Waiting for Fitzgerald

[Penske_Account]

Originally posted by Hank Chinaski
Sometimes when i read these long arguments I start thinking I'm way too lacking in substance and knowledge to post here. then I remember Penske started the PB and I realize I am far closer to original intent than most who post here today.

On Infirm I'd say 60% of the posts were funny or at least intended to be. We'd catch a tax thread every few months but that was it.

Right on! I miss Plated's socks. [sniff] (npi)

[Sidd Finch]

Originally posted by Spanky
Only a minority of Dems in Congress and the Senate supported NAFTA. A majority of Repubs in both houses was the reason NAFTA passed. I supported Kosovo and Iraq. Many Dems did not support Kosovo. The only congress in the past fifty years to have balanced a budget is a Republican congress. Congress is in charge of the budget (in case you have not read the constitution lately).

I am sure that Clinton had nothing to do with any of those things, and certainly the Repub Congress would have raised taxes enough to generate the revenue that was needed to balance the budget.

Whoa! A flock of pigs just flew past my window!

[Sidd Finch]

Originally posted by Captain
I'm afraid this is not true. The House came under the control of the Democrats in 1954; that year, the deficit as a percentage of GDP was 0.3%, down from 1.7% in the last year of the Republican Congress. The Democratic house then proceeded to balance the budget on a regular basis into the Nixon Administration (the 1969 budget was in surplus). The data is on the white house site at
http://www.whitehouse.gov/omb/budget...s/hist01z3.xls .

It is pretty clear that the Great Society legislation had less to do with the initial budget deficits than the Vietnam War, and the inflation caused first and foremost by the oil embargo during the Ford and Carter administrations also had a huge impact on creating a period of structural deficits in the late 1970s and early 1980s.

And the deficit under the Carter presidency, with a Dem Congress -- something that Reagan the candidate railed against -- looks like a paragon of fiscal prudence compared to what we've seen under any Repub administration since.

[Secret_Agent_Man]

Originally posted by Spanky
In a growing economy you should consistently reduce the deficit without raising taxes. Since 1960, as far as I can see on that chart, the only congress that was able to pull this off was the Repub congress of the late 1990s. Every other congress has not been able to sustain significant and continuous deficit reduction during times of growth (especially without raising taxes).

If the economy continues to grow this decade, and we continue to decrease the deficits, that will be twice for the Republican congress.

Ok, sport, but you are compeltely shifting your argument.

S_A_M

[Not Bob]

Originally posted by Spanky
Dems keep referring to this act was so significant. During this year we increased spending but increased taxes even more. After the Republican took control we were able to get rid of the rest of the deficits by not raising taxes (and even cutting some). After the 1993 budget act long term interest rates stayed high (I think they even increased). It was only after a Repub congress did long term interest rates come down and growth really picked up thereby balancing the budget.

We've had this discussion recently. You're wrong. http://www.federalreserve.gov/releas...a/m/tcm30y.txt

The 30 year rate in November 1992 was 7.61%. In January 1993 it was 7.34%, and it dropped to 6.81% by June 1993 and to 6.25% by December 1993.

eta There was a spike in interest rates in 1994 that economists generally (I think) attribute to worldwide economic factors. One could, I suppose, blame it on Clinton, but that doesn't change the fact that the bond traders liked his deficit reduction plan -- which passed by one vote in 1993.

[Spanky]

It was 7.53 when Clinton got elected. It climbed to 8.8 in November 1994. The Republicans got elected in November 1994 and since the Republican Congress took control it has declined steadily to 5.4. In fact it really started to climb right after the 93 deficit reduction act was passed. Clearly the markets did not have much confidence in the accomplishements of that act. The market is not big on tax increases to solve the deficit problem.

I also seems like the deficit spending of the recent Congress has not caused a spike in the interest rates. It seems the markets understand this was what was needed to get the economy rolling again.


