Insider's Game

Andrea Mitchell made a feeble attempt to cut through John McCain’s doublespeak.

MITCHELL: You know, you’ve added up and you talked about some $300 billion in savings — pork barrel savings. Independent experts say that your tax cuts would cost at least $100 billion more than you say and that the savings would not materialize. You know, we’ve seen over decades…

MCCAIN: I disagree with the experts. I disagree. I disagree. I disagree with the experts.

 

MITCHELL: Well, let’s say that there is a pork…

 

MCCAIN: I have experts of my own. I have many experts of my own who say that this will stimulate the economy, will create jobs and increase revenues over time.
And that’s what we did in 1980 — Ronald Reagan did when he came to office in 1981. We reduced taxes, we reduced regulation and we controlled spending.

 

MITCHELL: But it did bust the deficit.

 

MCCAIN: And a key part of this is controlling spending.

 

MITCHELL: I mean, you are a deficit hawk.
MSNBC Live, April 16, 2008

John McCain is a “deficit hawk”? These days, that’s about as accurate as saying Donald Trump is homeless. Let’s cut through the nonsense and talk about real numbers.

Numbers tell a story. Especially over time. They compel us to focus on results — success and failure. Over the short term, maybe a few years, numbers can be manipulated or give false signals. But not over decades, and not over a generation. The numbers over the past 30 years are not refutable. When it comes to creating jobs and managing the nation’s finances, Democratic presidents demonstrate success while Republican presidents show failure.

Job Creation

Jimmy Carter, 1977-1980: 10.5 million new jobs
Bill Clinton, 1993-1996: 11.6 million new jobs
Bill Clinton, 1997-2000: 12.4 million new jobs
Total: 33.6 million jobs created over 12 years, or 2.8 million jobs per year

Ronald Reagan 1981-1984: 5.2 million new jobs
Ronald Reagan 1985-1988: 10.8 million new jobs
George H.W. Bush 1989-1992: 2.6 million new jobs
George W. Bush 2001-2004: 0.2 million fewer jobs
George W. Bush 2005-2007: 5.5 million new jobs
Total: 24 million jobs created over 19 years, or 1.3 million jobs per year

Government Spending

How much did the government spend for every dollar of revenue?

Jimmy Carter, 1977-1980: $ 1.16
Bill Clinton, 1993-1996: $1.25
Bill Clinton, 1997-2000: $1.01
Democratic Average: $1.16

Ronald Reagan 1981-1984: $1.31
Ronald Reagan 1985-1988: $1.38
George H.W. Bush 1989-1992: $1.34
George W. Bush 2001-2004: $1.27
George W. Bush 2005-2007: $1.24
Republican Average: $1.29

The difference between $1.16 and $1.29 may not seem like a lot, but the impact on the national debt is huge, especially when you consider that $1.29 applies to 19 years, and the budgets under this president are so much larger.

Increases in Government Debt

Growth In Debt Held By the Public [$US trillions]
Jimmy Carter, 1977-1980: 0.2
Bill Clinton, 1993-1996: 0.7
Bill Clinton, 1997-2000: -0.3
Democratic Total: 0.6

Ronald Reagan 1981-1984: 0.6
Ronald Reagan 1985-1988: 0.7
George H.W. Bush 1989-1992: 0.9
George W. Bush 2001-2004: 0.9
George W. Bush 2005-2007: 1.1
Republican Total: 4.3

The financial markets only pay attention to the amount of debt held by the public. This is the number that helps drive down the value of the dollar and makes bankers nervous about inflation down the road.

Growth of Debt Held By “Government Accounts” [$US trillions]

Jimmy Carter, 1977-1980: 0.00
Bill Clinton, 1993-1996: 0.4
Bill Clinton, 1997-2000: 0.8
Democratic Total: 1.3

Ronald Reagan 1981-1984: 0.1
Ronald Reagan 1985-1988: 0.3
George H.W. Bush 1989-1992: 0.5
George W. Bush 2001-2004: 0.8
George W. Bush 2005-2007: 1.4
Republican Total: 3.0

Debt held in government accounts is very much a misnomer. Debt, in the real world, is a fixed obligation to make a payment on a specific date. Not so for debt held in government accounts, according to this White House.

“The Bush administration opposes including Social Security and Medicare in the audited deficit. Its reason: Congress can cancel or cut the retirement programs at any time, so they should not be considered a government liability for accounting purposes.” USA Today, August 3, 2006

This subject warrants a separate article, but there, in a nutshell, is the basis for the Republicans’ “Social Security Reform.”

In very simple terms, what happens is that the money contributed by everyone into Social Security, intended to build up a surplus to fund the baby boomers’ nest egg for their retirement years, is actually used to reduce the government’s reported deficit. Is it a huge scam? You bet. President Clinton, anticipating the problem, proposed some kind of undefined “lockbox” to prevent the pillaging of the Social Security surplus that’s taken place under the current White House. Of course, the Republicans shot that down.

Anyone who speaks of a crisis in Social Security is really talking about a problem that can be laid at the Republicans’ doorstep. It’s not class warfare, just simple arithmetic.
Sources:
Job Creation: Bureau of Labor Statistics Seasonally adjusted nonfarm payrolls, calculated on calendar years
Government Spending: OMB, On-Budget Outlays divided by On-Budget Revenues
Increases in Government Debt: OMB