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Just as Rome wasn’t built in a day, the federal government won’t be adequately downsized in one round of budget negotiations

Not all conservatives believe the budget agreement Speaker Boehner negotiated with President Obama and Majority Leader Reid was a “win” for our side.  Mark Levin thinks Beltway Republicans were had (via Instapundit).  David Freddoso reminds us of the “argument that if we can’t even handle small cuts, it bodes poorly for the future debate over large ones.

He also brings up another argument:  “Republicans come out of this with a political advantage and an air of responsible governance and adulthood that could help them in the coming debate.”  Until conservatives control both houses of Congress — and the White House — we won’t be able to see the kind of cuts we need to bring the government’s expenditures in line with its income.*

Finding “silliness” on both sides, Jennifer Rubin points out that we have heard . . .

. . . a few hard-line congressmen proclaim that House Speaker John Boehner (R-Ohio) didn’t get “enough” or that a shutdown would have been a win for the Republicans. These are the voices of the perpetually aggrieved on the right who will oppose any deal because their aim is not conservative governance but confrontation and incitement of an anti-Washington base. For these folks the “best deal possible” is not a statement of mature leadership, but a sell-out.

Nevertheless, we also know that the cranky voices are a very small minority in the House (only 28 Republicans voted against the short-term CR in the wee hours of the night). Moreover, Tea Partyers whom the Democrats were setting up to take the fall in the event of a shutdown were overwhelmingly positive about the deal. Perhaps the anti-dealmaking right is largely a creation of liberal media and of a few sour conservative pundits.

Look, I agree with these conservatives that these cuts weren’t deep enough, but we all need bear in mind the truth of that old maxim about the city which from its rise in the century before the common era until nearly a millennium after its fall remained the most important jurisdiction in the West.  Rome wasn’t built in a day.  And it will take more than a day — or one campaign cycle — to reduce the power and size of the new Rome on the Potomac.

But, we’ve started removing the bricks from a few of the newer edifices.  And it will take time to cut them — and related institutions — down to size.  And to that, we’re going to need patience, fortitude and the determination to fight entrenched powers.

*

Philip Klein reminds us just how little of their agenda Democrats got through when they controlled both houses of Congress at a time when the Republican chief executive had little political capital:

Even when Democrats controlled both chambers of Congress from 2007 to 2009 and President Bush’s approval ratings were in the 20s and 30s, liberals didn’t get much of anything they wanted. Bush got his Iraq troop surge and he vetoed the expansion of the children’s health program S-CHIP, and Democrats couldn’t stop him even though the public was on their side. But they used this reality to motivate their base of voters as to why they needed more Democrats in Congress and a Democratic president — and one of the first things they did when Obama was president was to pass the S-CHIP expansion again, which Obama signed two weeks into office.

Let us hope the need to make more extensive cuts keeps Tea Party types motivated, particularly in states like Montana, Nebraska, Missouri, Ohio, Florida, Pennsylvania, Michigan, Wisconsin, New Jersey, Minnesota and Washington State where big-spending Democratic incumbent Senators are up for reelection in 2012.  (Not to mention New Mexico, Connecticut, North Dakota and Virginia where open Democratic seats are ripe for Republican takeover.)

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56 Comments

  1. NDT,
    Time to put a stake through the heart of this claim:
    “““Furthermore, despite the so-called “loss of revenue” from the tax cuts, tax revenue exploded, hitting record highs in 2006 and 2007.””

    You point out a problem with my use of stats–it doesn’t say what I would like them to say, because it talks of % of GDP. Well done. So, one for you. However, before you and ILC get too excited about that “+1”, let us break this 2006 year down.

    NDT claims “record” tax receipts.Checking http://www.gpoaccess.gov/usbudget/fy05/pdf/hist.pdf, we see that in 2000, tax receipts were 2,025.2 billion. In 2006 they were2,205.7 billion, and in 2007 they were 2,350.8 billion. NDT looks right.

    “The reason why is simple. I am referring to record tax receipt and revenue amounts.You could not find a source that contradicted that…”

    Not so fast grasshopper.

    A little further down, when one looks at these receipts in CONSTANT 2000 DOLLARS, we see the following–in 2000, tax receipts were 2,025.2 billion. In 2006 they were 1952.6 billion, and in 2007 they were 2,040.3 billion. I guess, if you want to include inflation (GDP deflator of 12.96% from 2000 to 2006) it looks like a record. It ain’t, when one looks at this in real terms.

    “And I also pointed out that you were dodging the original point – tax cuts demonstrably increase private sector growth and, in doing so, drive tax revenue even higher.”

    Apparently not always the case, when we look at things in real terms, NDT.

    “You then tried to quote a partisan source,” Dude, it was your source I quoted from! And this bit: “MANY INDEPENDENT BUDGET ANALYSTS” from the source you provided continues to escape you. By the way, where did you get the claim for 2006 being a “record year”? It is nowhere to be found in the 2006 source you cite. Maybe they were more reticent about calling a nominal increase in taxes a real tax receipt record.

