2012 Lie of the Year: Government is affordable

unlike you, I don’t begrudge the President the perks of his office. Isn’t that quite marxist of you to envy his success?

nonpartisan on April 12, 2013 at 10:07 AM

Not when we’re paying for them.

Resist We Much on April 12, 2013 at 11:52 AM

Until tax rates returns to pre-Bush levels, this country’s fiscal policy remains permanently stuck in the past. Even with sequester spending cuts, revenue remains far below outlays.

bayam on April 12, 2013 at 9:35 AM

PUHLEASE. Further increasing tax rates when countries with expanding economies will NOT lead to higher revenue.

Washington Post:

But here’s the important point: the Clinton plan was never intended to achieve a balanced budget. After the bill’s passage, the Congressional Budget Office estimated that the deficit would decline modestly — from $290 billion in 1992 to $200 billion in 1998. In the phrase of the era, there were still “deficits as far as the eye could see.”

Indeed, the Clinton budget plan was actually slightly smaller, on an inflation-adjusted basis, than the deficit-reduction package signed into law in 1990 by President George H.W. Bush ($770 billion versus $830 billion). Many Republicans also opposed that deal — which Boxer supported — because it included higher taxes.

Fast forward to 1995. The Democrats lost control of the House and the Senate, largely because of bruising budget battle. Clinton’s fiscal year 1996 budget again proposes $200 billion deficits every year for the next five years. So, again, the target in 1998 (when surpluses later emerged) was a deficit of $196 billion.

But Republicans immediately set the goal of achieving a balanced budget within seven years. After resisting for a few months, Clinton shocked many fellow Democrats by announcing that he, too, would embrace the idea of a balanced budget.

As The Washington Post editorial page put it at the time, Republicans had forced Clinton’s hand: “Mr. Clinton’s new position on the budget is much better than the old one. He should have taken it six months ago. The Republicans have driven him to say that he too wants, if not to balance the budget, at least to get the deficit into the neutral zone.”

But even Linden’s argument about 1998 is one-sided. He ignores the substantial shift in the policy debate in Washington that occurred because of the GOP takeover of Congress. He also glosses over the fact that the government ended up with a gusher of revenue that had little to do with Clinton’s 1993 budget deal: capital-gains taxes from the run-up in the stock market, as well as taxes paid on stock options earned by technology executives.

Clinton, in essence, was lucky to become president just as a revolution in computer and information technologies was unleashed.

From 1992 to 1997, CBO estimated, revenue increased at an annual average of 7.7 percent in nominal terms, or about 2.4 percentage points faster than the growth of the gross domestic product, the broadest measure of the economy. CBO Deputy Director James L. Blum in 1998 attributed only 1 percentage point of that extra tax revenue to the 1993 budget deal. The rest, he said, came from capital gains.

Between 1994 and 1999, realized capital gains nearly quadrupled, the CBO concluded, with taxes on those gains accounting for about 30 percent of the increased growth of individual income tax liabilities relative to the growth of GDP.

Resist We Much on April 12, 2013 at 11:59 AM