Three economic statistics that make Obama look good — but with some cautions

REUTERS/Jonathan Ernst
The economy is recovering. Obama is president.

A brilliant quote goes: “If you torture the numbers long enough, they’ll confess to anything.” One should always be especially careful about crediting numbers that prove that what you want to think is true is true. That goes for lefties and righties.

Writing for the lefty site Alternet, Dave Johnson compiles what he calls “Three Charts to Send to Your Right-wing Relative, guaranteed to make their head spin.”

You should click through on the link above to look at them, but the three charts indicate that:

1. Total U.S. government spending rose 88 percent during the George W. Bush presidency. So far, during the Obama presidency, spending has risen 3.78 percent.

2. Bush inherited from President Bill Clinton a budget that was running a small surplus. The budget immediately went back into deficit and, by the end of the Bush years, reached an all-time high of $1.4 trillion. From that peak, the deficit has fallen steadily and dramatically Obama.

3. During the last of the Bush years, total private-sector employment started falling and the job loss accelerated rapidly month by month until the economy shed almost a million private-sector jobs during the last month of the Bush presidency. The job loss picture improved very slightly during the first months of the Obama presidency, but then improved dramatically until, by the end of Obama’s first year, the negative jobs number turned positive and the economy has added private-sector jobs ever since. The Alternet chart attributes the turnaround to the stimulus program.

These numbers are all pretty good for Obama, especially if you are comparing them to the (really pretty horrid) economic results under Bush. There are many dangers of critical-thinking errors available if Obama admirers (and I am one) get too excited about such comparisons. There are all kinds of unknowns connected.

A Republican might point out that the slow growth of spending under Obama would have been faster if he had had fewer Repubs in Congress slowing down his spendy ways. Of course a liberal could reply that if Republicans had gone along with more of Obama’s proposals, they would have stimulated the economy and more jobs would have been created sooner.

Another curve that reality throws against the easy assumptions is that one of the biggest things driving spending up in Bush’s first term (leaving aside for the moment the War on Terror, War in Iraq stuff, which should certainly not be left aside for too long) was Medicare Part D, which was a fundamentally liberal impulse coming out of the “compassionate conservative” strain of Bush’s ideology.

The budget deficit, under Bush, was also headed down at a pretty good rate in the first three years of Bush’s second term. The spectacular spike in the deficit in 2008 was all about the financial meltdown, measures to deal with it, and the onset of the Great Recession. The deficit would have bounced down from that peak under pretty much any president and any imaginable economic plan.

I don’t mean to be overly skimpy with praise for Obama’s impact on that chart — and I do believe he has much more of a debt/deficit hawk in him than any conservatives would credit — but even with the falling deficit shown on the chart, the lowest deficit of the Obama years would be the highest in history, if it wasn’t for the Great Recession deficits of Bush’s last year in office. I’ll be much happier when the combination of a declining deficit and a rising GDP combine to actually reduce the total debt as a percentage of GDP.

I consulted my friend Louis Johnston, an actual economist who writes about such things regularly for MinnPost, about the third chart, showing the growth in private-sector jobs before and after the Obama stimulus. He was bothered by the way the chart implies that all of those new jobs can be credited to the stimulus package. Every recession eventually ends in a recovery. He believes that a properly constructed stimulus program can get the recovery started sooner and make it stronger, and that’s likely what happened in the early Obama years.

All of my quibbling and contexting shouldn’t be taken as dismissive of the basic argument made in Johnson’s piece. The economy is recovering. Obama is president. While it’s naive to act as if everything that happens is attributable to the policies coming out of the White House, it would be even sillier to deny they have an effect.

Republicans and conservatives who have trouble accepting that anything positive has occurred — domestically, economically or internationally — since Obama took office, need to look hard at these charts — so hard that they can see through some of their biases and maybe have a rethink about some of those biases.

hat tip: Ray Schoch

Comments (97)

  1. Submitted by Thomas Swift on 08/14/2014 - 09:46 am.

    You might have forgotten, but Bush was excoriated by the right for TARP I, we haven’t forgotten that failure, so now might not be a good time to tout the virtues of Obama’s Porkulous.

    Cash for Clunkers: An Evaluation of the Car Allowance Rebate System

    http://www.brookings.edu/research/papers/2013/10/cash-for-clunkers-evaluation-gayer

    Obama’s stimulus package, 5 years later: Dems defend, Republicans ridicule

    http://www.washingtontimes.com/news/2014/feb/17/obama-stimulus-package-dem-defends-gop-mocks/?page=all

    • Submitted by Dan Hintz on 08/14/2014 - 12:22 pm.

      Economics

      Bush had no choice but to support TARP, and should be commended for doing so. Had he listened to the know-nothing-wing of the Republican party, the economy would have collapsed. Ted Cruz and his fellow clowns wouldn’t understand this, but when you are in power, you actually have to govern.

      Rather than ask the Republicans or Democrats about the stimulus, why not ask the economists:

      http://www.washingtonpost.com/blogs/wonkblog/post/did-the-stimulus-work-a-review-of-the-nine-best-studies-on-the-subject/2011/08/16/gIQAThbibJ_blog.html

      • Submitted by Thomas Swift on 08/14/2014 - 02:15 pm.

        It doesn’t surprise me in the least that lefties thought TARP was a good idea…it also doesn’t surprise me that when Obama capitulated to their ignorant demands for retreat from Iraq disaster followed.

        I hope you’ll forgive me if I decline to open the link you so thoughtfully provided, but just as observational profundity leaves me unsurprised by lefty support for feckless decision making, I somehow just know anything the WaPost offers will elicit explosive laughter. I’m drinking coffee; you understand, I’m sure.

        • Submitted by Dan Hintz on 08/14/2014 - 03:30 pm.

          Forgiveness

          When I respond to a comment that includes links, I read the links. I sometimes even read other things about the links to understand them better. I want my responses to comments to be informed. I have even changed my mind upon learning new information. I read your links before responding to your comment. I don’t know if forgiveness is the right word, but if you are unwilling to even read the link provided, I don’t know how anyone can take you seriously. You won’t let the facts get in the way of your opinions.

          If you had read the link, you would see that not all of the studies cited (and analyzed for strengths and weaknesses) supported the stimulus. Most did, which is in line with economists generaly, including those who thought the stimulus was not big enough. Despite the fact that I disagreed with some of the article (I side with those who thought it was not big enough) I thought it was a good source of information about the various arguments about the stimulus. You would be well served by reading it.

          Its just not leftiest that think TARP was a good idea. Its anyone with a basic understanding of economics. You may remember we had the biggest single day stock exchange drop in history when the house failed to pass the bill. It passed the Senate 74-26, with Republicans voting 34-14 for it, and Democrats (including Lieberman and Sanders) voting for it 41-11. And it was signed into law by Bush. Was it distasteful to bail out wealthy banks that had made terrible decisions? Of course. But the alternative was much worse.

          Not quite sure how you threw Iraq in to the mix. Iraq went bad the day we invaded in 2003. We should have listened to 1991 Dick Cheney’s explanation of why invading Iraq was a bad idea. Were we supposed to keep 100K troops there forever? Even after the government we installed wanted us to leave?

  2. Submitted by Gerald Abrahamson on 08/14/2014 - 10:15 am.

    Employment was the key factor.

    Employment rose at a virtually continuous rate of about 2-million ADDITIONAL workers per year from 1971-2000. It “flatlined” in 2001 and never recovered to that level again until Obama.

