As a general practice I don’t usually acknowledge or engage ignorant people, albeit as it’s been a slow week and the (ring gear) went out on my friend Stacy’s truck, ..the vehicle that I had designs on borrowing to transport the compost I require for my garden, – ..so I’m making an exception today.
On May 21, and/or, Wednesday last, I received the following from an individual who I’ve decided to call; Mr. Babyspittle.
Spending has gone DOWN drastically under Obama.
The deficit has been reduced at the fasted rate in 60+ years.
If you right wing morons knew how to factcheck, you wouldn’t vote against your own stated interests.”
I address my detractor as “Mr. Babyspittle,” as women are (unequivocally) not that stupid, ..nor that rude.
(FYI). Mr. Babyspittle has a website, (an interesting website).
Check it out…
Mr. Babyspittle’s lead-in on his website is; …
How stupid are conservatives? They think the deficit has grown under Obama. Can you believe that? 1.2 trillion before Obama to half that amount this year means the deficit is growing to mentally ill conservatives. Conservatives have exclusive ownership of the idiot gene.
The history of the United States public debt started with debt incurred during the American Revolutionary War by the federal government of the United States, after its formation in 1789.
The United States has continuously held public debt since then, except to the native Americans for about a year during 1835–1836. To allow comparisons over the years, public debt is often expressed as a ratio to gross domestic product (GDP).
Historically, US public debt as a share of GDP increased during wars and recessions, and subsequently declined.
The United States public debt as a percentage of GDP reached its highest level during Harry Truman’s first presidential term, during and after World War II.
Public debt as a percentage of GDP fell rapidly in the post-World War II period, and reached a low in 1973 under President Richard Nixon.
The debt has consistently increased since then, except during the presidencies of Jimmy Carter and Bill Clinton.
Public debt as a share of GDP rose sharply in the late 2000s, in the wake of the Great Recession.
Except for a year during 1835–1836, the United States has continuously held a public debt since the US Constitution legally went into effect on March 4, 1789.
During the American Revolution, the Continental Congress, under the Articles, amassed huge war debts, but lacked the power to service these obligations through taxation or duties on imports.
On the founding of the United States, the financial affairs of the new federation were in disarray, exacerbated by an economic crisis in urban commercial centers.
In 1790, Secretary of the Treasury Alexander Hamilton pushed for Congress to pass a financial plan, called the First Report on the Public Credit, a controversial part of which involved the federal government assuming state debts incurred during the Revolutionary War.
Northern states had accumulated a huge amount of debt during the war, amounting to $21.5 million, and wanted the federal government to assume their burden.
The Southern states, which had lower or no debts, whose citizens would effectively pay a portion of this debt if the federal government assumed it, were disinclined to accept the proposal.
Some states, including Virginia, had already paid off almost half of their debts, and felt that their taxpayers should not be assessed again to bail out the less provident, and further argued that the plan was beyond the constitutional power of the new government.
James Madison, then a representative from Virginia, led a group of legislators from the south in blocking the provision and prevent the plan from gaining approval.
The plan was finally adopted as part of the Compromise of 1790, as the Funding Act of 1790.
The Southern states extracted a major concession from Hamilton in the recalculation of their debt under the fiscal plan. For example, in the case of Virginia, a zero-sum arrangement was contrived, in which Virginia paid $3.4 million to the federal government, and received exactly that amount in federal compensation.
The revision of Virginia’s debt, coupled with Potomac residence issue, ultimately netted it over $13 million.
Another result of federal assumption of state debts was to give the federal government much more power by placing the country’s most serious financial obligation in the hands of the federal government rather than the state governments. The federal government was able to avoid competing in interest with the States.
The debts of the federal government on January 1, 1791 amounted to $75,463,476.52, of which about $40 million was domestic debt, $12 million was foreign debt, and $18.3 million were state debts assumed by the federal government, of the $21.5 million that had been authorized.
To reduce the debt, from 1796 to 1811 there were 14 budget surpluses and 2 deficits. There was a sharp increase in the debt as a result of the War of 1812.
In the 20 years following that war, there were 18 surpluses. The United States actually paid off its debt entirely in January 1835, only to begin accruing debt anew by 1836 (the debt on January 1, 1836 was $37,000).
Another sharp increase in the debt occurred as a result of the Civil War. The debt was just $65 million in 1860, but passed $1 billion in 1863 and reached $2.7 billion by the end of the war.
