History is clear: Its the spending, stupid

Dr. Paul Kengor's picture

We have failed to heed the lessons of economic history, with terrible consequences for our economy and country. And the most crucial of those lessons, particularly since the start of LBJs Great Society, is this: deficits have been caused not by a lack of income-tax increases but by recession and, most of all, by excessive government spending.

The failure to learn that lesson is again on painful display, as President Obama travels the country pointing the finger at the rich for not forking over enough income. By this narrative, the 36 percent income-tax rate paid by the wealthiest Americans is somehow robbing the poorest Americans, whose income-tax rate is zero percent; something one would never know from Democrats class rhetoric.

Because I comment on this topic so frequently, especially in the context of Reaganomics, I constantly deal with these issues from a historical perspective. Here, I would like to make it easy for everyone to see the numbers themselves and understand the root of the problem.

The answers are as easy as googling the words historical tables deficit. Two sources pop up: CBO historical tables and OMB historical tables. CBO is Congressional Budget Office; OMB is Office of Management and Budget. These are the official go-to sources for data on deficits, revenues, and government expenditures.

Either source will work. To keep it simple, Ill focus on the OMB numbers. At the OMB link is Table 1.1, titled, Summary of Receipts, Outlays, and Surpluses or Deficits: 1789-2016. That is an official scorecard of spending by the federal government since the founding of the republic.

Looking closely at the chart is an eye-opening experience. As the first two columns show, receipts (i.e., revenues) and outlays (i.e., expenditures) moved up and down throughout our history. In 1965, however, something historically unusual, something literally deviant, began: Spending increased every single year, non-stop, consistently, without exception, into the Obama presidency, from 1965-2009.

There are few constants in the universe: gravity, the sunrise, the oceans, the moon. Add another: spending by the federal government; it rises every year.

Significantly, revenues dont increase every year. The most dependable reason for declines in revenues is not a lack of tax increases, or high enough income-tax rates, but recessions. Since 1965, as the data shows, annual revenues declined seven separate times.

At the start of the Great Society, in 1965, revenues and expenditures were nearly equal, with expenditures only slightly higher, leaving a manageable deficit of $1.4 billion. By 2009, however, annual expenditures ($3.5 trillion) had far outpaced annual revenues ($2.1 trillion), leaving a record deficit of $1.4 trillion.

Significantly, the biggest one-year drop in revenues was from 2008-9, when they declined from $2.5 trillion to $2.1 trillion. Worse, President Obama and the Democratic Congress responded with an $800-billion stimulus package that didnt stimulate. In other words, they responded in the worst way: with another $800 billion in government spending. That further mushroomed the record deficits/debt we face. The math is very simple.

Government spending, which has hampered growth rather than spark growth, caused this fiscal crisis.

It is crucial to realize that this spending addiction is a new thing in American history. Previous generations of politicians showed much more restraint. Prior to 1965, expenditures were not following an ever-upward trajectory; expenditures decreased year-to-year frequently, nearly two-dozen times between 1901 and 1965, even during the administrations of big-government liberal presidents, like Woodrow Wilson and Franklin Roosevelt.

This changed in the mid-1960s, when the federal government began a serious spending problem.

How do we communicate the crisis to the wider public, beyond charts and data?

I suggest comparing the situation to a household: Your familys annual revenue has probably not enjoyed a 40-year-plus consecutive increase. For some years, you were paid less. Perhaps you lost a job, took a pay cut, or switched jobs. Maybe your spouse was laid off, or left work to have a child. You bought a house one year, another 20 years later, spent a ton of money on your childrens college education, lost on a bad investment.

I doubt your familys yearly revenue has been a steady upward climb since 1965. Life obviously doesnt work that way.

And yet, imagine if each successive year, without fail, you spent considerably more money than the previous, including money that isnt yours. You added debt each year, creating massive debts for your family and children. You paid taxes with a credit card.

How long would this go on before you ended up with a credit downgrade or in jail? Get the picture?

If President Obama and the Democrats dont, they should. Warren Buffet certainly should. Our fiscal crisis is due not to insufficient income taxes but uncontrolled, undisciplined spending.

To paraphrase Bill Clintons 1992 campaign slogan, Its the spending, stupid.

[Dr. Paul Kengor is professor of political science at Grove City (Penn.) College and executive director of The Center for Vision & Values. His books include The Crusader: Ronald Reagan and the Fall of Communism, and his latest release, Dupes: How Americas Adversaries Have Manipulated Progressives for a Century.]

roundabout
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Puzzled by just what McCain........(To the good doctor)

.........might have done his first two full years with the mess he helped Bush make!

Since the conservatives indicate that if they had won we would have full employment and out of debt with a balanced budget by now, why haven't they told the President how they would have done it.

I mean besides giving the oil companies more tax breaks and reducing taxes on the rich and corporations. (That one we have been trying ever since Bush reduced their taxes and where has it gotten us?

How about the wars? Would he have sent in a half million more troops maybe?
Would he have fully trained the Iraqis and the Afghans how to run their country and control the Taliban and "The Camp?"
Would he have pumped more oil out of Iraq and kept the dough?