    1971 = 71-million workers
    2001 = 131-million workers
    Start of 2009 should have been about 147-million workers but was actually about 130-million. That is about 17-million MISSING jobs from the US economy. There is the problem.

  3. Submitted by Ron Gotzman on 08/14/2014 - 02:50 pm.

    Obama -debt/ deficit hawk?

    Eric, Is Obama a deficit hawk or a moderate deficit hawk like yourself?

    Also, if Obama is a debt/ deficit hawk – then everyone is a deficit hawk.

    • Submitted by Dan Hintz on 08/14/2014 - 03:15 pm.

      Not really

      Obama is much more of a deficit hawk than say George W. Bush, or Ronald Reagan. Like Bill Clinton before him, Obama has reduced the defict while in office, not grown it like recent Republican presidents have.

      • Submitted by Ron Gotzman on 08/14/2014 - 04:40 pm.

        Really?

        So – is there such a thing as a “tax and spend liberal?” What is Al Franken? Mark Dayton? I though you liked tax and spend liberals?

        • Submitted by Dan Hintz on 08/14/2014 - 05:13 pm.

          Really really

          “Tax and spend liberal’ is a pejoritive term used by people who don’t like Democrats. I like Al Franken and Mark Dayton. I have no opinion about that term because its not a term I use.

          What I do know is that when you look at actual numbers (like this article did) the economy performs better under Democrats than Republicans. Economic growth is better, unemployment is lower, the stock market is higher, deficits are lower,etc. I won’t pretend that is all because of Democratic policies, but at a minimum, its a pretty good rebuttal to claims that “tax and spend liberals” will destory the economy. If Obama is a socialist, he’s a pretty crummy socialist. Contrary to popular belief, Obama has not significantly increased spending – it was Bush (the 2nd) that did that.

        • Submitted by jason myron on 08/14/2014 - 06:17 pm.

          As opposed

          to tax and spend conservatives like Reagan?

          • Submitted by Ron Gotzman on 08/14/2014 - 09:42 pm.

            Reagan taxes?

            I am sure you loved those huge Reagan tax increases.

            • Submitted by RB Holbrook on 08/15/2014 - 09:19 am.

              Which ones?

              Can you be more specific? President Reagan increased federal taxes eleven times, so I can’t give an opinion until I know which ones you mean..

              • Submitted by Ron Gotzman on 08/15/2014 - 09:39 am.

                Do not rewrite history…

                Reagan raised some taxes but they were offset by decreasing other taxes.

                “When Reagan took office in 1981, federal taxes were 19.6 percent of GDP, the highest level since World War II. That figure dropped to 17.3 percent during his first term and rose to 18.2 percent at the end of his second term.”

                When are the DFL going to pull out the slogan “tax the rich just a little more.”

                Of course, they will probably just tax business so they can hide the taxes from the people, that is – all the people – not just the rich.

                • Submitted by RB Holbrook on 08/15/2014 - 10:36 am.

                  Nice try

                  The wondrous Reagan tax cuts were largely reversed shortly after they were imposed. Consider that, for all the cutting, the percentage of GDP in taxes decreased by only 1.4%. Of course, we’re not going to mention the deficit in THAT context, are we?

                • Submitted by Todd Hintz on 08/15/2014 - 12:03 pm.

                  Reagan Taxes

                  Reagan actually increased taxes each and every time–he never reduced them even once. What you’re referring to is the tax RATE, which is not the same thing as reducing your overall taxes. What Reagan did was reduce the rate, which made people feel good, but at the same time eliminated a lot of loopholes, with the end result being the overall taxes collected by the federal government were higher post revision than they were pre revision.

                  Sorry, but my wife is a consultant in the tax field. She’s actually read the Reagan tax bills cover to cover as she needs to understand the impact for her field of work.

                • Submitted by jason myron on 08/15/2014 - 01:29 pm.

                  Do not rewrite history?

                  That’s rich coming from someone whose own deification of Reagan has apparently jumped the shark. It’s always amusing that the same people who hiss about Obama being a community organizer, worship the feet of a B List actor whose most well known role was starring with a chimp. From “bringing down the Wall” and single handily destroying communism, which in realty was just the result of a massive overspend in defense, one that the Soviets couldn’t keep up with, and that in many ways, the US is still paying for today, to “Morning in America”, the flag lapel pin set just can’t get enough of the myth.
                  One can only imagine the howls from these same people had Obama illegally sold weapons to Iran, or been at the helm when 244 US servicemen were killed in Lebanon (followed by a quick retreat…Reagan portrayed nothing but strength to the world, you know). S&L, HUD, illegal lobbying, EPA, etc…yup, Ron, you go right on gazing at Ronnie’s picture on the mantel of your fireplace and pine away for the good old days. The rest of us will continue to clean up the mess and air out the place….the funk still lingers.

                  • Submitted by RB Holbrook on 08/15/2014 - 03:10 pm.

                    It’s a winning strategy for Republicans

                    By 2016, no one who was old enough to vote for Reagan will be under 50 years old.

                    Always looking to the future, those folks.

          • Submitted by RB Holbrook on 08/15/2014 - 09:19 am.

            Don’t you mean

            A “borrow and spend” conservative like George W. Bush, or Tim Pawlenty? Let’s keep things current.

        • Submitted by Neal Rovick on 08/15/2014 - 07:53 am.

          No such thing as a tax and spend Republican….

          Rather, the Republicans have proved that they’re SPEND THEN BORROW* (*MAYBE), with the MAYBE coming from the fact that they don’t want to raise debt ceiling to borrow to pay for the spending they approved.

  4. Submitted by Eric Ferguson on 08/14/2014 - 04:41 pm.

    The deficit wasn’t the problem

    The problem with focusing on the deficit it implies the deficit was a problem. It wasn’t and isn’t. The deficit is a symptom. Our problem was a recession, a financial crisis, a stimulus that was too small and too much directed to tax cuts, and then years of austerity when we needed the opposite. There’s no reason at all the recovery needed to take this long. We learned hard lessons during the Great Depression, and then when it happened again, we ignored everything we learned. I guess the overwhelming evidence of history just didn’t feel right.

    • Submitted by John Appelen on 08/14/2014 - 10:39 pm.

      Turn off the tap

      I always liked this explanation. And “austerity”, you must be kidding. Read the link.
      http://www.factcheck.org/2012/06/obamas-spending-inferno-or-not/

      And I can even understand turning up government spending temporarily while in the recession. The problem is that Democrats seem to always see that higher level as the new baseline, so they call any efforts to get back to a normal rate of expenditure a draconian heartless cut by the GOP. When those increases were to be temporary in the first place.

      Remember all the gnashing of teeth when the GOP held firm on not increasing spending after the worst of the recession was over.

      And if Obama was a real deficit hawk he would have pushed for un doing all of those “terrible Bush tax cuts”. Instead he just stuck it to the well to do. That is one way in which I disagree with Conservatives. If higher taxes were good for them, we probably all should have gone back to those Clinton rates and eliminated the deficit.

  5. Submitted by Tom Christensen on 08/15/2014 - 10:21 am.

    The President has had some accomplishments but we have to remember he is working for the UNITED States of America and is only able to work with half of America because the other half has decided obstructionism is much more fun. He is working with disguised and sometimes overt racism, the Republican noise machine, and a do nothing congress. He has put Republican ideas out there and the Republicans have been against their own ideas, ACVA for example. Everything the Republicans propose contains a very purposeful poison pill guaranteed to go nowhere. McConnell’s has made it his goal to make sure the president fails. Fiction is more important than fact to the House of Reps. There are elections and the next day the next election cycle starts, no time to do work. We can hardly be called the UNITED States of America, for now.

