined from $260 billion in 2008 to $199 billion in 2009 because of lower interest rates. But this low interest rate environment will not last, and America's interest payments each year on our debt will easily surpass $400 billion dollars per year by the time we hit a 20 trillion dollar national debt level. Clearly, maintaining the status quo on spending and tax revenues spells disaster for America and the American people.
Pres. Obama courageously acknowledges this by including in his budget a 15% cut in certain areas of federal discretionary spending (payment amounts renewed annually, or not, as part of the budget process). Nothing loses votes for Congress persons like vocal constituents back home screaming bloody murder because their pig urine research subsidy or, agricultural subsidy for wine grape growers, is being discussed as a budget cut. Republicans could not find the courage to cut discretionary spending when they had control. They even expanded entitlement spending with the Medicare Rx drug bill. For a Democratic president to put cuts in his budget, where Republicans would not, is courageous. But, it is also the right and necessary thing to do.
Pres. Obama appears to have learned a valuable budgetary lesson from the Health Care reform debate. Big complex changes will be used by opponents to turn public opinion away from such proposals. This lesson is not lost in his 2011 budget. An attempt to cut across the board or to cut military or education spending in a big way, would not pass Congress. Not with all of the House of Representatives up for reelection in Nov. and 1/3 of the Senators. An incremental approach that keeps it simple, comprehensible, and politically doable appears to be Pres. Obama's approach to addressing the long term fiscal deficit and debt challenge.
And who in their right and objective mind could blame him for such an approach? A reduction in government spending, even a small incremental one, is better than not addressing the deficit issue at all. And Pres. Obama has cut the program to put people back on the Moon in his budget. There are, after all, higher priorities for the nation at this moment in time. Pres. Obama will not stop addressing the fiscal crisis either. There is little doubt that his 2012 and 2013 budgets will take bigger steps in cutting federal spending and increasing where possible, federal revenues. When it comes to budgeting, the math is always the same: increasing income and reducing spending will erase debt faster than increasing income or cutting spending, alone.
And that is what is proposed in this budget. Pres. Obama's budget allows the Bush tax holiday for corporations and the wealthy to expire, increasing federal revenues going forward. At the same time, the 15% cuts in various discretionary spending programs goes even further in bringing down the deficit that would otherwise have grown even larger.
In the long term however, driving down the costs of the government's Medicare and Medicaid expenses, increasing the premiums at some point, and reforming the Soc. Sec. program to pay for itself through the retirement years of the baby boom generation, is the hill which Sisyphus must try to roll the boulder up upon. At this time, however, the higher priority is rescuing the economy. If the economy has returned to a 3 plus percent GDP growth rate for 2010, then Pres. Obama's next budget for 2012 must assume the Sisyphus position and start pushing that boulder up the Congressional Hill.
The Choice Before Voters:
And when he does, Americans would be well advised to tune out the Republicans and conservative talk show hosts who play the Janus role saying we have to cut entitlement spending out one face on their their head and screaming bloody murder about Health Care reform cutting Medicare spending out their other face. As Pres. Obama drove the point home to House Republicans last week, political tactics to win elections is not leadership and solves no national challenges or problems. If Republicans want to remain short-sighted and play politics instead of governance, American voters need to tune them out when it comes to realistically addressing the debt and deficit problem threatening our nation.
Good Governance is about prioritizing and taking the heat from minorities who will be opposed to any proposal put forth, while explaining to the majority the necessity of going ahead with the needs of the nation. That is the great potential strength of democratic elections and nations. The nation can come first, if the people will demand it of their politician's with their votes. In addressing the Great Recession, Pres. Obama, and Bush in his last year, put the nation's interest first and took enormous heat for doing so from minority interests.
And in 2011 and 2012, Pres. Obama will continue to put the nation's greatest challenges first and foremost, on his agenda. Most Americans understand this about Pres. Obama, that is why they elected him. What they may not understand is how deficit spending today can actually lower deficits and projected debt, in years ahead. That case, true and real as it is, has yet to be convincingly made by Pres. Obama and Democrats to the American majority, especially independent voters.
With dropping educational standards and increasing illiteracy in America, that task which should be an easy one, will not be. Math. Most Americans are not comfortable with it. And understanding America's budget, deficits, and debt solutions is all about math. But, the case can be made in terms the American public can understand. A woman working at minimum wage who borrows over 4 years, 40,000 dollars to become a registered nurse, will be enormously better off financially for having taken on that debt and repayed it with interest, 10, 20, and 50 years later as her lifetime earnings increase 5, 10, and 20 times what they would have been at her minimum wage job.
Now is the time for America to invest in small businesses (and jobs), public works infrastructure, energy independence, and far cheaper energy in the long run. A dollar saved in energy costs is a dollar recirculated elsewhere in the U.S. economy, employing more worker's and providing income for their families. Now is the time to maintain our gains in fighting pollution and toxic wastes, which have cost taxpayers more than a trillion dollars and is not close to being finished. Now, is the time to invest in improving education quality, and finishing our Southern Border barriers to protect American jobs and lower the growth in low wage families who constitute a greater cost during times of economic downturn.
Now is the time to re-prioritize government spending, and say no to those budget items which are not immediately necessary to sustain our nation and her people, and secure its future. Now is the time to back up our votes in 2008 for change we can believe in, and demand of our Congress that they follow Obama's lead which we elected him to chart for us. Someone once said, politics is a constant educational process, and no one entering politics can avoid becoming a student each and every day if they are to be a good representative of the nation and its people. They were wise. Obama is a most capable student. As any politician worth their salt must be. Let the learning continue for us all.
Posted by David R. Remer at February 1, 2010 03:58 PMTax and spend. Not a good recipe for prosperity David.
Posted by: eric at February 1, 2010 08:07 PMEric
Didn’t you ANY of what DR had to say. The past 8 years under the Reps was borrow and spend. As a direct result we went from the expectation of surpluses far into the future to huge debt. A combination of unjustified tax cuts for the wealthy, two wars and deregulating the financail sector to the point of failure , and setting up a massive unfunded medicare benefit,left BHO little choice. Its going to take years to repair the damage. No doubt the Reps will simply deny all that and make it as hard as possible to get the country’s budget back on the right track. Thank God the grown ups are back in charge
As a direct result we went from the expectation of surpluses far into the future to huge debt.
I don’t on what basis YOU were expecting surpluses, but Clinton a) never put a penny towards our debt and b) left Bush with nearly a 200 BILLION dollar deficit…
Perhaps you were having a dream?
Posted by: Rhinehold at February 1, 2010 10:44 PMI have two issues with this post.
Arithmetic is a subset of Mathematics. Unfortunately, a large percentage of the population seems to be unaware of this.
The mathematics required to really understand scientific literature is well beyond simple addition and subtraction. Truthfully, it is more an issue of abstract reasoning.
Science literacy is a function of mathematics literacy and is, in my opinion, a large problem inhibiting advancement of US society, as well as other cultures and countries.
As far as reading literacy, while the total number of illiterates is growing as population grows, the actual rate of literacy has dropped throughout our history.
Is this sufficient for intelligent choices? Probably not. Of course the definition of literacy can vary. The UN definition of level I literacy is the ability to read and write simple statements. It is not the ability to pick up in depth analysis books read them, and critically evaluate their information.
http://www.nationmaster.com/graph/edu_lit_tot_pop-education-literacy-total-population
http://www.data360.org/dsg.aspx?Data_Set_Group_Id=599
http://www.pbs.org/wgbh/commandingheights/lo/countries/us/us_well.html
http://www.uis.unesco.org/en/stats/statistics/ed/g_%20all%20regions.jpg
http://social.jrank.org/pages/951/How-Educated-Are-We.html
I think it is a false argument to say that education is failing. It has succeeded by most reasonable standards. It is fair to say that educational requirements to advance in US society are rising. We have moved beyond the pre WWII farming culture, and need higher functional literacy. This is the challenge facing educators.
This leads us back to discussions about higher education(high school & college), as well as adult education for those that grow into a desire for education while maintaining a job, career, and family. If America wants to advance, we need to think about this in terms of the highly successful public education system we created in the early 20th century.
arrrgghhh!!!
The following:
As far as reading literacy, while the total number of illiterates is growing as population grows, the actual rate of literacy has dropped throughout our history.
Should have read:
As far as reading literacy, while the total number of illiterates is growing as population grows, the actual rate of illiteracy has dropped throughout our history.
Posted by: gergle at February 1, 2010 11:47 PMgergle, thanks. Your point of clarification is correct and reflected now, in the article.
My intent, poorly phrased, was to make the point that functional literacy for high school students has been dropping over the last couple decades. But, that is a complicated topic the discussion of which was cut back for the sake of brevity. In editing back, the sentence ended up keeping the word rate, which it should not have, since being edited to reflect a statement about national adult literacy, and not high school functional literacy anymore.