Would he have sent our troops to Libya? I don't know where he would have gotten them but I'm sure he wouldn't have cooperated with NATO. Macho, you know.

Would he have let all the major banks fail and our car companies?

How would the TEAS have handled McCain?

We were so destroyed over the past ten years, that Moses couldn't have resolved it quickly even with some new Tablets. I also don't see a Saviour among the candidates either. Maybe Sarah or Paul.

kcchiefandy
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I don't know, Roundie...

...but he probably has already done a damn sight more than you ever have for this nation. I could be wrong, I don't know you, but unless you have a Purple Heart or a Service Cross or a Congressional Medal of Honor, he'd have EARNED an opportunity to represent the electorate who would have put him into office on the simple fact he sacrificed his health and well-being in our defense. Putting your life on the line speaks volumes more in character than playing on your race for advancement & opportunities. You can postulate as much as you want (as you seem to do about almost EVERYTHING), but some put up or shut up. Enjoy regurgitating the CNN, DNC, and WH party line of how Bush ruined everything. You're as obtuse as Clinton; too bad he didn't get AIDS from his adulteries. At least he enjoyed life after the GOP destroyed our greatest post-WWII threat.

roundabout
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kchiefandy

I didn't say anything about Mccain's hero status. I worked in his first try for the Presidency---went to his meetings, bought his book.
He was too old and strange the second time however. And Palin!

My point was President OBAMA NOR McCain COULD HAVE RESOLVED THIS TERRIBLE PROBLEM WITH JOBS WE NOW HAVE IN TWO YEARS.
It is going to take over five years, or even more, depending.

As to me, I am a veteran of many years ago. However, that alone wouldn't make me or McCain a good President.

I think Truman said it best: "I feel sorry for Ike because for years now he has said, do this, do that, and they did it but now it won't amount to much in Washington."

kcchiefandy
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Ok, Roundie...

...and thanks for your service.

lion
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Kengor and spending

Dr. Kengor, another of the right wing parrots from Grove City College, has spoken.

Government spending for the benefit of the American people is bad; government spending for wars is OK. He does not care how much war spending had contributed to the deficit

This is how the Tea Party Republicans (a.k.a. John Birch Society Republicans,et.al) view American politics.

Observerofu
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Lion economics is not your strong so is it?

Let's see if you can answer this?

If you spend more than you take in is it good or bad?

roundabout
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OOUY: mine either!

How do you feel about war spending unnecessarily?

About Oil company tax credits?

About bank regulations?

About health insurance for everyone?

About Pharmaceutical regulations? (a new recall every week on TV)

About veterans hospitalization and benefits?

About the destruction of our planet?

About our collapsing infrastructure and lack of water supplies?

Do you thin Corporations have those things #1 on their list?

About Americanizing the middle east? (like we have Iraq and Afghanistan)?

About too much credit for construction that is unneeded (by corporations)?

Should the States be all the time begging Washington for money for roads, schools, cops, firemen, disasters, unemployment money, and grants for colleges, etc.?
Or should Georgia, for instance, tax Georgians enough to handle all that themselves?

Can't have your cake and eat it too!

conditon55
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Hi Ho Hi Ho The debts just grow and grow.

$14,000,000,000.00 in debt.
300,000,000 people in the USA.

What is that ? $46,000.00 in debt for every man woman and child in the country.

Time for those who have to ante up.

Time to prioritize the nation ahead of the special interests.

Cancel the foreign wars. We cannot afford them.
Tax Big oil, They got money falling out of their pockets all over the place.
Tax big coal.
No more having Americans pay 10 times the rate for prescription drugs as other countries. We cannot bankrupt the country to bankroll the "health care business"

Last fall Sec of Def Gates stepped up and said, here is $100B in spending the at the pentagon does not even want. Cut defense spending - big time. Why are we chasing Arabs riding across the desert on dirt bikes with M1A1 tanks It don't make no cent.

Oh yeah, rich folks Time to pull the weight with everyone else. No one is too special to contribute their fair share.

Wall Street. Time to pay up. No more free rides.

United we are strong. Divided by our "special" interests, we may be doomed. Lets act together before it gets to be too late.

conditon55
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It is $14,000,000,000,000.00 in debt a growin'

And if having everyone pay their fair share will not balance the budget or pay the debt, then what will ?

For sure perpetuating the idea that some narrow isolate "special" interests are more special than the overall financial health of the country will not help either.

Time to half the folks pay their far share.

If you hitch me to the sled and tell me to pull, then the rich and prividged dog next to me better be pullin just as hard.

Else I might bite 'em on the leg.

roundabout
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condition bad!, 55

Whole lot of spelling and math errors!

Hard to concentrate on what you say for all that!

You wrote billions and it is trillions. (math is still a major problem for USA.)

Unfortunately, all of what you say won't even balance the budget----much less pay any of the debt.

You are right however about the TEAS screwing up a vote that would have helped.

Observerofu
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Oh now you've gone and done it

you used logic and research. You should just have said make the Rich pay more and it will fix everything.

Now the Class Warriors will be here soon to tell you just how wrong you are and that the "Rich" don't really pay anything at all.

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