    • Submitted by John Appelen on 08/15/2014 - 02:55 pm.

      Obstructionism

      I believe the Republicans have been striving to do what they were asked to do by the citizens who elected them:
      – keep taxes lower for all Americans
      – keep governmental spending low and promote effective governace
      – enforce immigration law, and not reward people who cut in line ahead of legal immigrants
      – provide safety nets for the truly needy and incent those who fell to dust themselves off and get climbing again
      – minimize arbitrary government enforced wealth transfer (ie min wage increase, health insurance subsidies, etc)
      – ensure traditional man/women marriage and family is promoted within our society

      They would probably be doing even better if those obstructionist Democrats didn’t keep blocking their efforts.

  6. Submitted by Thomas Swift on 08/15/2014 - 11:25 am.

    Amen to that.

    “We can hardly be called the UNITED States of America, for now.”

    And I wouldn’t hold my breath of that changing any time soon, if I were you.

    • Submitted by jason myron on 08/15/2014 - 01:02 pm.

      and you seem

      quite happy about that. However, I disagree with your assessment… the fact that this country is more diverse and attitudes are changing and progressing will only diminish the numbers of the perpetually angry. People are tired of the hate and just want to live their lives instead of listening to the rants of neanderthals unable to come to grips that we’re nearing 2015.

  7. Submitted by Tom Karas on 08/17/2014 - 06:51 am.

    that’s entertainment

    The regular conservative Minnposters are great. Give em a shovel and they will ‘swiftly’ dig their hole deeper and deeper.

    • Submitted by John Appelen on 08/17/2014 - 10:06 pm.

      Please Explain

      I may not quite qualify as a Conservative, however I am interested to learn more about your comment.

  8. Submitted by Paul Udstrand on 08/18/2014 - 12:10 pm.

    Reagan tax cuts

    We’ve seen a lot of comments about the Reagan tax cuts but one thing that’s been overlooked is the over-all tax increases that resulted. The Fed rate bounced around but much of that revenue demand just got pushed out to state and local governments. We saw the same thing with the Pawlenty cuts where property taxes and local fees increased in response to ALG cuts. In the 80s the same thing happened on a national level when the Fed cut tax rates. This is why the cost of government never really goes down with these magic tax cuts, in fact it actually went up in many cases. Republicans like to pretend that they get more efficiency with tax cuts but all they really do is cut services, then someone else picks up the tab, they don’t really reduce over-all cost.

    It’s really just math. If you have 50,000 people in your city, and your getting $1 million in state aid, that money is costing you 25 cents (1 million divided by 4 million people in the state). If you eliminate that state aid and have to raise a million in your city it will cost you $40. The state can brag that they’ve cut $1 million from the budget but that budget cut cost you $39.75. This is the problem with magic tax cuts. Depending on what level of government services get cut, they can end up increasing the cost of government for individuals.

    • Submitted by John Appelen on 08/18/2014 - 01:07 pm.

      Local is Better

      Thank heavens for National and State spending cuts, when and if they actually occur. The closer the collect and spend decisions are to the citizen / tax payer, the better it is for all of us.

      Now I agree that national defense, inter state rules/commerce, post office, etc belong at the national level. And I can even agree that SS/Medicare belong there since the benefits are delayed and a citizens often cross state lines.

      However the idea that the Feds are involved in welfare, medicaid, etc is just wasteful. It seems to indicate that states are not capable of deciding how to best help their friends, neighbors, fellow citizens, etc.

      • Submitted by Paul Brandon on 08/18/2014 - 07:26 pm.

        Your third paragraph is absolutely correct

        A number of states have decided NOT to help their fellow citizens (I assume they don’t regard all citizens as their friends).
        And of course Federal agencies such as the VA and Medicaid are far more efficient than most state agencies, so I don’t see where the waste is in having the Federal government provide for “the general welfare”. That’s what the Constitution says it should do.

  9. Submitted by jason myron on 08/18/2014 - 05:44 pm.

    Wasteful?

    Hardly. As it’s been pointed out to you numerous times here, the Feds involvement in welfare, medicaid and other safety nets is crucial in maintaining continuity for those seeking help. Republican majority houses at the state level have already proven that they have virtually no capacity for empathy and no interest in helping anyone they deem unfit or unworthy. It would be tragic to those seeking help if people like you were making those types of decisions.

    • Submitted by John Appelen on 08/18/2014 - 06:06 pm.

      Judgement Again

      Now you continually say that you are a supporter of freedom, yet again you are judging people lacking based on your values.

      Apparently you know better how to help the citizens of Mississippi than the people of Mississippi?

      When are you going to stop forcing your belief systems/religion on to other people?

      • Submitted by Jonathan Ecklund on 08/19/2014 - 03:32 pm.

        On Mississippi

        Considering that Mississippi consistently ranks in the bottom of all states on income, health, education, civic participation, and generally being part of the 21st century, I’d say that yes, there is a LOT the people of Mississippi could learn from a state that ranks near the top of all US states on those same measures, and is also world-renowned for it’s biotech industry, agriculture industry, and culture.

        It’s ironic (or just plain obtuse) that you accuse others of imposing their views when you want to impose YOUR views on other people by, for instance, not allowing same-sex partners to marry, or denying contraceptive coverage to women, among other things. Judgement, indeed.

        Either way, the world is oh-so-rarely as black and white as you imagine it to be.

        • Submitted by John Appelen on 08/19/2014 - 04:15 pm.

          Where have you ever read that I personally am against same sex marriage, birth control, choice, etc?

          I am actually against people using the government to force their will / beliefs on other groups of people. Something that both the far Right and Left seem to like doing often.

          • Submitted by Jonathan Ecklund on 08/19/2014 - 04:34 pm.

            Just click your name.

            You’ve repeatedly stated your preference for ‘traditional’ marriage and complained about conservatives being ‘ignored’ specifically on gay marriage AND the anti-bullying bill (which focused heavily on LGBT protections). You’ve also repeatedly stated that contraceptive coverage should be voluntary based on the employer’s religious preference (you know, imposing your beliefs upon someone else).

            • Submitted by John Appelen on 08/19/2014 - 06:33 pm.

              Clarification

              I agree…

              I disagree with Liberals using laws to force Conservatives to
              encourage behaviors they find inappropriate, pay for for things they equate to murder, pay for arbitrary wealth transfer, eat healthy, mandate reverse discrimination, etc.

              I also disagree with Conservatives using laws to force Liberals to deliver unwanted babies, limit marriage to a man/woman, limit their ability to buy whatever birth control they choose with their money, etc.

              If you think I am fibbing, go look more closely at my G2A posts or at my MinnPost comments. To me the far right and left are almost the same, they both want to define right/wrong and force everyone else to live according to their values.

      • Submitted by jason myron on 08/19/2014 - 10:48 pm.

        The fact that you’re attempting to use Mississippi

        to make your point is almost to humorous to respond to. I’ve made my thoughts on the Fed maintaining a national standard on safety nets for the needy of this country quite clear to you. If I’m supposed to feel bad that my “belief system” of caring for the unfortunate and having a desire for them to get the help they need without being vilified by heartless people, I can assure you that I will sleep soundly at night. And for you to have a sad because you’re being judged based on the very posts you’ve made over the course of your presence here, is laughable. You’ve made no secret of the fact that you are far more interested in judging the less fortunate and how they’ve found themselves in their situation than actually helping them. Own it…

        • Submitted by John Appelen on 08/20/2014 - 08:09 am.