    So, insults or no, are you still going to stick by your “record tax receipts” claim for 2006, NDT?

    Comment by Cas — April 15, 2011 @ 8:05 pm - April 15, 2011

  2. PS. I also withdraw the claim about 2008 tax receipts that I made at #46. 2008 tax receipts in real terms were 2,112.6 billion (2000 dollars)

    Comment by Cas — April 15, 2011 @ 8:10 pm - April 15, 2011

  3. I think this is the point at which we just start laughing at the screaming red-faced brat Cas as it stomps its feet and cries, desperately looking for any weed it can find to avoid looking at the forest.

    So let me break down the problem with your most recent weed, Cas.

    1. The numbers you are citing are located on page 26, Table 1.3.

    2. The numbers you are citing for 2006 and 2007 are labeled as “estimate”.

    3. That is because you are citing the FY 2005 budget, which was issued in 2004.

    In short: You are using an estimated number generated in 2004 to claim that the numbers provided you from 2006 and 2007 based on actual receipts are wrong.

    So Cas, not only are you a mathematical idiot, but you can’t even keep the difference between estimated and actual straight.

    Again, instead of engaging with those FACTS, which were provided to you in that very post, you decided to spin off and try to argue that comparisons of the “four years following the 1990 business cycle” were needed to prove that, quote, “the Clinton tax hikes led to real growth”.

    I then pointed out, again with links, that a) the 1990 business cycle had dropped, then gone well back into recovery growth YEARS before any of Clinton’s tax hikes and b) that you had previously disdained historical comparisons of business cycles because the circumstances were “different”.

    And I also pointed out that you were dodging the original point – tax cuts demonstrably increase private sector growth and, in doing so, drive tax revenue even higher. Three years after the Bush tax cuts, which liberals screamed would permanently lower Federal revenues, Treasury receipts were breaking record high amounts.

    You then tried to quote a partisan source, breaking your own rule that partisan sources were not reliable information, tried to claim that my news sources were not reliable, breaking your own rule that sources like the AP or news organizations were reliable, and insisted that years at what you claimed was the end of a speculative bubble were not valid for comparison while you yourself were touting the year 2000, which was clearly at the tail end of a speculative bubble, as a valid comparison.

    And now you’ve capped it off with this latest screaming fit where you are quoting estimated numbers from 2004 to prove that actual numbers collected in 2006 and 2007 are wrong.

    My argument has been consistent, strong, and fact-based throughout. You have presented nothing but irrelevant assumptions and cherry-picked quotes, establishing requirements and rules in one post that you then break at your convenience in the following.

    Your strategy is to push irrelevance after irrelevance in the hopes of frustrating your opponent and making them give up, Cas. It’s nothing more than the whining and tantrums of a child, and unfortunately, we are stuck with doing the job of raising you that your parents either were not competent or didn’t care enough to do.

    Comment by North Dallas Thirty — April 15, 2011 @ 10:45 pm - April 15, 2011

  4. Meanwhile, let’s remind everyone how Cas’s biggest cheerleader Pat gushes over Cas’s arguments.

    I also liked the way you handled a poster who a) argues points that you didn’t make; b) goes rabid while doing so; c) refuses to correct his errors and blames it on some logic that even a two-year old wouldn’t subscribe to; and d) uses the same type of logic to refuse to answer your question. I get the same many times with this poster.

    Now let’s watch Pat come running in here to defend Cas, making snide remarks about how my being “provincial” and “black and white” means I don’t understand the fabulous nuance by which Cas made 2004 estimates more valid than 2006 and 2007 actual numbers, and then threatening to go tell on me to Bruce and Dan about how I’m “harassing” and “bullying” Cas.

    Comment by North Dallas Thirty — April 15, 2011 @ 10:57 pm - April 15, 2011

  5. NDT,
    “let’s remind everyone how Cas’s biggest cheerleader Pat gushes over Cas’s arguments….about how I’m “harassing” and “bullying” …”

    Oh, I can see how that previous dust-up must have stung! As for “bullying” and “harassing” I understand you like to be an attack dog. It is your style. You don’t like being called on it, but that, as they say, “is life.”

    So, I went back and checked things. Thank you for the heads up–you were right again. I mislead myself by not carefully checking the source I used.

    “And I also pointed out that you were dodging the original point – tax cuts demonstrably increase private sector growth and, in doing so, drive tax revenue even higher.”

    The problem is that your claim is vaguely worded. It is unclear what you actually mean by “drive tax revenue even higher.” That is, should real tax revenue growth as you understand it be somewhat proportional to real GDP growth? If so, what degree of proportionality?