Appreciate the correction.
Posted by: David R. Remer at February 2, 2010 12:24 AMEric said: “Tax and spend. Not a good recipe for prosperity David.”
It is a far better recipe than Republican’s borrow and spend which nearly doubled the national debt in 8 years. I see Republicans have just said NO to Pay as You Go in the Congress. That would be consistent with their abysmal record on deficits and debt.
More importantly, tax and spend is the PRECISE recipe the founding fathers called for to pay for government operations and services, tariffs being a tax on imports or exports. Republicans want government but they don’t want to pay for it. We get it, Eric. Thanks for the reiteration of Republican policy on deficits and debt.
Posted by: David R. Remer at February 2, 2010 12:29 AMRhinehold, I think your comment is the one caught in a dreamworld. Here are some CBO facts and figures. All figures in billions of dollars.
Clinton years discretionary spending:
1993 292.4
1994 282.3
1995 273.6
1996 266.0
1997 271.7
1998 270.3
1999 275.5
2000 295.0
2001 306.1
Bush years discretionary spending:
2002 349.0
2003 405.0
2004 454.1
2005 493.6
2006 520.0
2007 547.9
(Could not easily locate 2008 and 2009 figures on CBO, but the trend is clear. )
Deficits (minus sign = deficit)
Clinton years
1993 -255
1994 -203
1995 -164
1996 -107
1997 -22
1998 69
1999 126
2000 236
2001 128
Bush years
2002 -158
2003 -378
2004 -413
2005 -318
2006 -248
2007 -162
2008 -3.1 As percent of GDP *
2009 -9.3 As percent of GDP *
(* = CBO change in format of reporting of historical data from numbers to percentage of GDP.)
OKAY! I have provided you with my source. Where is yours? Something verifiable with a link, please.
Thanks.
Posted by: David R. Remer at February 2, 2010 12:50 AMDavid,
First, *again* I have not said anything about Bush, I’m confused why you bring his abysmal record on the economy up at all. It has absolutely nothing to do with anything that I have said and I have not once defended his policies on the economy.
Second, I’ve given my sources previously and you still want to pretend that accounting tricks are more important than real dollars.
I use the US Treasury taking the amount of the national debt from one year to the next. FY, followed by the debt at the end of that year and then the difference. When did the number go down?
FY1993 $4.411488 trillion
FY1994 $4.692749 trillion $281.26 billion
FY1995 $4.973982 trillion $281.23 billion
FY1996 $5.224810 trillion $250.83 billion
FY1997 $5.413146 trillion $188.34 billion
FY1998 $5.526193 trillion $113.05 billion
FY1999 $5.656270 trillion $130.08 billion
FY2000 $5.674178 trillion $17.91 billion
FY2001 $5.807463 trillion $133.29 billion
http://www.treasurydirect.gov/NP/BPDLogin?application=np
All you have to do is look at what the debt was at the end of the FY.
According to the CBO, Bush’s budget was pretty small too, but he hid a lot as well. It wasn’t ok when Bush did it and it wasn’t ok when Clinton did it.
BTW, the debt at the end of TODAY is:
12,278,635,997,966.88.
Nice, huh?
Posted by: Rhinehold at February 2, 2010 01:54 AMRhinehold said: “First, *again* I have not said anything about Bush, I’m confused why you bring his abysmal record on the economy up at all.”
Historical context provides perspective, Rhinehold. The figures I provided evidence the history with a basis for comparison.
You can use whatever inventive math you wish, Rhinehold to get the outcome you desire. CBO however, is the non-partisan group of economists and economicians with the responsibility to assess this data in an objective and accurate way, without political or ideological bias.
I will accept CBO’s numbers over your own individual methodology, leaves a lot to be accounted for. If your methodology were all that were required, Ph.D’s in economics at the CBO could be replaced with 10th grade high school students.
Posted by: David R. Remer at February 2, 2010 02:38 AMHistorical context provides perspective, Rhinehold. The figures I provided evidence the history with a basis for comparison.
Then you need to go further and examine whe house of representatives, who writes the budget laws, and the economic conditions at the time, etc…
You can use whatever inventive math you wish,
I didn’t realize the US Treasury was ‘inventive math’. Considering they are the ones who actually record what our debt is, I think I’ll use them. They know how much we are in debt and don’t ignore some spending because it is convenient…
Rhinehold to get the outcome you desire.
You think I *WANT* To owe 12 trillion dollars in debt? You think I *WANT* to know that at some point we are going to have to pay that money back? I think you misunderstand the issue with your partisan approach to the issue. I am at least consistent, I called for a cut in spending during every president, including Clinton, Bush *AND* Obama.
CBO however, is the non-partisan group of economists and economicians with the responsibility to assess this data in an objective and accurate way, without political or ideological bias.
And they ignore a huge amount of money that we owe using accounting principles. Obama himself spoke to this when lambasting Bush for keeping the funding for the wars in Iraq and Afghanistan off of the books, a move that the CBO agreed to. It was wrong, they were wrong and they are still wrong to ignore the money we owe.
I will accept CBO’s numbers over your own individual methodology, leaves a lot to be accounted for. If your methodology were all that were required, Ph.D’s in economics at the CBO could be replaced with 10th grade high school students.
Maybe that would be a good idea, we would know what we owe then.
I find it odd that you are for not auditing the fed, not knowing how much we owe and basically keeping our heads in the sand just so you can support spending more money. And then claim to be for fiscal responsibility.
I can understand why you support Obama’s policies.
Part of the problem with your methodology is that Presidential terms begin in January, and fiscal budget years begin in October. To compute national debt by treasury figures is to use debt figures from Jan. to Dec. rather than the fiscal year for which a president is responsible through the budgetary process.
Except that isn’t what I’ve done. In case you didn’t notice, I used FISCAL YEAR dates.
Best leave the econometrics to the non-partisan professional economists trained for it. You have been disseminating this false information about Clinton’s surplus being a lie for some time here at WB. I thank you for clarifying why your assertion was false, which was not apparent before.
And it is false in what way? I’ve given you the debt that the US had, at the end of each fiscal year, and in each and every year the debt was higher than the year before it. I’ve used the actual numbers, not the modified numbers that the CBO presents. Anyone else can go to the site of the US Treasury and look it up, I’ve given the link. Put in the dates I’ve listed, end of FY (september) of each year. Check out the numbers.
And you claim that this is a surplus.
I don’t think that word means what you think it means, David….
Posted by: Rhinehold at February 2, 2010 02:59 AMRhinehold,
Your dates DO NOT CORRESPOND with Presidential control. Clinton LEFT OFFICE in January of 2001, but you attribute the debt on Sept. 30, 2001 all to Clinton, ignoring what the CBO takes into account, which is that the Congress and Bush appropriated spending from the time Clinton left office to the end of the 2001 fiscal year.
Your methodology is that of a high schooler, who doesn’t know what they don’t know about the budgetary and appropriations process as it relates to presidential responsibility in incoming and outgoing years of their presidency.
Like I said: “Best leave the econometrics to the non-partisan professional economists trained for it. “
Posted by: David R. Remer at February 2, 2010 03:06 AMDeficits are projected to fall as the economy recovers, but they will still average roughly 4.5 percent of GDP over the coming decade, according to the estimate.
Posted by: cheap r4ds at February 2, 2010 05:54 AMDR
Thanks for doing the research for me. RH won’t listen anyway.Facts do not impress him,but perhaps some other readers will learn somthing.
I believe you are overly concerned about how much debt the Chinese hold. Its big and not a good thing but they are more or less trapped into its continuation. If they decided to pull,for example, they would stand to lose a great deal of money. They are also not likely to use it as international leverage. In a military engagement with the US the first thing we would do is sieze their assets and they know it. Its like the old saying that if you owe the bank a thousand dollars you are a debtor but if you owe the bank a million dollars you are a partner.BHO is on the right track playing hardball with the Chinese over trade, steel tariffs for example and pushing for more currency parity. The Chinese have adopted a predatory merchantilism that needs to be checked and only the US can do it.
I hope the commission idea fades away. Outside of being a political tactic,its worthless at this point and is likely to delay action. The Reps on the commission will want to cut things like SS and will no doubt push for more tax breaks for the wealthy using more bizarre logic. They will resist any real attempts at raising revenues.Cutting SS is a political non-starter,especially at this point when so many pension plans are in trouble and so many people put their retirement nest eggs into their homes.Ain’t gonna happen.
DR
Looking more at the budget,its pretty depressing. The administration projects high unemployment for years and there is not much in the budget to ease it besides a short term and small jobs bill and what is left of an undersize stimulus package. This is perhaps,not the fault of BHO. Politically it may just not be possible to do the kinds of things that will ease the family destroying unemployment or get the economy cooking again.Its possible,but too radical to do politically. Our government is failing. Sad.