11/1992 7.61 Clinton Elected.
12/1992 7.44
01/1993 7.34
02/1993 7.09
03/1993 6.82
04/1993 6.85
05/1993 6.92
06/1993 6.81
07/1993 6.63
08/1993 6.32
09/1993 6.00
10/1993 5.94 Deficit Reduction act passed
11/1993 6.21
12/1993 6.25
01/1994 6.29 Deficit Reduction act kicks in.
02/1994 6.49
03/1994 6.91
04/1994 7.27
05/1994 7.41
06/1994 7.40
07/1994 7.58
08/1994 7.49
09/1994 7.71
10/1994 7.94
11/1994 8.08 Repubican's elected to Congress.
12/1994 7.87
01/1995 7.85 Republicans take control of Congress
02/1995 7.61
03/1995 7.45
04/1995 7.36
05/1995 6.95
06/1995 6.57
07/1995 6.72
08/1995 6.86
09/1995 6.55
10/1995 6.37
11/1995 6.26
12/1995 6.06
01/1996 6.05
02/1996 6.24
03/1996 6.60
04/1996 6.79
05/1996 6.93
06/1996 7.06
07/1996 7.03
08/1996 6.84
09/1996 7.03
10/1996 6.81
11/1996 6.48
12/1996 6.55
01/1997 6.83
02/1997 6.69
03/1997 6.93
04/1997 7.09
05/1997 6.94
06/1997 6.77
07/1997 6.51
08/1997 6.58
09/1997 6.50
10/1997 6.33
11/1997 6.11
12/1997 5.99
01/1998 5.81
02/1998 5.89
03/1998 5.95
04/1998 5.92
05/1998 5.93
06/1998 5.70
07/1998 5.68
08/1998 5.54
09/1998 5.20
10/1998 5.01
11/1998 5.25
12/1998 5.06
01/1999 5.16
02/1999 5.37
03/1999 5.58
04/1999 5.55
05/1999 5.81
06/1999 6.04
07/1999 5.98
08/1999 6.07
09/1999 6.07
10/1999 6.26
11/1999 6.15
12/1999 6.35
01/2000 6.63
02/2000 6.23
03/2000 6.05
04/2000 5.85
05/2000 6.15
06/2000 5.93
07/2000 5.85
08/2000 5.72
09/2000 5.83
10/2000 5.80
11/2000 5.78 Bush elected
12/2000 5.49
01/2001 5.54
02/2001 5.45
03/2001 5.34
04/2001 5.65
05/2001 5.78
06/2001 5.67
07/2001 5.61
08/2001 5.48
09/2001 5.48
10/2001 5.32
11/2001 5.12
12/2001 5.48
01/2002 5.45
02/2002 5.40

[Captain]

I'm not going to question how markets respond or what high or low long term rates mean, because it's simply not my area. But let me ask, I see a lot of numbers in the 5s, 6s, and 7s, with a few in the 8s. I look historically at numbers that were up in the teens in the 80s.

I know some of us may make our living off a spread of a lot less than a point, but for the overall economy, aren't all of these numbers reasonably healthy, especially compared to the 70s and 80s?

My only point here is to say that whether there is a Democratic or Republican Congress or President, we've all got to say that the period from 1990 through today looks a lot better than the period from 1970 to 1990.

[Sidd Finch]

Originally posted by Spanky
It was 7.53 when Clinton got elected. It climbed to 8.8 in November 1994. The Republicans got elected in November 1994 and since the Republican Congress took control it has declined steadily to 5.4. In fact it really started to climb right after the 93 deficit reduction act was passed. Clearly the markets did not have much confidence in the accomplishements of that act. The market is not big on tax increases to solve the deficit problem.

I also seems like the deficit spending of the recent Congress has not caused a spike in the interest rates. It seems the markets understand this was what was needed to get the economy rolling again.

Shockingly, there are other factors influencing interest rates besides the size of the US deficit. Like the money supply which, also shockingly, is somewhat higher now than it was in 1993.

Put differently, Bush has China to thank for keeping the US afloat, and Bush has left us a bit more vulnerable to the Chinese government than I, for one, feel comfortably with.


And while I would never, ever question the wisdom of the market with you --- after all, this is the same market that determined that companies like Webvan and Red Gorilla were worth umpteen billion dollars --- I would suggest that anyone who bet against the deficit reduction act lost.

Or, is it your position that the surplus would have been exactly the same size if government revenues had not increased? (Wait, let me guess -- the Clinton tax increases stifled enterpreneurs and prevented the US from seeing any economic growth in the 1990s -- right?)

[Spanky]

Originally posted by Sidd Finch
I am sure that Clinton had nothing to do with any of those things, and certainly the Repub Congress would have raised taxes enough to generate the revenue that was needed to balance the budget.

Whoa! A flock of pigs just flew past my window!