          I agree

          I own every word I write, however I don’t own how the words are perceived by each individual reader. That is determined by their personal history, perspectives, beliefs, paradigms, etc. These and even if the reader is tired can bias what an individual takes away from any experience.

          I have no interest in making anyone feel bad. I am interested in discussing the multiple aspects of these topics. As Jonathan said “the world is oh-so-rarely as black and white as you imagine it to be.”

          Though it seems that people on the far right and far left do like to think in terms of cowboys with black or white hats. Or angels and demons…

  10. Submitted by Jay Willemssen on 08/18/2014 - 06:45 pm.

    Big Government Saint Reagan v Small Government Obama

    At this point in his presidency, Reagan had grown the federal government from 9.6% of GDP to 10.4% of GDP.

    Obama, on the other hand, has shrunk it from 8.2% of GDP to 7.0% of GDP.

    Source:
    http://1.usa.gov/1thr5Mb

  11. Submitted by John Appelen on 08/19/2014 - 10:20 am.

    Help

    Jason and Paul,
    Per your comments, apparently you believe Minnesotans know “how to help” people that are thousands of miles away better than those citizens that live in that community?

    • Submitted by Paul Udstrand on 08/19/2014 - 01:13 pm.

      Help from afar….

      John, if you read a book or two about how your government actually functions and what it does, that would clear up a lot of your confusion. The National Guard doesn’t sandbag in cities that are flooding because someone far away “knows” something that local people do not. State’s administer Medicare and Medicaid, local governments spend the ALG they get. Local governments and states apply for state and federal grant money to do projects they think would be good for their communities, etc. etc. When engineers built the interstates they designed the roads to meet local conditions with local requirements. For instance the decision to build through the Rondo neighborhood and downtown St. Paul was NOT made in Washington DC.

      At every level of government you have local representation, and they do the budgets and authorize spending.

      It’s kind of common sense but I’m sure you can find some information on the nature of civilization and collective resources. The advantage to having a nation and states within nations is that they have more resources combined than is typically available locally. Obvious examples are events like Hurricane Katrina, Schools, etc. A state or small town may not have the resources to deal with big expenses that a larger economy can easily afford. A small town may not have the tax base to pay for police, fire, and school services, but the state can make up the difference without even feeling it.

      • Submitted by John Appelen on 08/19/2014 - 04:32 pm.

        Carrots and Sticks

        The citizens of the states do have some choice in matters, however as Paul B., Jason and Jonathan indicated the Feds can be used to apply a lot of pressure to the States to help them “behave correctly”.

        I mean ACA is an example of where the Feds spent a boatload of money to get the states to drink the punch. What did they pay again for MN to setup the exchange and market it? (>$200,000,000?)
        http://thehill.com/policy/healthcare/293071-costs-mount-for-health-laws-exchanges

        And do you remember the full court press to raise the drinking age across the country. My point is that both the Left and Right like to force their idea of “behave correctly” on others via the government.

  12. Submitted by Jay Willemssen on 08/19/2014 - 12:46 pm.

    Macroeconomics 101

    GDP = Consumption + Investment + Government spending + eXports – iMports)

    Government spending = Federal spending + State/Local spending

    Federal government share of GDP = Federal spending / GDP

    Sources:
    http://www.bea.gov/national/pdf/nipa_primer.pdf
    http://www.investopedia.com/exam-guide/cfa-level-1/macroeconomics/gross-domestic-product.asp

    • Submitted by John Appelen on 08/19/2014 - 01:13 pm.

      Straight Forward

      Seems like it should be straight forward, yet Factcheck, a guy who wrote in Forbes, a guy who wrote in Mother Jones use different numbers and get a different / identical results.

      Something is missing from the straight forward method. Maybe they ignore SS / Medicare?

  13. Submitted by Jay Willemssen on 08/19/2014 - 01:52 pm.

    Transfer payments and GDP

    “Payments such as transfer payments and interest payments are excluded from the calculation of GDP because these payments do not represent purchases of goods and services, though income from transfer and interest payments may fund consumption expenditures or investment in other sectors of the economy.”

    http://www.bea.gov/faq/index.cfm?faq_id=552

    “Social security, welfare, and other transfer payments are not included in government expenditures. Recipients of transfer payments do not provide any current goods or services in exchanges for these payments. Hence, government expenditures on transfer payments do not involve the purchase of any new goods or services and are therefore excluded from the calculation of government expenditures.”

    http://www.cliffsnotes.com/more-subjects/economics/gdp-inflation-and-unemployment/gdp

    This is quite easy to illustrate why the accounting is done this way.

    Imagine a country where all the income is earned by individuals and there are no exports and no imports. All income is spent as consumer expenditures.

    Government functions in this country in a simple way. Each day it taxes every person’s cumulative income for the year at 100%, then immediately cuts an electronic check to each individual equal to the amount just taxed. No transaction fees are charged.

    In this country, total government expenditures would equal total government receipts and the budget would be balanced. Total government expenditures would be 18,200% of GDP, but government’s share of GDP would be 0%.

    The World Bank has data on general government final consumption expenditure for 27 of the 34 OECD countries going back to 1960. This is the primary component of “government” in the GDP equation (the lesser portion being investment).

    In 1960, the US ranked 3rd highest among the 27 countries in terms of government’s share of the economy – slightly behind France and the UK. By 2011, its rank had dropped all the way to 21 – ahead of only Korea, Turkey, Chile, Mexico, Switzerland, and Hungary. Among the 27 countries, only 2 had government shrink as a share of its economy between 1960 and 2011 – the US and Korea.

    http://data.worldbank.org/indicator/NE.CON.GOVT.ZS

    Claiming the US is “more socialist” based upon an increasing total government expenditure share of GDP, then, doesn’t make any rational sense. Socialism is an economic system in which the means of production are primarily controlled by the government. More than 84% of the economic production of the US is done by the private sector (and still going up), so in an absolute sense, relative to peer countries, and in its current direction, it is about as non-socialist as any developed country in the world.

  14. Submitted by Jay Willemssen on 08/19/2014 - 02:52 pm.

    Total Fed Expenditures – Up Under St. Reagan, Down Under Obama

    Even using the metric of total federal expenditures, the federal government is smaller today than when Obama took office – the opposite of Reagan’s record. Also note that the 22nd quarter for both of them was post-recession by many years.

    Total federal expenditures, share of GDP
    1980Q4: 22.55%
    1986Q2: 23.74% (+1.19%)

    2008Q4: 24.10%
    2014Q2: 22.74% (-1.36%)

    Total federal expenditures per capita (constant May 2014$)
    1980Q4: 8,355
    1986Q2: 9,570 (+1,215)

    2008Q4: 12,606
    2014Q2: 12,356 (-250)

    Sources:

    GDP (line 1)
    http://1.usa.gov/1pIC6H0

    Total Federal Expenditures (line 39)
    http://1.usa.gov/1pYu7V3

    Population (line 18)
    http://1.usa.gov/1oOyT9Q

    Core Inflation
    http://data.bls.gov/timeseries/CUUR0000SA0L1E

    • Submitted by John Appelen on 08/19/2014 - 04:08 pm.

      Trusted Wrong People

      This article indicates he unfortunately trusted the wrong people and they did not follow through on their commitment. And yes that is still his error.
      http://www.timesfreepress.com/news/2011/nov/12/reagan-taxes-and-spending-cuts/

      Now all of us commenters agree that the 2008/9 recession was the greatest recession since the depression. With this in mind, I would hope that Obama’s numbers would look great since the GDP has recovered nicely and the GOP kept his spending increases in check.