KAP
Compromise with Republicans?Here is what Mike Pence(R-Ind.),third ranking Rep leader in the House, said on Hardball when Matthews ask him to spell out the Rep HC proposals he was willing to work with the Dems on,
“Well, look, you know, I was, uh, yeah, yeah, look, uh.” Must make you proud.
http://www.washingtonmonthly.com/archives/individual/2010_01/022170.php
It seems to me that Rheinhold and DR are comparing apples and oranges in this thread. Rheinhold is addressing the national debt and DR is addressing the annual budget. The national debt did indeed increase during the Clinton years due to debt servicing requirments of the cumulative historical debt. DR is also correct regarding the annual budget deficits/surpluses during the Clinton years. The US did record surpluses during some of the Clinton years. It slowed the growth of the national debt as the figures presented by Rheinhold clearly show. I may be incorrect, but I also believe that the Clinton administration did make some principal payments on the debt.
Posted by: Rich at February 2, 2010 08:43 AM
Bills,
The Mike Pence clip and accompanying article clearly illustrate the problem of obtaining any compromise with Republicans on the health bill or any other matter.
The HC bills before Congress, from inception, contained the provision (insurance exchange) for national sales of health insurance (across state lines). But to hear Republicans over the past year, this concept has been entirely absent. When confronted with reality, the Republican response is something like, “Well thats good, but….” It is the “but” that is important. The Democratic proposal contains national standards in lieu of individual state standards. The Republican proposals provide for the federal designation of an insurer’s domicile state as the national standard. This is clearly a race to the bottom in health insurance regulation. The results of interstate deregulation of the credit card industry should be fair warning as to the consequences for the consumer.
Until the Republicans discard disingenious arguments of the above sort and outright distortion, it is difficult to see how compromise in the interests of the US public can be achieved.
Posted by: Rich at February 2, 2010 09:44 AM
The terms deficit and debt are not interchangeable.
If I have an income of $40,000 and and a debt of $30,000, I do not have a deficit.
If I have an income of $40,000 and a debt of $400,000, I have a deficit.
Debt is a meaningless number without reference to income (GDP or tax revenue) or assets.
Posted by: gergle at February 2, 2010 10:02 AMYour dates DO NOT CORRESPOND with Presidential control. Clinton LEFT OFFICE in January of 2001, but you attribute the debt on Sept. 30, 2001 all to Clinton, ignoring what the CBO takes into account, which is that the Congress and Bush appropriated spending from the time Clinton left office to the end of the 2001 fiscal year.
WOW.
David, being a little dishonest here? If you are going to modify your original comment, you should have gone in and edited my comment where I quoted you, otherwise you sort of get found out.
You originally said my numbers weren’t any good because they weren’t based on FY. When I pointed out they did you then remove that from your original comment and now say that they SHOULDN’T be based on FY numbers…
In comment http://www.watchblog.com/thirdparty/archives/006903.html#294951 you made the statement :
“Part of the problem with your methodology is that Presidential terms begin in January, and fiscal budget years begin in October. To compute national debt by treasury figures is to use debt figures from Jan. to Dec. rather than the fiscal year for which a president is responsible through the budgetary process. ” which I quoted in my response. Now that comment is MISSING from your original comment.
I’ve now saved the page to a file to make sure that any changes are documented, I find this pretty disturbing to say the least. Modifying one’s comments is something only the editor can do, seem highly unfair if you ask me…
In fact, the more I think about it, the more disgusted I am.
The fact is you aren’t even sure why the debt numbers are so far off of the CBOs numbers, I wasn’t going help you, but since you are willing to do just about anything to try to win this ‘debate’ I’ll help you out….
The reason we had a higher debt when we had a ‘surplus’ is because the CBO and the President only report PUBLIC debt, not debt that it owes itself. That is where Bush has been hiding his war funding, and it is where Clinton borrowed money from to make his numbers appear to match up. These are things like money we are obligated, by law, to put aside for Social Security shortfalls, among other things.
Your methodology is that of a high schooler
And you are the one calling ME a high schooler?
Don’t worry, I caught it, I’ll be saving pages from now on so I have record of things ‘before’ they go through the re-edit processes…
Posted by: Rhinehold at February 2, 2010 10:38 AMRH won’t listen anyway.Facts do not impress him,but perhaps some other readers will learn somthing.
I’m one of the few people on here who actually understand and listen to facts. Including who wrote what, when.
If you want to play the game of saying you have enough money to go on vacation even through you are not paying on your mortgage, which is what our government is currently doing and has been doing for decades, fine by me. But when the house gets repossessed while you are in Disneyland enjoying that vacation, don’t expect me to feel the least bit sorry for you…
The only problem is I live in that house too…
Posted by: Rhinehold at February 2, 2010 10:41 AMIt seems to me that Rheinhold and DR are comparing apples and oranges in this thread. Rheinhold is addressing the national debt and DR is addressing the annual budget.
Actually, we aren’t, IMO. Our total national debt increased during years when people say that Clinton had a surplus. Now, according to the CBO numbers, if you IGNORE a large section of where our money goes, Clinton was able to claim a surplus. Our debt still increased each year, but we were operating in the black. It is how accounting can be used, along with semantics and the way funds are labelled in such a large budget process that allows him to ‘get away’ with that. But it doesn’t change the fact that Year over Year, we owed more money every year during the Clinton administration, not less.
The national debt did indeed increase during the Clinton years due to debt servicing requirments of the cumulative historical debt.
It wasn’t just interest on the debt, Rich. Money legally required to be used to pay for future SS benefits, off the books projects, special spending that didn’t go through the budget process, some military operations, etc. These are all ‘off the books’ because they are borrowed from the government, not from the Public. You have to be careful when using these phrases because the use of intra-governmental holdings over public debt are how Clinton was able to claim a deficit and Bush was able to fund two wars without it killing the PUBLIC debt. It just wasn’t ‘counted’. We still owe it, we still have to pay it back, but we are running a surplus. Yay!
I may be incorrect, but I also believe that the Clinton administration did make some principal payments on the debt.
You are incorrect, not one payment was made on the debt during the Clinton administration.
Posted by: Rhinehold at February 2, 2010 10:47 AMThe terms deficit and debt are not interchangeable.
No they aren’t. Much like speed and acceleration are not interchangeable. Except one is a piece of the other…
If I have an income of $40,000 and a debt of $400,000, I have a deficit.
Right, and if you have an income of $50,000 next year, but don’t count your mortgage which takes up $350,000 of your debt, did you have a deficit that year or not.
If your debt went from $400,000 one year to $450,000 the next year, did you operate at a surplus or deficit?
Is our current debt 7.8 Trillion or 12.2 Trillion?
Posted by: Rhinehold at February 2, 2010 10:51 AMCompromise with Republicans?Here is what Mike Pence(R-Ind.),third ranking Rep leader in the House, said on Hardball when Matthews ask him to spell out the Rep HC proposals he was willing to work with the Dems on, “Well, look, you know, I was, uh, yeah, yeah, look, uh.” Must make you proud.
Funny, because Obama himself admitted in his ‘discussion’ with the Republicans that they HAD offered up HC proposals, some were even good enough to be in the current passed bills.
Of course, it contradicts what he had stated earlier, but when has that ever stopped a politician from using doublespeak?
Posted by: Rhinehold at February 2, 2010 10:54 AMbills
I never mentioned anything about compromise on this set of postings, but anyway without compromise nothing will ever get done in this country. Both parties are acting like children because neither is getting their way. Until both parties grow up and realize that they are hurting this country with their petty differences nothing will ever get done.
The days of strong employment are behind us. Phx-8 was out in front on predicting our march to a drastically lower standard of living. OBL will take credit and frankly he has made all the right moves to tear us apart. Now we have one person (Boehner-or is it Rush?)having 41 votes in the senate.
Posted by: Schwamp at February 2, 2010 12:09 PMRhinehold,
Now your comment’s defensiveness is creating a comprehension problem.
I use your Treasury FY numbers. But, you fail to account for the BUSH appropriations from the time Clinton left office to the end of the FY 2001, adding those appropriations, some off budget, to Clinton’s last year in office. You are WRONG to do so. CBO is RIGHT attribute to Bush what is Bush’s and Clinton what is Clintons in the 2001 year in which BOTH presidents oversaw spending, Clinton with his budget approved by Congress and any additional spending UNTIL Jan. 20, 2001, and Bush’s spending IN ADDITION to the Clinton Budget AFTER Jan. 20, 2001.
Your math fails to account for these, and therefore WRONGFULLY attributes Bush spending to Clinton’s last year. Clinton did produce a surplus. You are wrong on this.
But, if fantasy is necessary to preserve your ideological biases and reduce your cognitive dissonance, that’s fine. Many of us will just call you out on your comment’s creative and high schoolish math errors.