    Receipts in 2006, in 2000 adjusted dollars are 2037.1 billion, whilst in 2000 they are 2,025.5 billion, or 0.57% growth in real terms. Its an increase that took 6 years to get back to 2000 levels. Tax receipts grew by 4.7% in real terms for the 2001-2006 period. That is after two tax cuts. Meanwhile, real GDP grew by 15.8% from Q1 2001 to Q4 2006. Expenditures grew by 23.4% in the same period in real terms. That does not look like great evidence that supports your contention that ” tax cuts drive tax revenue even higher.” Tax revenue went higher, but its a whopping big change in GDP to get such a small increase in revenue, generated by your Laffer effect. Meanwhile, we went from budgetary surplus to budgetary deficit, and the % GDP of receipts fell from 19.8% of GDP in 2001 to 18.4% in 2006 (after dropping to 16.3% in 2004, a year after the second tax cut.

    So, should we see this as support for your point of view? I remain unconvinced. I will continue our conversation tomorrow.

    Comment by Cas — April 16, 2011 @ 2:27 am - April 16, 2011

  6. NDT,
    It is clear that I cannot support a counter-claim as regards “record tax receipts” as you have kindly showed me. However, in the course of our conversation, you have said a couple of things that warrant comment.
    1. “I then pointed out, again with links, that a) the 1990 business cycle had dropped, then gone well back into recovery growth YEARS before any of Clinton’s tax hikes and b) that you had previously disdained historical comparisons of business cycles because the circumstances were “different”. ”

    You won’t acknowledge this, but as I said before you do not want to recognize that these are different circumstances. Fine. As for the first point, let us look at it in detail. Why should it matter, NDT. According to the model you have in your head, tax hikes should damage the economy—that was the refrain of conservatives, including the Heritage mob, back in 1993, when they were enacted, a point I raised earlier. The issue can be framed as you have done so—tax cuts good—lower taxes, and they produce more revenue. But it can also be framed as the corollary—a test of whether tax hikes hurt an economy. And, in that case, the Clinton experience is an “inconvenient truth” so to speak. Because, it shouldn’t make any difference when Clinton’s tax cuts came in—after all, according to your theoretical framework, they should have WRECKED THE ECONOMY. They didn’t. You might want to think about how that result fits within your framework.

    Where would you like to compare the Bush and Clinton administration performances? If not at the bottom of the troughs, then when? If the bottom of the trough for Clinton was 1991-I and for Bush, it was 2001-IV, and you don’t like the bottom of the trough, where? Why not two years out for both? So that would be 1993-I and 2003-IV. Go out four years. That would be 1996-I and 2006-IV. Now, in real terms, we get:
    Stat Clinton Bush
    GDP +8.5% +9.9%
    Receipts +17.5% +22.3%
    Outlays +3.3% +11%

    http://www.gpoaccess.gov/usbudget/fy11/pdf/hist.pdf
    http://forecastchart.com/chart-gdp-inflation.html
    By all means use other sources if you prefer to check my results.

    So, it looks like in this comparison, the extra GDP growth helped explain the growth in receipts. Though it also was helped by a large differential in spending as well. With two large tax cuts as well, it is clear that Bush was using a Keynesian strategy in this period of time.

    When you look at the six years from trough to 1996-I and 2006-IV, the picture looks like this:
    Stat Clinton Bush
    GDP +11.6% +14.3%
    Receipts +20.5% +0.6%
    Outlays +4.1% +25.6%

    So, again, Bush’s Keynesian approach is pretty obvious.

    You don’t want to look at the first four years, because, there were already two years of growth before the tax hikes. I wondered about this, so I went back to compare the first two years. A comparison of those first two years looks like this:
    Stat Clinton Bush
    GDP +4.6% +3.9%
    Receipts +2.6% -0.2%
    Outlays +-3.9% +8.0%

    What is interesting is that the Heritage Foundation felt that the impact of the 2001 tax cuts would be felt almost immediately (as they also said with the Ryan Plan), with higher tax revenues (starting in 2003) and lower national debt. http://origin.heritage.org/Research/Reports/2001/04/The-Economic-Impact-of-President-Bushs-Tax-Relief-Plan, visited 17 April 2011. 9-11 (and Medicare Part D) created the need for expenditures, so that helps explain part of why debt rose, instead of fell (increased expenditures). But, even with additional tax cuts, tax receipts fell in both 2003 and 2004, when compared with 2000 & 2001 peaks. The bottom of the trough for the recession was 2001-IV. Surely, we should be seeing much higher tax revenues by 2003, or 2004 at the latest? 2005?

    So, what we have, when we compare the two early parts of the recoveries, is the curious result that tax cuts were not immediately effective in getting the kinds of results that the Heritage Foundation (and you) said that we could expect to find. I grant that real GDP growth was better for most of the range in the Bush recovery than it was in the Clinton recovery, for the period I have surveyed. But then again, the Clinton recovery went on longer. One reason why it did, is that tax hikes put a lid on economic growth, slowing things down, ensuring that there was not a repeat of the earlier causations of recessions, namely: when accelerating inflation results in the Fed raising interest rates, slicing private investment and consumption, killing economic growth. As for the 1997 tax cuts—it can be argued that these helped fuel the technological speculative bubble that helps explain the eventual burst and recession in 2001.

    Comment by Cas — April 17, 2011 @ 3:44 pm - April 17, 2011

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