      What is the point of the comparison? Just curious.

  15. Submitted by Paul Udstrand on 08/20/2014 - 01:33 pm.

    It’s nice to see a strong critique… finally

    I must say it’s very nice to see such a strong evidence based critique of republican magical thinking in the comment threads. For decades these facile conservative/republican claims went largely unexamined and unchallenged in any serious way. These “small government” or “government is the problem” claims have never withstood even superficial examinations. Worse, for a while in the 90s the “New” democrats like Clinton and Gore actually adopted some of the reasoning.

    On the face of it these “small government” agendas were always bereft of legitimacy or evidence. They’ve never amounted to much more than ideologically driven magical thinking. Proponents have always had the same answer to questions of government and taxes and it’s always “smaller” or “less”. The problem is they’ve never clearly defined an objective. How big should the government be and what exactly does that mean and how is it measured? What should the tax rate be? How much should government cost and how do we measure that? For instance we see here arguments about the government portion of the GDP but magical thinking doesn’t tell us what it ought to be beyond: “less than it is now”. Of course such simplistic claims are not supported by any evidence beyond irrational assumptions derived from stereotypical thinking about government and economies.

    Likewise the notion that the private sector is always more efficient fails even the most superficial examination. From a banking sector that can’t find its mortgage paperwork to phone companies that can’t complete a simple upgrade tickets we have overwhelming evidence that the private sector is rife with incompetence and inefficiency. Time and time again huge and supposedly uber efficient private sector giants have to be bailed out the government.

    It’s always been surprising that small government and low taxes claims went unchallenged for so long when they are so obviously at odds with reality. Proponents have never been able to point to a single government or economy run along these principles that outperforms the US or any of the other affluent and wealthy nations. On the contrary, every single one of the most affluent and prosperous economies on the planet flows out of nations with strong and effective central governments collecting roughly the same tax revenue per capita. Examples of economies and nations with weak governments and low taxes like Bangladesh and Somalia show us where this ideology leads yet that simple and obvious observation has eluded serious US discourse for decades. The simple question: “Where exactly are you going with this?” went un-asked until very recently.

    Whenever this magical thinking has been deployed in the US, whether it be by democrats (who worshiped Greenspan’s Randian distopia) or republicans pledging allegiance to Norquist’s dream of a drowned government, this agenda has produced predictable economic reversals if not catastrophe for the majority of Americans. Even state by state comparisons are now showing that magical thinking in Wisconsin and Kansas have produced under performing state economies and dysfunctional governance. Mississippi is pretty much the Bangladesh of American states only it has viable welfare programs. We also know that so-called “red” states are more dependent on federal dollars per capita than “blue” states, with one or two exceptions. http://www.slate.com/blogs/the_reckoning/2012/10/25/blue_state_red_face_guess_who_benefits_more_from_your_taxes.html

    Small – low – tax government proponents can’t even point to more efficient governments or economies run according to their principles because typically such government and economies are rife with corruption. They blow into town promising more efficiency but in the end they never deliver because they find real governments and economies instead of their stereotypes when they get into power.

    The funniest aspect of this “debate” has always been the ignorance of small government/lower taxes proponents. What makes it funny is the fact that they often think they’re smartest ones in the room while demonstrating a complete inability to produce a coherent evidence based argument. Basic knowledge regarding economics, governance, or even history, is almost completely displaced by facile (my word for the day) stereotypes that cannot be penetrated by fact or logic. You see this repeatedly in the comments here on Minnpost. And it’s not just commenters; from Rand Paul to Michelle Bachmann, to the current crop of republican gubernatorial hopefuls you see dull intellects and ignorance pretending to be talented brain power. Scott Honour thinks there’s too many state employees- how many state employees does he think there should be? “Fewer”. Why? “Because”. And so it goes. Just don’t ask for details or point out that state employees are not “at-will” and we’ll be fine. Let’s shut down the government again over state wages despite that fact they take up less than 3% of the state budget. THAT’S a new idea.

    So it’s nice to see Jay and Johnathan and Paul and others step forward to unmask the magical thinking behind this Randian/small government/low tax agenda. I hope this tells us that liberals have finally realized that arguing about what you want the government to do is more productive than arguing about how “big” the government is. If liberals make the case, I think “moderates” will follow.

    Democracies are about deciding what you want a government to do. The size of government in democracies is dictated by the mission assigned by the people, government is as “big” as it needs to be to do what you want it to do. Once you decide what you want the government to do… you pay for it or it doesn’t get done without ringing up huge debts. Thousands of years of human experience have taught us that taxes are the best way to pay for government. The last few hundred years have taught us that governments that don’t collect taxes, don’t produce strong economies. These observations are not even the slightest bit controversial, and they provide a strong affirmative narrative for campaigns.

    • Submitted by John Appelen on 08/20/2014 - 04:39 pm.

      1950 America

      http://graphics8.nytimes.com/images/2013/01/16/us/politics/16fivethirtyeight-gov4/16fivethirtyeight-gov4-blog480.jpg

      So are you saying that 1950 America was equivalent to Somalia, Bangladesh, etc?

      I think there are some old timers who may take offense at that. You certainly do have an interesting imagination.

      • Submitted by jason myron on 08/20/2014 - 08:48 pm.

        1950’s America

        is certainly where the mindset is for most conservatives these days. Stuck in the past with a healthy fear of anything that challenges their primitive world view.

        • Submitted by John Appelen on 08/20/2014 - 10:09 pm.

          Please Share

          Please tell me about this enlightened view that they are resistant to?

          From my understanding, you believe that it is best for Americans and the country if the government collects a much higher percentage of the fruits of our labors. Possibly up to 60% of the GDP. And you support giving our enlightened politicians and bureaucrats the power to determine what each of us will receive in the way of education, healthcare, retirement funds, etc. This will not necessarily be based on good choices, saving, investing, continuous improvement, work ethic, risks taken, etc, but on what is “fair”.

          Thereby relieving us citizens of the burden of choosing, saving, investing, thinking, etc.

          Am I close? How would you correct the paragraph above?

          • Submitted by Paul Udstrand on 08/21/2014 - 08:57 am.

            1950s America

            Sadly, for many conservatives their visions of the 50s are even less reliable than their visions of the 80s. This is fantasy pretending to be nostalgia masquerading as history. There’s actually a really nice book about this by Stephanie Coontz: “The Way Things Never Were: American Families and the Nostalgia Trap”

            http://www.amazon.com/Way-We-Never-Were-Nostalgia/dp/0465090974/ref=sr_1_2/184-0142594-3818426?s=books&ie=UTF8&qid=1408628926&sr=1-2&keywords=the+way+things+never+were

            Anyways, restoring the 50’s aren’t the real conservative agenda, erasing the entire 20th Century is the actual agenda.

            • Submitted by John Appelen on 08/21/2014 - 10:40 am.

              I disagree

              I think most Conservatives would be happy if we could see an end to the Liberal obsession with pulling us even further towards the “government controlled GDP collection and “fair” redistribution” model.

              Unfortunately, I have never been able to get an “acceptable” upper limit opinion from any Liberal commenters I have asked. They just say governments needs as much wealth as it needs to provide it’s functions.

              Government collected and redistributed very little money in the 1900’s, meaning citizens for better or worse made choices, took actions and lived with the consequences. Now the government collects nearly 40% of the country’s GDP and chooses how and who is it is redistributed to. I am not sure what the future will look like, but I would prefer if my children had more choice and not less.