During the following 47 years, there were 36 surpluses and 11 deficits. During this period 55% of the national debt was paid off.
Debt increased again during World War I (1914–1918), reaching $25.5 billion at its conclusion. This was followed by 11 consecutive surpluses that saw the debt reduced by 36% by the end of the 1920s.
Warren G. Harding was elected president in 1920 and believed the federal government should be fiscally managed in a way similar to private sector businesses. He had campaigned in 1920 on the slogan, “Less government in business and more business in government.”
Under Harding, federal spending declined from $6.3 billion in 1920 to $5 billion in 1921 and $3.3 billion in 1922. Over the course of the 1920s, the national debt was reduced by one third.
Warren G Harding was a conservative*
The decrease was even greater when the growth in GDP and inflation is taken into account. Debt held by the public was $15.05 billion or 16.5% of GDP in 1930.
When Roosevelt took office in 1933, the public debt was almost $20 billion, 20% of GDP.
Decreased tax revenues and spending on social programs during the Great Depression increased the debt and by 1936, the public debt had increased to $33.7 billion, approximately 40% of GDP.
During its first term, the Roosevelt administration ran large annual deficits of between 2 and 5% of GDP. By 1939, the debt held by the public had increased to $39.65 billion or 43% of GDP.
The buildup and involvement in World War II during the presidencies of Franklin D. Roosevelt and Harry S. Truman led to the largest increase in public debt. Public debt rose over 100% of GDP to pay for the mobilization before and during World War II.
Public debt was $251.43 billion or 112% of GDP at the conclusion of the War in 1945 and was $260 billion in 1950.
After World War II…
The public debt fell rapidly after the end of World War II, as the U.S. and the rest of the world experienced a post-war economic expansion.
Unlike previous wars, the Korean War (1950–53) was largely financed by taxation and did not lead to an increase in the public debt.
Growth rates in Western countries began to slow in the mid-1960s. Beginning in the mid-1970s and afterwards, U.S. national debt began to increase faster than GDP.
The public debt reached a post-WWII low of 24.6% in 1974.
In 1974, Congressional Budget Act reformed the budget process to allow Congress to challenge the president’s budget more easily and as a consequence deficits became increasingly difficult to control.
National debt held by the public increased from its post-World War II low of 24.6% of GDP in 1974 to 26.2% in 1980.
Debt held by the public relative to GDP rose rapidly again in the 1980s. President Ronald Reagan’s economic policies lowered tax rates (Reagan slashed the top income tax rate from 70% to 28%, although bills passed in 1982 and 1984 later partially reversed those tax cuts.) and increased military spending, while congressional Democrats held fast against attempts to reverse spending on social programs.
As a result, debt as a share of GDP increased from 26.2% in 1980 to 40.9% in 1988, and continued to rise during the presidency of George H. W. Bush, reaching 48.3% of GDP in 1992.
Public debt reached 49.5% of GDP at the beginning of President Clinton’s first term. However, it fell to 34.5% of GDP by the end of Clinton’s presidency due in part to decreased military spending, increased taxes (in 1990, 1993 and 1997), and increased tax revenue resulting from the Dot-com bubble.
The budget controls instituted in the 1990s successfully restrained fiscal action by the Congress and the President and together with economic growth contributed to the budget surpluses at the end of the decade.
The surpluses led to a decline in the public debt from about 43% of GDP in 1998 to about 33% by 2001.
In the early 21st century, debt relative to GDP rose again due in part to the Bush tax cuts and increased military spending caused by the wars in the Middle-East and a new entitlement Medicare D program.
During the presidency of George W. Bush, debt held by the public increased from $3.339 trillion in September 2001 to $6.369 trillion by the end of 2008.
In the aftermath of the Global Financial Crisis and related significant revenue declines and spending increases, the debt held by the public increased to $11.917 trillion by the end of July 2013 under the presidency of Barack Obama.
Debt relative to GDP rose due to recessions and policy decisions in the early 21st century. From 2000 to 2008 public debt rose from 35% of GDP to 40%, and to 62% by 2010.
During the presidency of George W. Bush, the gross public debt increased from $5.7 trillion in January 2001 to $10.7 trillion by December 2008, due to decreased tax rates, increased spending, and two wars.
Federal spending under President George W. Bush remained at around 40% of GDP during his two terms in office.
Public debt increased in the aftermath of the global financial crisis and the late-2000s recession. Public debt increased to 63% of GDP by 2010, mainly due to decreased tax revenue, and the stimulus and tax cuts enacted by President Barack Obama.