I did my very best to explain this to you so you could learn and bring your assessment into the realm of reality where CBO’s numbers come from. Your comments have been taken to the water of reality and historical fact, whether you drink or not, is entirely your decision.
Posted by: David R. Remer at February 2, 2010 12:39 PMRhinehold said: “Funny, because Obama himself admitted in his ‘discussion’ with the Republicans that they HAD offered up HC proposals, some were even good enough to be in the current passed bills.”
Which makes liars of Republicans like McConnel and Boehner who make the claim that Democrats have shut them out of the process. Like your claim that Clinton never produced a surplus, it is simply and factually, untrue. Yet, persistence in preserving false notions for personal and political reasons remains a human foible engage in by many.
Posted by: David R. Remer at February 2, 2010 12:43 PMDebt is a concept of future obligation and wealth assessment. Deficit on an annual basis is a simple matter of revenue or income in that year less all sums paid out in that year.
The difference is that of a balance sheet statement and an income statement. Sheesh! Ignorance really does fight hard to preserve itself even in the face of centuries of knowledge and language defined, the ignoring folks will insist their inventions of new definitions are right even when they stand in opposition to human knowledge accumulated and tested for millenia.
Such folks would find the story of the tower of Babyl incomprehensible. :-)
Posted by: David R. Remer at February 2, 2010 12:49 PMRhinehold said: “You are incorrect, not one payment was made on the debt during the Clinton administration.”
Yes, and No!
Clinton never signed a check handing it over to the Treasury to reduce the debt. True. Clinton did produce a Surplus which did bring down the debt based on the budgets he signed and execution of those budgets while HE was in office. A surplus is the difference between treasury receipts and outlays. To determine whether a president in office for only a partial fiscal year produced a surplus or deficit, accrual accounting must be employed to accurately ascribe to the exiting president receipts and expenditures which fell under their tenure as president, and not the expenditures and receipts which are to ascribed to the actions of the new president in the remainder of that fiscal year.
To just look at the raw debt numbers at the end of a presidential election fiscal year in which a new president is elected, and ascribe that number to the exiting president is to WRONGFULLY employ cash accounting principles to the exiting president’s term of responsibility over receipts and expenditures which resulted from the new president’s actions.
I know, accounting is very tough for those who never took the courses. That is why we don’t employ high school graduates to audit corporations or the government or non-profit organizations. That would truly recreate the tower of Babyl in our financial world.
Posted by: David R. Remer at February 2, 2010 01:02 PM
David, you should have left out the reference to the Bible because according to it God Almighty himself stood in opposition to human’s gaining knowledge. It was a lesser god that took us down the path of knowledge and it is that lesser god that is supposedly in charge of the governments and religions of man until you know when.
I use your Treasury FY numbers. But, you fail to account for the BUSH appropriations from the time Clinton left office to the end of the FY 2001
David,
I find it interesting that NOW you want to focus on the 2001 budget. Nevermind that Clinton claimed surpluses in the 3 years prior, when the debt increased as well… You want to ignore those to make your partisan claim.
You, and others, claim that the FYs 1998, 1999 and 2000 were surpluses as well. Except, using the Treasury numbers, as I pointed out, our debt increased each of those years. An example of that type of reporting can be found at http://archives.cnn.com/2000/ALLPOLITICS/stories/09/27/clinton.surplus/ .
As I have pointed out, those surpluses never happened, except on paper, by IGNORING a huge portion of our debt obligations. Now you want to focus on the 2001 ‘surplus’ by saying it was all Bush, in those few months, that caused the debt to increase. And you are right, Bush could have done different things to prevent some of that debt, except that most of it he was not allowed to touch because of the laws in place at the time.
However, irregardless of those few months, the previous 3 years the US *INCREASED* the amount of debt that we owed. Yet he claimed surprluses. He did this by hiding the debt as I have described several times.
YOU are the one trying to ignore the realty for politcial purposes. You also want to ignore that the republicans running the house, who writes the budget laws, had a hand in those ‘surpluses’ (which weren’t surpluses) in making your partisan claims.
The simple fact is that we still increased our debt those years when the ‘Clinton Surpluses’ took place. I’ve shown the FY Treasury numbers, which you now say you after editing the comments that stated those weren’t the numbers we should be using.
Sorry, David, but try as you might, the numbers are there to prove the point and nothing you can do or say will ever change them…
But, if fantasy is necessary to preserve your ideological biases and reduce your cognitive dissonance, that’s fine. Many of us will just call you out on your comment’s creative and high schoolish math errors.
You are the one paticipating in fantasy, David. Please tell me WHICH YEAR we had a surplus of funds and paid down a penny on the debt instead of increasing our debt?
Posted by: Rhinehold at February 2, 2010 01:54 PMWhich makes liars of Republicans like McConnel and Boehner who make the claim that Democrats have shut them out of the process.
Yep. And it makes liars out of Axelrod, Obama and Gibbs who all said that the Republicans had offered no alternatives as well.
It is hard to find a single person in Washington these days who isn’t lying to try to make a political power play. Business as usual.
Posted by: Rhinehold at February 2, 2010 01:56 PMDebt is a concept of future obligation and wealth assessment. Deficit on an annual basis is a simple matter of revenue or income in that year less all sums paid out in that year.
Yes, that is correct.
Let’s take 1998. Clinton claimed a surplus of 69.2 billion dollars for that year. So, on that annual basis, HE is saying that the revenue for that year was 69.2 billion more than the sums paid out in that year.
Except our Debt increased that year by 113 Billion dollars that fiscal year. Now tell me David, how is that possible? Unless, as happened, the Federal Government borrowed money, from itself, to make those payments? The fact is that revenue did NOT beat payouts by themselves, they beat payouts by borrowing money to make them.
If I had an income of 40,000 and had to pay 50,000 in payments, that is not a surplus, is it?
But if I paid for 15,000 of those payments using a credit card I happened to have, I could claim a 5,000 surplus at the end of the year! Yeah, I am going to have to pay that 15,000 sometime in the future, but that year I had a surplus.
That is what the government is doing to claim a surplus, David. If you are happy with that type of governing, that’s fine. But quit trying to pretend that isn’t what is going on…
And don’t for an instant try to tell me that it is ‘fiscally responsible’.
Rhinehold said: “You are incorrect, not one payment was made on the debt during the Clinton administration.”Yes, and No!
Errr, ok….
Clinton never signed a check handing it over to the Treasury to reduce the debt. True.
Wow, I feel that I have reached a milestone here so far, let’s see how you are going to try to wiggle out of it…
Clinton did produce a Surplus which did bring down the debt based on the budgets he signed and execution of those budgets while HE was in office. A surplus is the difference between treasury receipts and outlays.
Bzzzt. Sorry David. You are right that a surplus is the difference between treasury receipts and outlays. Unfortunately you seem to think that this only happened in 2001. It also happened in 1998, 1999 and 2000 where Clinton claimed surpluses while our debt increased. How is Bush responsible for those years again exactly? Did Rove somehow go back in time and change the numbers around to make it look like we borrowed money to pay our obligations?
I know, accounting is very tough for those who never took the courses. That is why we don’t employ high school graduates to audit corporations or the government or non-profit organizations. That would truly recreate the tower of Babyl in our financial world.
It’s a shame that I’ve had several years of college accounting… It’s also a shame that you don’t even seem to be able to understand the YEARS I am talking about, the numbers I have presented or whether or not I am talking about FY numbers or jan-dec numbers as you realized in your previous comment that you edited.
Please, continue to debate this with us lesser mortals, David. It is interesting to watch and I am learning SO much about the ‘non-partisan’ views you are expousing.
Only remember, I am now routinely saving the page so trying to edit your comments so that they appear to say something different once called out upon it isn’t going to work very well anymore. And having to do that is a very sad way to have to operate, I’m afriad. :/
Posted by: Rhinehold at February 2, 2010 02:10 PMRhinehold said: “I find it interesting that NOW you want to focus on the 2001 budget.”
It accounts for the difference between your creative math and contrived math on surpluses or deficits regarding Clinton’s last year and that of the CBO and commonly accepted historical data by economists who deal with such numbers.
Budgets and emergency appropriations are the legal authorization for expenditures and raising or lowering tax revenues. To attempt to deal with this topic in contradiction to the experts trained in such accounting, without understanding the complexity of it, is why your statements and conclusion regarding Clinton’s surplus are patently false and wrong, Rhinehold.
Posted by: David R. Remer at February 2, 2010 02:44 PMRhinehold said: “Let’s take 1998. Clinton claimed a surplus of 69.2 billion dollars for that year. So, on that annual basis, HE is saying that the revenue for that year was 69.2 billion more than the sums paid out in that year.”
