A lot of the people behind the last several posts seem to me to be, consciously or unconsciously, advocating what is known as Reagonomics. Simply
put, Reagonomics is based on what is known as the 'trickle-down' theory, where the gov't gives big tax cuts to industry and business, fallaciously
assuming that these economic benefits to the rich will somehow 'trickle-down' to the poor. This is what both Bushes have tried. Please refer to
Murcielago's excellent graphs above to see the results, noting in particular the blue section, where the deficit became a surplus, and then the pink
section, where this trend was sharply reversed, from the highest surplus in US history in 2000to the largest deficit in US history in 2003. Also note
the exponential-like curve displayed in 'National Debt from 1940 to Present', where the upward slope increases during the reagon/bush/bush.jr years,
and started to level off during the Clinton years. Please view the following links to get a better idea of this brand of economics currently
practiced by the US gov't.
Originally posted by edsinger
It is called, instead of getting paid $10 an hour at a factory, I go into debt ex. school, to better myself, then get the $30 an hour job and pay back
the debt with my much higher purchasing power...so hard to understand?
Yes, edsinger has good advice here, but the analogy is poor, because this is not what the US gov't is doing. Imagine, instead, if you will, this
I make $10/hr at a factory. I decide this doesn't cut it, and go into debt to go back to school. After 4 years of training, I now decide to return
to work at the local fast-food restaurant for $6.50/hr. I am now making less money, plus I have to pay back all my debt. Not only have I foolishly
cut my source of revenue, I have increased my expenditures (deficit in the form of interest payments) as well.
And now this scenario:
The government collects X dollars through tax revenues. They decide this doesn't cut it, and slash taxes for industry and business (the main
recipients of Bush Jr. tax cuts). Not only that, they decide to increase spending at the same time. (this would be analogous to me buying a car and
house during my previous hypothetical scenario) Now the US gov't is in the unenviable position of trying to pay off an increasing deficit, while
simultaneously diverting financial resources to other concerns, and to top it all off, they have less money to do it all with.
Fiscal spending for 2005:
Fiscal spending for 2000: (Clinton's last year)
Item 1. Social Security 22%.
Item 2. Net Interest 11%.
Item 3. Medicare 11%.
Item 4. Medicaid 6%.
Item 5. Other Mandatory 6%.
Item 6. Other Means-tested entitlements 6% (Footnote: Means-tested entitlements are those for which eligibility is based on income. The Medicaid
program is also a means-tested entitlement.)
Item 7. Reserve pending Social Security reform 6%.
Item 8. Non-defense discretionary 17%.
Item 9. National defense 15%.
Tabular Information on the last 57 years of gov't spending
-noting in particular net lending/borrowing, which is highest during years in which Reagonomics was practiced