By February 2012, public debt had increased to $15.5 trillion.
2011 Credit Rating Downgrade…
On August 5, 2011, after Congress 2011 U.S. debt-ceiling crisis of the United States federal government, the credit rating agency Standard & Poor’s downgraded the credit rating of the United States federal government from AAA to AA+.
It was the first time the U.S. had been downgraded since it was originally given a AAA rating on its debt by Moody’s in 1917.
According to the BBC, Standard & Poor’s had “lost confidence” in the ability of the United States government to make decisions.
Which of course is (the same) as saying that Standard and Poor’s (lost confidence), in Barack Obama’s ability to make decisions.
Together with the budget deficit, the political climate at the time was one of the reasons given by Standard & Poor’s to revise the outlook on the US sovereign credit rating down to negative on April 18, 2011.
Standard and Poor’s downgraded the credit rating by one notch from AAA to AA+ on August 5, 2011, for the first time ever. The long-term outlook is negative and it could lower the rating further to AA within the next 2 years.
The downgrade was met with severe criticism from the Obama administration, commentators, and other political figures.
The U.S. still has a AAA rating from other ratings agencies.
2001 vs. 2009…
According to the CBO, the U.S. last had a surplus during fiscal year (FY) 2001. From FY2001 to FY2009, at the height of the Global Financial Crisis, spending increased by 6.5% of GDP (from 18.2% of GDP to 24.7%) while taxes declined by 4.7% of GDP (from 19.5% of GDP to 14.8%).
Spending increases (expressed as % of GDP) were in the following areas: Medicare & Medicaid (1.7%), defense (1.6%), income security such as unemployment benefits and food stamps (1.4%), social security (0.6%) and all other categories (1.2%).
Revenue reductions were individual income taxes (−3.3%), payroll taxes (−0.5%), corporate income taxes (−0.5%) and other (−0.4%).
If people don’t work, they don’t pay taxes and with Obama’s policies favoring unemployment – I personally don’t believe there will be a change in America’s economy until Obama is out of office.
The 2009 spending level is the highest relative to GDP in 40 years, while the tax receipts are the lowest relative to GDP in 40 years. The next highest spending year was 1985 (22.8%) while the next lowest tax year was 2004 (16.1%).
Four more years of paying for their party…
In June 2012, CBO summarized the cause of change between its January 2001 estimate of a $5.6 trillion cumulative surplus between 2002 and 2011 and the actual $6.1 trillion cumulative deficit that occurred, an unfavorable “turnaround” or debt increase of $11.7 trillion.
Tax cuts and slower-than-expected growth reduced revenues by $6.1 trillion and spending was $5.6 trillion higher.
Of this total, the CBO attributes 72% to legislated tax cuts and spending increases and 27% to economic and technical factors. Of the latter, 56% occurred from 2009 to 2011.
The difference between the projected and actual debt in 2011 can be largely attributed to:
$3.5 trillion – Economic changes (including lower than expected tax revenues and higher safety net spending due to recession).
$1.6 trillion – Bush Tax Cuts (EGTRRA and JGTRRA), primarily tax cuts but also some smaller spending increases.
$1.5 trillion – Increased non-defense discretionary spending.
$1.4 trillion – Wars in Afghanistan and Iraq.
$1.4 trillion – Incremental interest due to higher debt balances.
$0.9 trillion – Obama stimulus and tax cuts (ARRA and Tax Act of 2010)..
The U.S. budget situation has deteriorated significantly since 2001, when the CBO forecast average annual surpluses of approximately $850 billion from 2009–2012.
The average deficit forecast in each of those years as of June 2009 was approximately $1,215 billion. The New York Times analyzed this roughly $2 trillion “swing”, separating the causes into four major categories along with their share.
Recessions or the business cycle (37%);
Policies enacted by President Bush (33%);
Policies enacted by President Bush and supported or extended by President Obama (20%), and;
New policies from President Obama (10%).
At the end of 2013 under the Obama administration the debt percentage of GDP was up to 102.7%, a total increase, (in billions of dollars) 6.061, and an increase in GDP percentage points of +18.5%. (Source, Wikipedia).
As Mr. Babyspittle chose not to sign his name to his verbal assault on me and my website and my beliefs, ..or to provide America with (his) identity – after an arduous search, – this is the only likeness I could come up with.
This has been fun, drop-in again anytime.
Truth forges understanding, I’ll be back…