              • Submitted by Dan Landherr on 08/21/2014 - 01:26 pm.

                Choices

                In 1900 the “choice” for your child would likely be work as a manual laborer or starve to death since only half the population completed 8th grade. Increasing education and literacy has been an incredible productivity enhancement for the US economy. Meanwhile the demand for manual labor has plummeted with automation. I have no interest in returning to 1900. I would prefer my children had the opportunity to be a highly productive citizen of the 21st century.

                http://www.historyliteracy.org/download/Sears2.pdf

                • Submitted by John Appelen on 08/21/2014 - 04:47 pm.

                  1900

                  Dan,
                  Who here has recommended going back to 1900 other than Paul?

                  It is interesting that any proposal to stop the growth of government distribution is greeted with historical stories of dying children, Jim Crow laws, etc. I think we have K-12, OSHA, EPA, etc already in our current budget.

                  Thoughts?

                  • Submitted by jason myron on 08/21/2014 - 05:31 pm.

                    Here’s a thought…

                    Stop beating a dead horse…….you clearly need to admit to yourself when you’ve lost an argument and walk away from it.

                  • Submitted by Matt Haas on 08/21/2014 - 07:23 pm.

                    We have those things

                    Because of effort by liberal legislators to get them passed over conservative objection. We bing it up, over and over and over, because we believe that conservatives would see them abolished and return us to the conditions of 1900. We have no reason to believe that conservatives are acting with anything other than malice towards those protected by such laws and agencies, and they never give reason to think otherwise.

    • Submitted by Jay Willemssen on 08/20/2014 - 08:53 pm.

      Well said, Paul

      Thanks for articulating all that.

  16. Submitted by Jay Willemssen on 08/20/2014 - 11:21 am.

    Four Pinocchios = “Whoppers”

    “It is time to abandon this myth. Reagan may have convinced himself he had been snookered, but that belief is based on a fundamental misunderstanding of the deal he had reached.

    Congress was never expected to match the tax increases with spending cuts on a 3-to-1 basis. Reagan appeared to acknowledge this in his speech when he referred to outlays (which would include interest expenses), rather than spending cuts. In the end, lawmakers apparently did a better job of living up to the bargain than the administration did.

    If people want to cite the lessons of history, they need to get the history right in the first place.”

    Sources:
    http://wapo.st/1oRvlDL
    http://wapo.st/1oZK6yk

  17. Submitted by Jay Willemssen on 08/20/2014 - 08:50 pm.

    1950s US: 91-92% top federal tax rate

    Today? 39.6%

    Also…
    Federal government share of GDP
    1950s: 14.8%
    2013: 7.3%

    1950s America sure was a golden time in America, right? More than double the tax rates and double the size of the federal government.

    Sources:
    http://bit.ly/1hewY9H
    http://1.usa.gov/1pg8mBl

    • Submitted by Paul Udstrand on 08/21/2014 - 10:26 am.

      And don’t forget the Organized Labor….

      Union participation in the 50s the highest in US history, a little over 50% compared with something like 10% or 12% today?

      And let’s not forget the wonders of segregation and Jim Crow or booming suicide and depression rates amongst women trapped at home with impossible domestic responsibilities and expectations. The 60s happened for a reason. Women’s lib didn’t come out of nowhere and the younger generations didn’t rebel against paradise. And by the way, EVERYONE wasn’t listening to Elvis either.

  18. Submitted by Paul Udstrand on 08/21/2014 - 09:20 am.

    Speaking of history

    Getting back to the government percentage of GDP for a moment, Historical fantasy rears it’s farcical head once again amongst contemporary small government conservatives. Pushed into a corner by better late than never demands for some kind of actual definition of “small” government beyond “one with limited powers”, they try to talk about GDPs. This business of arguing about Reagan’s numbers is typical fantasy pretending to be history.

    Reagan didn’t get bad advice. On the contrary, Reagan himself was largely clueless, for instance many people have forgotten or are too young to remember that Reagan’s original big complaint about Jimmy Carter was the Panama Canal Treaty and what a disaster that was going to be for America… yeah he was spot-on there. His Vice President was actually right about Reagan’s economics being voodoo economics but fortunately Reagan had actual economists on his team. Being actual economists they weren’t even thinking about the government percentage of GDP, we know this for a fact. If you had asked them at the time they would have told you that pushing that number around a percentage or two was economically irrelevant. We know that their primary concern was something they called: “stagflation”. To the extent that they modified government spending and tax rates, it was to break stagflation, not lower the governments percentage of GDP. They weren’t even really trying to shrink the government, which explains why they didn’t actually shrink the government.

  19. Submitted by Paul Udstrand on 08/21/2014 - 10:10 am.

    Correcting fantasy liberalism

    John writes:

    “From my understanding, you believe that it is best for Americans and the country if the government collects a much higher percentage of the fruits of our labors. Possibly up to 60% of the GDP. And you support giving our enlightened politicians and bureaucrats the power to determine what each of us will receive in the way of education, healthcare, retirement funds, etc. This will not necessarily be based on good choices, saving, investing, continuous improvement, work ethic, risks taken, etc, but on what is “fair”.

    Thereby relieving us citizens of the burden of choosing, saving, investing, thinking, etc.”

    And then asks: “Am I close? How would you correct the paragraph above?”

    The short answer is: “no” your not close or even on the same planet. Your paragraph is the product of your own imagination rather than any “liberal” reasoning and is frankly too incoherent to “correct”.

    Fortunately there’s a simply way to settle this. Why don’t YOU tell us what YOUR ideal tax burden would be for the US. Then you don’t even have to explain how you arrived at that figure, just point us to two or three countries anywhere in the world that are functioning with that tax burden and consistently out-performed the US economy for at least three decades. Show us the countries that produced more wealth, more prosperity, and more personal liberty than the US, following your program.

    • Submitted by Jay Willemssen on 08/21/2014 - 10:50 am.

      Playing the red card is a staple of right-wing rhetoric.

      “the longer it‘s clear that liberals and Democrats are winning an argument, the more likely it becomes that someone is going to get called a ‘commie,’ ‘socialist,’ ‘Bolshevik,’ ‘commie,’ ‘pinko,’ ‘comrade,’ ‘five-year planner.'”

      http://nbcnews.to/YEmJFw

      The red card is logically fallacious in at least two ways – it is both ad hominem and a strawman. Resorting to it is an admission that the person using it is unable to form a coherent, logical, reality-based argument. The analogue to it would of course be calling someone a fascist, but it’s guaranteed that kind of inflammatory rhetoric would never get past moderation filters. Dehumanization is a great way to derail a discussion by attempting to delegitimize another person’s worth and thus whatever they express.

      Also hanging one’s hat on a silly metric like total government expenditure’s share of GDP (which of course illogically co-mingles flow and production concepts, as demonstrated earlier) indicates an inability to grasp rudimentary (ie, first day in class) macroeconomics which are quite clear and logical about national accounting principles. It’s good to further note that not a single OECD country exceeds the arbitrary 60% level of this meaningless metric and that there is a clear correlation between wealth, quality of life, and that metric in the following distribution.

      http://bit.ly/1oV6cIg

      • Submitted by Paul Udstrand on 08/21/2014 - 11:11 am.

        Jay?

        Why do you hate America? 🙂

      • Submitted by Jonathan Ecklund on 08/21/2014 - 11:43 am.