I don’t know, Rhinehold. I have neither researched the veracity of your claim by Clinton nor the surplus or deficit condition of the 1998 FY.
My responses above were to your claim regarding Clinton’s surplus in his last year of office. Since, your calculations are flawed for that year, spending time researching your claims about 1998 would, in my estimation, be a waste of my time.
But, if you would like to provide links to the sources of your claims regarding 1998, I would be happy to review them for confirmation or rebuttal.
Posted by: David R. Remer at February 2, 2010 02:55 PMRhinehold said: “Yep. And it makes liars out of Axelrod, Obama and Gibbs who all said that the Republicans had offered no alternatives as well.”
That is also VERY True about Axlerod! You will have to provide me the quotes from Gibbs and Obama before I confirm whether they are true, or not. I suspect they are NOT true.
Obama acknowledged in his remarks to the House Republicans the politics on both sides for political reasons interfering with the ability of both sides to govern. He acknowledge a list of Republican proposals that were included by the Democrats.
jlw, yeah, I know. It is always tricky business referencing from a work which is so inherently contradictory. That is why I like Adam Smith, he is so very, very consistent. But, Adam Smith is about the most unquotable writer in the history of mankind. He could never make a point in less than a few dozen pages. Mind you, that is what makes his arguments nearly bullet proof, but, horrendously unquotable. Old colonial English doesn’t help, either.
Posted by: David R. Remer at February 2, 2010 03:03 PMBut, if you would like to provide links to the sources of your claims regarding 1998, I would be happy to review them for confirmation or rebuttal.
Well, I could use your numbers:
www.watchblog.com/thirdparty/archives/006903.html#294944
Where you claimed a Clinton surplus in 98, 99 and 2000.
Clinton years1993 -255
1994 -203
1995 -164
1996 -107
1997 -22
1998 69
1999 126
2000 236
2001 128
Or this is an article repeating the same claim
archives.cnn.com/2000/ALLPOLITICS/stories/09/27/clinton.surplus/
But they both use the same numbers.
However, as I stated before, the debt for those fiscal years increased, they did not decrease.
Using the US Treasury numbers at the link I provided
Looking at the makeup of the national debt and the YOY changes for the Clinton fiscal years, we have the following numbers:
FY Total Debt Amount Increase
FY1993 $4.411488 trillion
FY1994 $4.692749 trillion $281.26 billion
FY1995 $4.973982 trillion $281.23 billion
FY1996 $5.224810 trillion $250.83 billion
FY1997 $5.413146 trillion $188.34 billion
FY1998 $5.526193 trillion $113.05 billion
FY1999 $5.656270 trillion $130.08 billion
FY2000 $5.674178 trillion $17.91 billion
FY2001 $5.807463 trillion $133.29 billion
A better image of these numbers can be found at:
www.rhinehold.org/clinton_surplus.jpg
Now, during thoes claimed surpluses that YOU have provided in 98, 99 and 2000, the debt increased in each of those years.
Posted by: Rhinehold at February 2, 2010 03:20 PMYou will have to provide me the quotes from Gibbs and Obama before I confirm whether they are true, or not. I suspect they are NOT true.
http://reason.com/blog/2010/02/01/obama-i-dont-think-i-said-that
Is a good collection of some quotes from Emmanuel, Gibbs and Obama saying things like (Obama in a speech on labor day last year)
And because we’re so close to real reform, the special interests are doing what they always do—trying to scare the American people and preserve the status quo. But I’ve got a question for them: What’s your answer? What’s your solution? The truth is, they don’t have one. It’s do nothing.
And Gibbs
“I think you heard me and others say that you can’t just be the party of no or the party of no new ideas.”Posted by: Rhinehold at February 2, 2010 03:24 PM
Rhinehold,
The numbers are the same because they likely come from the same source, the CBO.
Let’s take a look at the OMB’s numbers, which are different, slightly, assembled by an entirely different set of economicians and accountants according to GAAP.
(Figures are in Millions.)
Year Total
Receipts Outlays Surplus/Def.(−)
1998 1,721,733 1,652,463 69,270
1999 1,827,459 1,701,849 125,610
2000 2,025,198 1,788,957 236,241
2001 1,991,142 1,862,906 128,236
Year Total On-Budget
Receipts Outlays Surplus/Def.(−)
1998 1,305,934 1,335,859 -29,925
1999 1,382,991 1,381,071 1,920
2000 1,544,614 1,458,192 86,422
2001 1,483,623 1,516,068 -32,445
Year Total Off-Budget
Receipts Outlays Surplus/Def.(−)
1998 415,799 316,604 99,195
1999 444,468 320,778 123,690
2000 480,584 330,765 149,819
2001 507,519 346,838 160,681
I took a couple courses in accounting in graduate business school Rhinehold, which does not make me an expert in accounting, but, it did afford me with an overview of GAAP and the legal compliance requirements, and the various accounting methodologies (which would account for the relatively small variance between OMB and CBO numbers.) In accounting, concepts and terminology are very rigidly defined, for obvious reasons of international contractual obligations and enforcement. You, nor I, are sufficiently educated nor experienced to prove a case that the OMB and CBO, politically independent organizations of financial professionals, are deceiving the entire world regarding our deficit or surplus federal income statements.
Your attempts to look at raw debt numbers to make a conspiracy theory out of the government deceiving their foreign creditors and American voters as to the financial condition of the U.S. government requires a venture into LaLa land that I won’t accompany you on.
The fact that there is concordance between the OMB and CBO numbers is sufficient evidence for me to establish that Bill Clinton was not making up numbers about the debt situation, but, instead, relying upon the official numbers of independent organizations who have the expertise and education to calculate such deficits and surpluses according to General Accepted Accounting Practices.
You can posit whatever implied conspiracies you like, but, Clinton quoted official numbers, and those official numbers calculated by independent organizations with nearly the same results, evidences that Clinton was not lying. Additionally, it evidences that your methodology and terminology are insufficient to make the case you are trying to make.
For example, the interest on the debt may not accrue to FY surplus or deficit calculations in a manner unfamiliar to you, which may account for the Debt going up slightly according to Treasury, but down slightly, according to CBO and OMB.
Surplus or deficits measured by the Treasury are based exclusively Treasury notes purchased back vs. sold. There has to be specialized accounting practices applied to this process to account for differences in future and present value of dollars paid in and out by the Treasury.
CBO and OMB, unlike the treasury, must account for differences in treatment of Off Budget and On Budget transactions in accordance with legislated laws affecting the timing of such transactions, to insure proper allocation of expenditures and receipts in the FY year defined. In other words, the Treasury may issue a sale of certificates on one date for efficiency and expeditious timing of such transactions favorable to the Treasury, but, the transaction may not accrue by legislation (law) until another date.
If this overview is insufficient to persuade you as to the efficacy of Clinton’s surpluses, then perhaps finding a nation where you can install your own set of accounting principles and practices in a nation of one, may permit you to conduct business with yourself. :-)
The rest of the world of course, will go on conducting business according to GAAP. (That’s GAAP, not Garp!)
Posted by: David R. Remer at February 2, 2010 04:34 PMdavid
rhinehold said
“Only remember, I am now routinely saving the page so trying to edit your comments so that they appear to say something different once called out upon it isn’t going to work very well anymore. And having to do that is a very sad way to have to operate, I’m afriad. :/”
is this true? did you edit your comments?
Posted by: dbs at February 2, 2010 05:34 PMdbs,
I will be happy to respond to your inquiry in email as per WB’s rules for participation. This inquiry and Rhinehold’s comment are off topic and not appropriately directed. Editor [at] Watchblog.com
Posted by: David R. Remer at February 2, 2010 05:53 PMYour attempts to look at raw debt numbers to make a conspiracy theory out of the government deceiving their foreign creditors and American voters as to the financial condition of the U.S. government requires a venture into LaLa land that I won’t accompany you on.
I have never once posited any such conspiracy. In fact, the reality is that the operation and budget of the US has become so uncontrollable that the president has very little control over it anymore, congress just a little more than that.
A good explanation for people who are not into large numbers:
http://www.youtube.com/watch?v=cWt8hTayupE
The fact is that accounting principles are necessary in order to know where money is going to give a good accounting to the people who are responsible for that money.
When the accountants talk about the budget they make sure to mention, very clearly, the Public Debt. The problem is, the Public is not on the hook for just the public debt but also the Intra-Governmental Holdings, ie the borrowing from itself, that is not included in the budget. The budget does not include a large number of things. But it is the budget.
Now, as I said, if you are happy with having surpluses based on the increase in borrowing within the government instead of from other sources, by all means be happy about it.
But our total debt has been increasing, every year, including every one in the 1990s, ever since I can remember. And I am not a young’un.
Right now our total debt is over 12 trillion dollars. According to the ‘budget’ we only owe a little over 7 trillion.