Gingrich would have balanced the budget while cutting taxes. The only thing that stopped him from cutting more taxes and spending was Clinton.

[Sidd Finch]

Originally posted by Secret_Agent_Man
Ok, sport, but you are compeltely shifting your argument.

S_A_M

That's because his argument is absurd. You cannot judge the health of a balance sheet by looking only at one half. In traditional Repub fashion, that's what Spanky does.

The Repub cuts -- yes, the Repub congress made cuts under Clinton (we won't get into the reasons -- but let's just say they were motivated by a lot more than fiscal prudence) -- were nowhere near enough to create a balanced budget, let alone a surplus, had taxes not been raised.

Spanky is in deep denial here. Bush tax cuts are working! The recession was short and shallow! But it was long and deep enough to cause a few trillion of debt! The deficit will be eliminated in, um, well, another 8-12 years of unprecedented growth! The tax cuts and spending increases have nothing to do with it!

And everything in Iraq is going swimmingly! Just as we planned!

[Sidd Finch]

Originally posted by Spanky
Gingrich would have balanced the budget while cutting taxes. The only thing that stopped him from cutting more taxes and spending was Clinton.

Yes, I'm sure. Once he got to the front of the plane, he would have done that important work.

[Spanky]

Originally posted by Sidd Finch
Shockingly, there are other factors influencing interest rates besides the size of the US deficit. Like the money supply which, also shockingly, is somewhat higher now than it was in 1993.

With bond markets it call comes back to fiscal discipline. Greespan will cut the interest rates when he thinks the economy is handled well. The long term interest rates will come down if they think the deficit will stay under control. A runaway buget deficit in a growing economy leads to inflation. The only way to get the inflaction under control is raise interest rates.

Originally posted by Sidd Finch Put differently, Bush has China to thank for keeping the US afloat, and Bush has left us a bit more vulnerable to the Chinese government than I, for one, feel comfortably with.

People invest in US bonds because they are considered the most stable and dependable in the world. The fact that people buy them shows their confidence in them.

Originally posted by Sidd Finch And while I would never, ever question the wisdom of the market with you --- after all, this is the same market that determined that companies like Webvan and Red Gorilla were worth umpteen billion dollars --- I would suggest that anyone who bet against the deficit reduction act lost.

Now you are confusing the stock market with the bond market. Clinton raised spending higher than the growth rate in a growing economy and raised taxes. This leads to inflation. That is what freaked the markets out. If the Repubs had not been elected in 94 we were headed for trouble and the markets knew it. Raising spending faster than the growth of the economy and raising taxes to cover it in a growing economy is a sure fire formula for infation.

Originally posted by Sidd Finch Or, is it your position that the surplus would have been exactly the same size if government revenues had not increased? (Wait, let me guess -- the Clinton tax increases stifled enterpreneurs and prevented the US from seeing any economic growth in the 1990s -- right?)

If Gingrich had gotten his way the surpluses would have been bigger and we would have cut taxes much more than they were raised by Clinton. Unfortunately Clinton would rather shut down the government than let that happen.

[Spanky]

Originally posted by Captain
I'm not going to question how markets respond or what high or low long term rates mean, because it's simply not my area. But let me ask, I see a lot of numbers in the 5s, 6s, and 7s, with a few in the 8s. I look historically at numbers that were up in the teens in the 80s.

I know some of us may make our living off a spread of a lot less than a point, but for the overall economy, aren't all of these numbers reasonably healthy, especially compared to the 70s and 80s?

My only point here is to say that whether there is a Democratic or Republican Congress or President, we've all got to say that the period from 1990 through today looks a lot better than the period from 1970 to 1990.

The Bond markets understand that Congress is in charge of budgets. Once the Repubs took control of congress the rates dropped from 8 to 5. There really is no mystery.

[Spanky]

Originally posted by Sidd Finch
Yes, I'm sure. Once he got to the front of the plane, he would have done that important work.

Gingrish actuall passed such a budget. It existed and would have gone into effect except Clinton vetoed it.

[Spanky]

Originally posted by Sidd Finch
And the deficit under the Carter presidency, with a Dem Congress -- something that Reagan the candidate railed against -- looks like a paragon of fiscal prudence compared to what we've seen under any Repub administration since.

Again you focusing on the White House and not Congress. I can understand why uneducated people do this - why you?