        Jay,

        Your 2nd full paragraph absolutely nails it. Thank you so much for all your well-reasoned and thoughtful posts.
        -Jonathan

        • Submitted by jason myron on 08/21/2014 - 12:57 pm.

          Thanks, Jay

          I see no reason to continue this as you articulated our position to the letter. I’ll see the rest of you at our monthly “Bring America to its Knees” meeting. I believe its Jonathan’s turn to bring the danish.

  20. Submitted by Jay Willemssen on 08/21/2014 - 12:12 pm.

    The glory times of America circa 1900

    No cars, no planes, no radio, no TV.

    The most likely ways to die were pneumonia, tuberculosis, and diarrhea.

    Little kids weren’t the horrible freeloaders they are today. Back then, a real 8-year-old put in 12 hour days, 6 days a week down at the mill for a few pennies per hour, maybe smoked a cigarette or two after work. On the 7th day they went to church for guilt, corporal punishment, and perhaps some special alone time with the pastor.

    Women were “liberated” with no voting rights and flocks of a dozen children, many of whom died before they turned 5.

    And man, was it fun to be a racial minority back then. Boundless freedom, rights, and dignity.

    If only we could leave that kind of “choice” for our children, instead of the oppressive dictatorship they live under now, where a mere 82% of the economy is outside of government hands.

    • Submitted by John Appelen on 08/21/2014 - 01:33 pm.

      Suspect Source

      The 82% number has been shown to be incorrect many times according to many different sources. The Federal spend alone is more than 18%, or do you not believe the factcheck folks.
      http://www.factcheck.org/2012/06/obamas-spending-inferno-or-not/

      According to those sources total government is up to ~38%, which leaves us citizens with ~62% to use as we see fit.

      • Submitted by Paul Udstrand on 08/21/2014 - 04:27 pm.

        suspect source indeed

        The article you point to is two years old and nowhere claims that the fed portion of the GDP is up to 38%. The only place the figure 38% appears is the claim that Obama is responsible for 38% of the fiscal 2009 spending. The percentage of government portion of GDP given in the article is 25.2% for 2009. Or don’t you people believe in reading the articles you point to?

        Jay’s information is clearly more reliable.

  21. Submitted by Paul Udstrand on 08/21/2014 - 01:12 pm.

    Like I said

    “Unfortunately, I have never been able to get an “acceptable” upper limit opinion from any Liberal commenters I have asked. They just say governments needs as much wealth as it needs to provide it’s functions.”

    That’s because the liberals you’ve talking to aren’t irrational. We don’t make policy decisions based on stereotypical thinking or arbitrary tax burden numbers. We live in a democracy and our government does what we ask it do based on the needs and demands of the electorate, not some inflexible tax fantasy. We decide what we want the government to do, and then we figure out how to pay for. When liberals go to war, they pay for it. When you guys to war, you leave the debt to your children. And so it goes.

    “Government collected and redistributed very little money in the 1900’s, meaning citizens for better or worse made choices, took actions and lived with the consequences. Now the government collects nearly 40% of the country’s GDP and chooses how and who is it is redistributed to. I am not sure what the future will look like, but I would prefer if my children had more choice and not less.”

    John, you seriously believe that the children who worked in coal mines and died in the Triangle Shirt Waist fire had more “options” and more opportunities than your children do today? Like I said, let’s repeal the 20th century.

    Again, it’s simple, tell us what your ideal tax burden is and show us two or three countries with that tax burden where children have more opportunity and freedom than they do in the US.

    See, this is the crux of the Libertarian problem, it’s irreconcilably incoherent because oddly enough it has no viable concept of “freedom” i.e. “liberty”. They claim to be all about liberty and freedom while assuming that low taxes delivered more “freedom” and opportunity to child workers at the turn of the century. Even in constant dollars our billionaires today are wealthier than the Robber Barron’s of the Guilded Age yet they’ll tell you that wealth creation has been destroyed by our “high” taxes. When Bill Gates created Microsoft our tax rates were two or three time higher than are now and fifty times higher than they were when James Hill built his rail road yet we’re told taxes destroy freedom and opportunity. What concept of “freedom” can you possibly be operating with? Freedom to smoke in restaurants? What? In the final analysis it’s simply bizarre.

  22. Submitted by Paul Udstrand on 08/21/2014 - 01:24 pm.

    Not to be too enamored with economists by the way

    For much of the last five decades many economics professors taught their students that taxes and government spending were economic black holes akin to expenses rather than public investments. It’s not entirely fair to claim that conservatives cooked up these bizarre tax claims on their own, they did have help from actual economists, primarily from the Chicago School.

    The strange thing is that such bizarre claims could be so persuasive in the first place. Milton Friedman used to claim that his Randian economic system would produce more individual liberty. His followers stomped out of the room every time someone pointed out that the only governments in the world deploying his models were dictatorships, and THAT was in the 60s. By the 70s the new liberals were buying into free market magical thinking, some even started calling it Neo-Liberal economics.

  23. Submitted by Jay Willemssen on 08/21/2014 - 02:22 pm.

    Government Share of GDP, US, 1929-2013

    In graphical form:
    http://postimg.org/image/e2wsdpe99/

    The operative equation:
    G% = G / (C + I + G + X – M)

    Observe how today’s level is below the historical norm and trending down. At the detail level, the 13 years of smallest government since WWII were all budget years under Democratic presidents.

    Median level: 20.1%
    Current level: 18.3% (-1.8% compared to historical median)

    Ergo, non-government = 82%. Simple math.

    Fighting with the official primary source of GDP data and how “government” is defined in the GDP equation (GDP = C + I + G + X – M) is futile, of course, but it’s something that lack of any macroeconomics education might engender. Confusing transfer/flow concepts with output concepts is also indicative of not grasping basic accounting principles. Taking a dollar out of one’s left pocket and putting it in one’s right doesn’t change economic output other than perhaps a slight increase in pants depreciation.

    [Note that US GDP data only goes back to 1929. Anything prior to that is not official or reliable.]

    Source:
    http://1.usa.gov/1oVp75K

    • Submitted by John Appelen on 08/21/2014 - 04:38 pm.

      OMB Has It Calculated

      See Table 1.2 here. The White House has calculated Fed % of GDP for us. And this is the data the other sources are apparently using.
      http://www.whitehouse.gov/omb/budget/historicals

      Federal percent of GDP went as high as 24% and is now about 20% due to GDP growing. Now from what I can tell this is just the Federal costs.

      And our local and state costs almost double this.

      I am not sure what the BEA data is, but it sure does not match the Office of Management and Budget’s records.

  24. Submitted by Paul Udstrand on 08/21/2014 - 04:43 pm.

    Anyways, John is wrong

    Look, the idea that government spending reduces private spending is daft anyways because most government spending actually gives people more money to spend. Social Security payments put money in personal bank accounts every month that people would not otherwise not have. Medicare payments keep money in individual bank accounts by paying medical bills. Government jobs pay salaries that people spend in the economy. Etc. etc. This idea that government spending reduces private sector spending or that government dollars reduce private dollars is stereotypical anti-government thinking based on a collection of economic fallacies. Again, it helps to know what your government actually does and how it functions.

    Look, all economies re-distribute wealth. Economies that collect taxes don’t redistribute wealth more than other economies, they just do it differently, and democracies tend to redistribute wealth differently than totalitarian or dictatorial regimes. The US government was just as involved in redistributing wealth in 1900 as it is now, the difference is more of the wealth went to the wealthy. A problem we’re revisiting today.