Which number do you use? If you use the larger one, then you are being dishonest by not using those numbers to determine whether or not the US had any surpluses in the 1990s. If you want to pretend that the 7 trillion number is accurate, great. When our government ends up going bankrupt in a few years (some people argue we are already) then you can blame Bush and wrap yourself around knowing that the accountants didn’t see this coming so neither could you.
I am trying to figure out how we are going to pay that 12 trillion dollars back. There are 3 ways. None of them are going to have support by the American people…
We can raise taxes to a level that is more oppressive than they are now, creating an even larger dependant class out of the people close to the line already. We can not spend as much, especially on future Social Security payments and other entitlements. Or we can file bankruptcy.
Unless you have another alternative? Please enlighten me, David, how do we pay back 12 trillion dollars without using any of these 3 options?
Posted by: Rhinehold at February 2, 2010 08:03 PMUnless you have another alternative? Please enlighten me, David, how do we pay back 12 trillion dollars without using any of these 3 options?
Not that I advocate this, but its always possible for the government to use violence to force its creditors to forgive its debt. But I’d chalk that up under the category of “things the American people won’t stomach”.
Regarding the deficit vs the surplus at the end of Clinton’s term. I don’t really care about the details of something in the past that we can’t change. The fact of the matter is the country was in much better fiscal shape in the year 2000 than it has been at any point since at least the Carter administration. Whether 2000 was just a small deficit or a small surplus is just semantics.
Regarding President Obama, I’m a bit of a Keynesian so I expect the worst recession since WWII to feature the worst budget deficits since WWII. However, my patience is limited. When Obama releases his 2012 budget, I want to see action towards cutting spending AND raising taxes in order to eliminate the deficit by mid-decade. This will also necessitate entitlement reform, which unfortunately will probably have to wait until after the 2012 election.
If were still in a recession next year, the Keynesian stimulus has failed and the President better think of a different strategy.
Posted by: Warped Reality at February 2, 2010 09:59 PMThere is another option and it is the one I think will be done. We can monetize the debt. That is what happened in the 1970s with the great inflation.
Warped
The difference between now and the end of WWII is that when the war ended we could cut back on government spending. We might want to believe that we are spending so much money because of a crisis, but it is actually on the way to being permanent increase in the size of government. Of course, we can make the really big tax increases that will slow economic growth and innovation.
Posted by: Christine at February 2, 2010 10:47 PMChristine
“Really big” tax increases on the wealthy will not slow the economy nor decraes innovation unless you count the innovation of outsourcing your company overseas etc. Raising the top brackets back up to the levels they were under Eisenhower and Kennedy would have a positive effect on the economy and culture.
bills,
You really believe that? Because no real economist accepts that reality and all it does is hurt the poor and middle class as the wealthy have means of passing those increased taxes onto them.
Or do you LIKE hurting the poor and middle class by attacking the people who generate wealth?
I’m just glad that the likes of Kennedy and Obama both disagree with you.
Posted by: Rhinehold at February 2, 2010 11:11 PMThere is another option and it is the one I think will be done. We can monetize the debt. That is what happened in the 1970s with the great inflation.
I hadn’t thought of that, but it’s basically the same as increasing taxes. That is, unless I’m misunderstanding something.
Regarding permanent vs. temporary spending. Maybe I’m a just a naive gullible twenty-year-old, but I believe Obama when he says most of the spending is just a temporary reaction to the recession. I said above that the 2012 budget should reflect a substantive reduction in spending. Otherwise, Obama will not get my support in November, 2012. If Obama is reelected while he continues to increase spending, I’ll join you in opposing him. Until the 2012 budget is proposed though, I think Obama should be primarily concerned with the economy and not the budget. If the economy is not rolling again in a year or two, then there is something seriously wrong with Obama’s spending priorities and he doesn’t deserve my support.
In any case, I hope you can agree with me that it would be a terrible idea to cut taxes right now with regards to the budget. The solution is to cut spending AND raise taxes simultaneously. Unfortunately, neither the average Republican nor the average Democrat is willing to do that. When I voted in 2008, I thought Barack Obama was not an average politician. Let’s hope I am still right.
Posted by: Warped Reality at February 2, 2010 11:14 PMThis was written about 10 years ago…
In each of the last three cuts in marginal tax rates, revenues received by the U.S. Treasury have increased. Coolidge cut tax rates in the 1920s, Kennedy cut marginal tax rates in the 1960s, and Reagan cut them in the 1980s.Under Coolidge, marginal tax rates were cut from the top rate of 73% to 24%. The economy rewarded this policy by expanding 59% from 1921 to 1929. Revenues received by the federal treasury increased from $719 million in 1921 to more than $1.1 billion 1929. That’s a 61% increase (there was zero inflation in this period). Growth averaged more than six percent annually. We are currently growing at 2.5%.
Under Kennedy, marginal tax rates were cut from a top rate of 91% to 70%. In real dollar terms, the economy grew by 42%, an average of 5 percent a year from 1961 to 1965. Tax revenue to the U.S. Treasury increased by 62%. Adjusted for inflation, they rose by one-third.
Under Reagan, marginal tax rates were cut from a top of 70% to 28%. Revenues (from all taxes) to the U.S. Treasury nearly doubled. According to the Budget of the U.S. Government, FY 1997, Office of Management and Budget. Revenues increased from roughly $500 billion in 1980 to $1.1 trillion in 1990.
In each case, the personal income taxes paid by “the rich” increased when their tax rates were cut. The top 10 percent of earners in the Reagan years paid 48% of the income tax burden between 1981 and 1988.
Regarding your remarks about tax hikes, there is a correlation between the Bush and Clinton tax hikes and a change in the revenue received by the Treasury. Martin Feldstien, professor of economics at Harvard, estimates that the U.S. Treasury would have collected two-thirds more revenue during the first three years of the Clinton presidency had his administration NOT raised taxes.
The reason that much of this data is ignored in debates is politics, pure politics. It pays to engage in class warfare if you are a politician because it divides voters against each other. When the perception is that only the “rich” will profit from a tax cut, such policies become difficult to sell because those labeled as “rich” tend to be in the minority.
In addition, politicians have a stake in keeping the tax code complex because it allows them to extract campaign donations and favors from people and corporations who derive huge benefits from special tax laws and exemptions in return.
Still accurate now as it was then…
And there is
The economy boomed after the 2003 tax cuts, leading to the highest level of corporate tax receiptsMoney collected by the government in the form of taxes. in over 20 years. Although revenues recently have fallen significantly, this is due to a weakened economy rather than changes in tax policy.
http://www.heritage.org/research/features/budgetChartbook/Taxes-and-Tax-Rates.aspx
Enjoy.
So, who has the proof that raising taxes increases revenues?
Posted by: Rhinehold at February 2, 2010 11:25 PMRhinehold,
So, who has the proof that raising taxes increases revenues?
Which taxes are you talking about?
The problem with your ten year old statement above is that it is a gross oversimplification and a false premise. Other correlations also occurred in these periods and are equally false.
Unfortunately, simplistic statements like this are great political fodder, but poor economics.
Maybe you meant it was said by a ten year old.
From wikipedia on the Laffer Curve:
Others have noted that federal revenues, as a percentage of GDP, have remained stable at approximately 19.5% over the period 1950 to 2007 despite significant changes in margin tax rates over the same period. They argue that since federal revenue is proportional to GDP, the key factor in increasing revenue is to increase GDP.[19]
Posted by: gergle at February 3, 2010 12:04 AMSeriously?
Yes, seriously.
What, because someone works their ass off, takes risks that many people refuse to take and gives up a lot in order to obtain wealth, they are supposed to be treated differently than anyone else? How is that fair?
As far as ‘passing on taxes to others through business’ are you saying that businessmen who decide on a set amount of money that they are willing to work for continuing to work for that amount and passing on costs of doing business, including taxation, somehow ‘immoral’?
Or is taking that money from those people for the single reason that they have worked hard, given up time with family, years of their lives (the stress often leads to shorter lives) and the risk of going bankrupt in order to obtain security for their family the real ‘noble’ desire of the progressive parties?
Posted by: Rhinehold at February 3, 2010 01:21 AMgergle, I think that you might have missed your quote…
Posted by: Rhinehold at February 3, 2010 01:22 AMWhat, because someone works their ass off, takes risks that many people refuse to take and gives up a lot in order to obtain wealth, they are supposed to be treated differently than anyone else? How is that fair?
They are treated that way because they consume a disproportionate amount of government resources. Not for any of the reasons you cited.
Regarding, ‘passing on taxes’, I was just curious. If we passed a surtax on low-income people with incomes of $20,000 to $30,000 (This is hypothetical, I don’t support this). Do you think these people pass the taxes onto their employers (who are the equivalent of customers/consumers here, they are consuming the labor of the low-income worker). Or would these people react by cutting back on their lifestyle (let’s exclude the possibility of going into debt)?
Posted by: Warped Reality at February 3, 2010 01:53 AMRhinehold,
I’m not sure what you mean.
You talked about marginal taxes, which is different from effective taxes. Which are you asking for proof from?
The Marginal crap you cited is just that. They didn’t call it a Laffer Curve, just because of it’s namesake, but because of the dumb argument made for marginal rates, as cited from the Wikipedia article. Even David Stockman gave up this argument in the eighties.
All you did was cite a few random correlations, not proof. How about something more than correlations similar to the amount of Grey Poupon served to tax revenue? You really need proof that nonsense is nonsense?
Posted by: gergle at February 3, 2010 02:39 AMtom
“Just by your statement you are saying that the people who hate the middle class are the wealthy, if they are the ones willing to pass on tax increases that they can easily afford, to people who cannot.”
this statement is absurd. do you itemize your deductions, in order to reduce your tax burdon? if so then you are depriving the gov’t of revenue, and hurting someone who may need thier gov’t benefits increased to survive. how insensative. does that mean that you hate poor people? isn’t this in essence what you’re saying?
Posted by: dbs at February 3, 2010 05:23 AMRH
” Revenues (from all taxes) to the U.S. Treasury nearly doubled. According to the Budget of the U.S. Government, FY 1997, Office of Management and Budget. Revenues increased from roughly $500 billion in 1980 to $1.1 trillion in 1990”
Revenues increased because taxes on the middle class skyrocketed. Social Security payroll taxes nearly doubled and went right into the treasury. For the first time,the federal government started taxing unemployment benefits,of all things.
If tax breaks for the upper brackets helped the economy then after GWB the economy should be just grand by now,correct?You are spouting right wing religious dogma that just ain’t so.BTW.If you want to see people that actually work hard,get on the early bus.
“Under Coolidge, marginal tax rates were cut from the top rate of 73% to 24%. The economy rewarded this policy by expanding 59% from 1921 to 1929. Revenues received by the federal treasury increased from $719 million in 1921 to more than $1.1 billion 1929. That’s a 61% increase (there was zero inflation in this period). Growth averaged more than six percent annually.”
Rhinehold are you saying tax cuts were the cause of the great depression that started in 1929 after the speculative frenzy stalled?
Posted by: j2t2 at February 3, 2010 08:58 AM
The paradox is the same today as it was back when Billy Badass and his band of merry thugs rode down on the industrious peasants and said you work for us now, From now on 50% of your production belongs to us and we will increase that percentage as necessary.
Many groups who do nothing to create wealth manage to gain most of the wealth for themselves and those who actually do the work that produces wealth receive very little of the wealth that they produced.
The best paying jobs are those that redistribute wealth and the very best paying jobs are those that redistribute wealth from the bottom up.
Posted by: jlw at February 3, 2010 02:46 PMWarped
What has Obama done - and especially what have Reid and Pelosi done – to make you think they want to shrink government once it gets bigger? Their words are designed to mollify us. They believe that once the fixes are in, people will get used to them and not call for changes. And they are probably right. It is an old trick of tyrants to bribe people with their own money and make them dependent on government. I am not implying that these three Democrats are tyrants, of course. But like all politicians, they could become that left unchecked. Fortunately, we checked them.
Monetizing the debt is like a tax, since it devalues money. But it is easier for government to do and even a pleasure. Government gets to spend more and print more money. Later on, they can blame greedy bankers, foreign firms, other administrations etc. I believe that is how Obama will “balance” the budgets. The stagflation of the 1970s worked to do that. It is just hell on the economy and people who act responsibly.
Re raising taxes – that is what Obama is de-facto going to do by allowing the tax cuts to expire. Experience has shown that this will raise much LESS revenue than he expects. As others have pointed out, revenues were at an ALL TIME HIGH in 2006/7, despite or maybe because of the tax cuts. The problem is that spending was up even more.
Gergle
“Others have noted that federal revenues, as a percentage of GDP, have remained stable at approximately 19.5% over the period 1950 to 2007 despite significant changes in margin tax rates over the same period. They argue that since federal revenue is proportional to GDP, the key factor in increasing revenue is to increase GDP.[19]”
Doesn’t this argue FOR tax cuts? If you make the same money at lower rates, why have higher ones?
Posted by: Christine at February 3, 2010 08:41 PMChristine said: “that is what Obama is de-facto going to do by allowing the tax cuts to expire.”
There’s that old Republican Saw, allowing temporary tax cuts to expire = raising taxes. That logic applied to spending results in: allowing temporary increases in spending to lapse = deficit reduction. No! Wrong! It doesn’t.
What Republicans just REFUSE to accept is that taxes must rise and fall according to the cost of government which the people demand and expect. This is why Republicans really don’t believe in democracy. They don’t trust the people. And who can blame them? The people just took them out of the Majority in government.
But, look, Christine, adding two wars, a recession, and high unemployment to our nation’s situation DEMANDS tax increases to PAY FOR THEM. If you have no insurance and your house is damaged by winds, wouldn’t an increase in your income help you to pay for the repairs.
And Democrats have a lot to repair after Republican governance. Borrow and spend Republicans or Tax and Spend Democrats. I will take the latter because I believe in not passing my burdens on to my children. Republicans demonstrated repeatedly they DO believe in passing our burdens on to our children. VP Dick Cheny: Deficits don’t matter. Bullpucky!
Taxes have to go up to pay for all this mess our generation created. It is not fair to NOT raise taxes and pass that debt on to the next generation. Americans, if they are to be responsible, must pony up both increased taxes and pared back government spending, if our children are to keep the same amount of their earnings as we have.
Republicans just can’t walk their talk, and should be ignored at the very least. Democrats on the other hand, will increase spending to get voters to back them at election time (Republicans were no different). It is time voters stopped backing them until serious and effective legislation is adopted which addresses this issue of passing our debts down to future generations.
Obama is proposing spending cuts, and tax increases on those burdened least by them in these difficult economic times. Voters should back Obama’s efforts and demand the same from their representatives or withhold their vote from them, voting for a challenger instead.
Posted by: David R. Remer at February 3, 2010 09:08 PMDavid
Taxes will rise. That is the bottom line. You can call it what you want. Let’s see how much additional revenue they generate.
Posted by: Christine at February 3, 2010 09:52 PMChristine,
I guess if you prefer regressive taxes that makes sense.
The point is that GDP, not lowering marginal (read as upper tax rates)taxes, is what increases revenue. Want more tax revenue? Get the economy going again. Want a better GDP? Do stimulative things. Get money into the hands of those that spend it. Consumers. Easing money supply (best choice), cutting middle class taxes (one of the least stimulative of the choices, because it creates little leverage), funding job stimulus, good trade policy (a big screw up in the depression). Henry Ford understood that to sell cars he had to pay his employees well enough so that had disposable income.
The myth that cutting marginal rates is stimulative is exactly that…myth.
Posted by: gergle at February 4, 2010 02:23 AMgergle said: “The myth that cutting marginal rates is stimulative is exactly that…myth.”
Not exactly true. It is true, it is a myth, except for that rare set of circumstances in which a shortage of capital for business expansion and development is constraining consumption, and economic activity spurred by consumption, that would otherwise take place.
That is not the case today, which makes Republicans call for further tax cuts entirely illogical. Economic activity today is constrained by consumer resources to spend. No customers means no business expansion. Cutting taxes on corporations and the wealthy investors would NOT touch the problem of constrained consumer resources. In fact, cutting those taxes on the wealthy would simply transfer tax payer dollars to the wealthy making them even wealthier, because business is not going to hire people to stand around with their thumbs up their butts where customer orders and demand don’t justify hiring that extra personnel.
Republicans have made an ideological mantra out of cutting taxes which equals the Greek Papa’s advocacy of Windex to cure all ills and fix all problems (movie: My Big Fat Greek Wedding). It was hilarious precisely because of its nonsensical nature. Americans don’t like math and therefore get very confused by Republican ideology on this matter, many actually buying into the Windex theory of taxes.
If the government is to stimulate this economy, it must stimulate consumption demand, which in turn, will generate business demand for additional labor. The government can become the consumer in the case of public works projects and the government can ease the tax burden on those income groups whose consumption is constrained by low or falling real wages.
This requires a surgical approach to taxation to maximize both tax revenues for the government to address deficits in part and consumption by those who will in fact, consume more and increase demand with increased income. Which is for the most part, what Obama’s budget calls for. A purely pragmatic approach, without ideological waste and unintended or intended increases in deficits and national debt for the long run. Such targeted tax cuts and public works projects will stimulate the economy and in turn, increase government revenues, which, against a backdrop of constrained spending, will address the issue of higher deficits going forward were such actions not taken.
Posted by: David R. Remer at February 4, 2010 08:44 AMException noted. Thanks for the refinement.