    • Submitted by John Appelen on 08/21/2014 - 05:41 pm.

      Agreed Sort Of

      As I said…

      “And you support giving our enlightened politicians and bureaucrats the power to determine what each of us will receive in the way of education, healthcare, retirement funds, etc. This will not necessarily be based on good choices, saving, investing, continuous improvement, work ethic, risks taken, etc, but on what is “fair”.”

      I never said that the money disappears from our economy.

      An example, the reality is that ~15% of my compensation goes to FICA now days. That means I no longer have control over where that money is invested or what rate of return it will earn. We have turned that money over to the politicians and bureaucrats for better or worse.

      My family may have appreciated a cabin to enjoy on weekends, or I could have used it to start a business that would hire employees. These are no longer choices since we gave that freedom up. Now how much more do we want transfer over?

      • Submitted by Paul Udstrand on 08/21/2014 - 10:48 pm.

        Reality?

        “My family may have appreciated a cabin to enjoy on weekends, or I could have used it to start a business that would hire employees. These are no longer choices since we gave that freedom up. Now how much more do we want transfer over?”

        The reality is that you and your family are members of a community and a nation. One of the best if not the best communities and nations in the world. You and your family would have a fraction of a fraction of the “choices” you have available if you lived in Bangladesh or Somalia where you could keep almost all of the fruit of your labor to spend as you wish. You and your family enjoy innumerable benefits as citizens of this country. That citizenship is not free, you don’t get freedom, choices, affluence, or wealth, for nothing.

        You are also not the only citizens, you live in a democracy with millions of other citizens. Citizens in democracies are subject to the laws and polices created by their fellow citizens. Our politicians are elected, and our government bureaucrats function according to the statutes and laws our elected representatives pass by majority vote. These are all elementary observations. As I think I said previously, one can find few books that will explain the nature of civilization and our government, it’s not much of a mystery.

        Well funded democratic governments don’t exercise total control over citizens lives. You do live a nation descending into dictatorship.

        Again I have to ask, exactly what is your ideal tax burden, and give us two or three examples of countries levying that tax burden where you and your family would enjoy more prosperity and have more “choices”?

        • Submitted by John Appelen on 08/22/2014 - 08:30 am.

          Exactly

          “One of the best if not the best communities and nations in the world.”

          By the way my number is 33%. 1/3 for the community and 2/3 for the citizen.

          As you said, this was and is one of the best countries in the world !!!

          What is the interest in significantly changing a winning formula?

  25. Submitted by Jay Willemssen on 08/21/2014 - 05:33 pm.

    “I am not sure what the BEA data is”

    There it is.

  26. Submitted by Jay Willemssen on 08/21/2014 - 06:03 pm.

    11.7%: America’s Effective Personal Tax Rate in 2013

    rate = Personal current taxes / Personal income

    How do we manage under such an oppressive environment where more than 88% of our income stays in our pockets?

    Sources:
    http://1.usa.gov/1kZ4Tac
    http://1.usa.gov/VJbJVa

  27. Submitted by Jay Willemssen on 08/21/2014 - 07:00 pm.

    Saint Ronald Reagan Nearly Doubled SECA rates

    He must really have despised business formation, lake cabins, and freedom.

    How does America even have 30 million business enterprises and over 4 million seasonal housing units under such oppressive Reaganite SECA conditions?

    Why can’t we go back to the glory days of 1950 or 1900, when everyone had a cabin and their own successful business?

    Sources:
    http://www.ssa.gov/oact/progdata/taxRates.html
    http://factfinder2.census.gov/bkmk/table/1.0/en/BP/2012/00A1
    http://factfinder2.census.gov/bkmk/table/1.0/en/NES/2012/00A1

  28. Submitted by Jay Willemssen on 08/22/2014 - 09:49 am.

    Do I believe objective facts?

    Yes. Yes, I do. It’s a terrible habit, I know.

    Personal current taxes divided by personal income in the US was 11.7% in 2013. It’s indisputable. Check the data, do the division.

    Not understanding what words mean doesn’t mean a hard fact is wrong. It means the confused person is wrong because they don’t understand. The remedy to this is to spend time learning.

    “payroll taxes by themselves…”

    Payroll taxes aren’t part of personal current taxes. See above about paying attention and learning the meaning of words. The proper national accounting term for payroll taxes is “Contributions for government social insurance”. If one follows the links I provide, one can see this for oneself. Or one can consult the BEA’s glossary, a proven tactic for better understanding what words mean:

    http://www.bea.gov/faq/index.cfm?faq_id=550

    It’s a shame the payroll tax rate is so high for self-employed people. That freedom-abhorring Reagan really stuck it to freedom-loving citizens with his doubling of its rate. If only the system would magically pay for itself in some other manner than matching expenditures to revenues.

    One other thing to make note of when speaking of national averages is to not confound oneself with the nation. These are two different units of analysis, but sometimes can be difficult to distinguish, even for astute observers.

  29. Submitted by Jay Willemssen on 08/22/2014 - 10:43 am.

    2 OECD countries fall below the magic 33% threshold of freedom

    Korea and Mexico

    Mexico, of course, is the poorest OECD country by far, with a GDP per capita less than 1/2 the OECD average and 1/3 that of the United States.

    How’s that “winning formula” working out for Mexico?

    It’s good to identify where true freedom is in the world today, so that freedom-loving people can then relocate to one of these two countries to make a boundless fortune, live a life of pure liberty, and have a nice lake cabin.

    • Submitted by John Appelen on 08/22/2014 - 11:19 am.

      So

      We are currently at 38% and as Paul said the most incredible country in the world. Why again would we want to route more money through our bureaucrats?

  30. Submitted by Jay Willemssen on 08/22/2014 - 11:34 am.

    Reviewing the checklist

    √ overestimate their own knowledge and ability, and underestimate that of acknowledged experts.
    √ insist that their alleged discoveries are urgently important.
    √ rarely, if ever, acknowledge any error, no matter how trivial.
    √ love to talk about their own beliefs, often in inappropriate social situations, but they tend to be bad listeners, being uninterested in anyone else’s experience or opinions.

    • Submitted by John Appelen on 08/22/2014 - 03:15 pm.

      Absolutely

      Yes, you did an excellent job of meeting the expectations of a liberal commenter. Congratulations !!!

      • Submitted by jason myron on 08/22/2014 - 09:51 pm.

        “Yes, you did an excellent job of meeting the expectations of a liberal commenter. Congratulations !!!”
        Translation…”I’ve got nothing…I better take this back to my blog where I can talk to myself.”

  31. Submitted by Jay Willemssen on 08/22/2014 - 03:53 pm.

    Confucius, Socrates, Russell, Pavlov, and Darwin keep nailing it

    Dunning, too.

    It’s comforting to see how those great minds understood the nature of their opposites and how it remains relevant through time, though surprising they failed to expound upon oclwd.

  32. Submitted by Jay Willemssen on 08/22/2014 - 04:22 pm.

    “Rhetorical Question, Colloquial, Childish Verbal Attack”

    “I know you are but what am I
    (rhetorical question, colloquial, childish) Assertion that an insult made by the party to whom the phrase is directed is actually true of that party, and not of the person using the phrase. Usually considered to be a playground taunt.”
    http://en.wiktionary.org/wiki/I_know_you_are_but_what_am_I

    “playground taunt
    n., An insult or phrase of the type that is traditionally used by children against one another; a childish verbal attack.”
    http://en.wiktionary.org/wiki/playground_taunt

Leave a Reply