Posted by: gergle at February 4, 2010 11:14 AMGo Mitt Romney - A guy who actually ran a business that succeeded. We MUST have new leadership & ideas that make sense and are reponsible! I’m shocked to see all this intelletual debate going on with facts & figures & all kinds of opinions about whose right or wrong (DEMS/REPS)- WHO CARES!! This is exactly the kind of posturing lawyers routinely engage in. It’s meaningless & totally counterproductive. Read Marc Hansen’s book, “What They Don’t Teach You At Harvard Business School.” In it he outlines how lawyers endlessly debate every obscure little detail & how destructive it becomes. Look at the big picture, the real agreement, don’t try to micro manage every factoid. I would bet that most of these entries come from people who have NEVER run a business, other than consulting or some equally narrow enterprise where expertise on a specific topic or field forms the basis for their success. Voting intelligently does require some facts in hand but the ability to lead is dependent not on performing every task. Instead it requires the selection of skilled participants to master that particualar area & the proper management & system to run it. This means you MUST hold those people accountable. Moreover, the success they foster must be sustainable & complete. Short-term gains won’t do. Our system of endless committees, legislation that contains so many compromise agreements, special interest favoritism, and sweetheart negotiation in order to get something passed not to mention the proper administration of stated policy rather than the endless politicking & spinning that serves as the hallmark of our government must end. We need people with street sense. If someone’s stats are down regularly, not on a temporary basis & not due to seasonal, or business cycle fluctuations, then something is wrong. You may attempt to aid them for a period but if it continues they either aren’t suited to the task or not making any effort. Our representatives in Congress have been telling the same lies & distortions of the truth forever. They champion a bill they know won’t pass - go home proclaiming they’re a champion of the masses, but they just couldn’t get the support they needed - it’s a crock! Vote new people in & keep doing it until YOU run the show -NOT THEM - Somehow we expect lawyers to run the business of government. We surprised at their endless posturing, bickering, meaningless supposed fact gathering & twisted rational. They are going to spend their way out of a depression. In 1929, O.K. Now, forget it. Put more money into people’s pockets & they will spend it, ease credit restrictions & people borrow more money. It is not rocket science. Having worked, for example, in lending it is crucial that the gatekeeper (lender) with all of the experience & expertise be held accountable for not letting the borrower get in over his head. Why, simple - when they default who loses? The lender. That is the way it has been for 60 some odd years & that is why it worked. The lender knew that if the borrower defaulted regardless of the market value of the collateral - it would likely have a negative effect on them. So when I hear the comment that banks or Wall Street somehow mismanaged the risk associated with CDO’s, or CMO’s & insurance provisions utilized the wrong models. It is yuppy speak for we don’t know what were doing. I don’t buy it for a second. That they didn’t care or didn’t pay much attention, that is the truth. Blaming borrowers for getting in over their heads is like blaming the victim for being mugged. Half the numbers our government issues are a joke - even they tell you that - i.e. unemployement @10% - bull! It’s more like 18-20% when we count all the “temporary” jobs. Ask someone in business around your area how their business is doing they’ll tell you it’s slow - about a 20% drop at least. I watched for 18 months as banks remained in total denial about the mortgage crisis & our government leaders took no action. Everyone sat around with their head in the sand. Investors at several real estate clubs I belong to salivated at the plummetting prices of property but the banks wouldn’t let go of the properties even in low income areas. Investors waited to snap up these bargains at 70% of market price but the banks listed them on the MLS at 90% and wouldn’t bargain. Brokers & investors alike lamented that there existed a huge inventory surplus with more arriving everyday. Banks wouldn’t lend unless you had 20% down in cash, great credit, & would pay 90% of assessed market value (a completely ficticious figure). This went on, and still is, as banks refused to embrace reality. Much of this inventory would sell today if banks would wake up & it isn’t over yet. Wait until the commercial mortgage balloons mature. Many of them are upside down now too as assessed values have dropped & banks won’t be able to refinance. Another crisis looms on the horizon as banks, lenders, Wall Street, & our wonderful government continue the blame game, deny reality, and refuse to come to grips with the issues at hand. You simply can’t tighten credit, increase down payment requirements, increase taxes, lower property values, refuse tax relief, foster huge government spending programs, and offer no real help for small business, & expect good results. It’s insane. There is no debate here. Cut the government’s credit card up. Send those bankers to JAIL - take their assets, all their assets & sell them off, get rid of all this social engineering legislation, investigate the healthcare insurers, & HINT - KEEP POUNDING THE TABLE UNTIL YOU GET WHAT YOU WANT. Really there are about fifteen issues that need to be addressed and there are good, viable solutions to all of them - but it takes guts & saying no even to countries like China. Can’t do that - they buy our debt - yeah! And we buy their goods. Their own people can’t afford them. Quit letting the tail wag the dog. Wal-Mart buys goods from China, charge a surtax on every good that doesn’t meet our criteria for pollution control, labor laws, etc. Can’t be done - baloney. When Japan’s yen started climbing against the dollar & they refused to reign it in - Paul Volker dumped millions of yen on the market & it plummeted. It shocked them so badly that next time they got the message. Lesson grasshopper - don’t FU%K with us we buy a huge amount of the world’s goods & services & we CAN control that. We can’t compete internationally - bull. What they mean is - it’s not an even playing field. We don’t need them they need us. These international corporations send the competition message so they can manufacture overseas & sell here. Lesson: Quit buying. Buy American. Sound trite - No! it works. Our problems are not only government debt, tax rates, etc,. they are a shrinking tax base, overbloated budgets, underemployed work force, & eroding manufacturing base. I recall arguing with my economics professor about outsourcing & the service based economy/global market they claimed was evolving in the 80’s. Well, we now see the result. Exclusively based service economies are a theory - like welfare. It doesn’t work. China has all this cash now. Of course, it manufacturers there and sells here. International corporations have been selling this lie for decades because it benefits them. Naturally they want trade agreements that suit them so they can sell you goods & services that run up your credit card bill. They don’t care if you ever get out of debt. Stop buying more than you can afford - decrease demand & viola prices drop. You have a thief at your front door & he’s big & mean - you can fight him off or run - that’s your choice. Debating his cultural background, lack of role models, socioeconomic plight & so on won’t solve siccum while he beats your brains out. Get real. When we send these guys to Washington we want results, not excuses. Can’t get the job done, CYA, NEXT. Believe me they’re starting to get the message.
To give this President a grade - GIVE HIM AN XXX
Sort of like a cartoon character that got drunk from being so excited about being elected - after all he hasn’t ever led anything before - unless you count him now leading his party & US over the cliff. OBAMA isn’t deaf - he’s unconscious!
It doesn’t matter anyway - he’s not the disease - he’s just the symptom - get plenty of rest (about three years left) call the doctor and have him give you plenty of painkillers & watch in fascinated horror as our new President, his cabinet, & Congress of left wing liberals lead you around in circles, propose new dialogues trying to figure out how to spin the message around from what WE want & need into what THEY think is good for their power base, campaign finances, & government retirement plans. Just relax in opiated bliss while these quasi corporate employees vote themselves raises & bonuses for tackling these important “issues” and “challenges” that WE face. WE - of course means YOU and YOUR children & grandchildren - NOT THEIRS. They’ll all be living offshore in Carribean paradises while you struggle to educate your children, visit the doctor, battle diseases caused by food additives, pay massive taxes, & live on dog food all throughout your “golden years.” Wonderfully sated & secure in the knowledge that your corporate pension plan went down the toilet with that corporate merger. The early retirement package they gave you went broke when the company you worked for couldn’t keep up with the new 85% tax plan that covers indigent farmers from Malaysia who needed price supports, or pharmeceutical companies that fed you toxic waste to cure your liver abscess caused by eating to many quarterpounders. I mean Hey - no research existed yet, right. What’d ya gonna do? It took a few decades to find any test tubes at Hamburger U. Yes, folks NO WORRIES - DON’T FRET - WITH OBAMANOMICS & OUR WONDERFUL CONGRESS you’ll be able to party like it’s 2099 because the governement as part of it’s new GOVERNMENT REFORM program is going to send each and every one of you a bright, shiny, new baseball bat so you can fight off the gangbangers, or your neighborhood dealer to get that fix you’re gonna need. You won’t even notice that rusty shipping container you live in with all the leaks in the roof, you’ll just sit there happily burning your old furniture or any available trees left in the neighborhood for heat while fighting off the wandering dog packs for scraps at the local dump. So KICK BACK & RELAX your future is secured, in fact certain, as you merrily glide down that slippery slope as you happily READ AL FRANKEN’S NEW BOOK, “Once a Scmuck - Always a Scmuck” (required reading) & slumber peacefully in that pee soaked lazy boy that you found in the street last week during the blizzard.
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