Optimism is always good news

This much optimism is GREAT news:

I'm really more interested in what's been happening with consumer confidence. While there's been plenty of talk about growing income inequality and worker angst–often by me–Americans have been getting more optimistic. Here are the key takeaways from today's University of Michigan consumer confidence survey, via the good folks at Global Insight:

1) The survey catapulted to a two-year high of 96.9 in January, up from 91.7 in December.

2) Sentiment for current economic conditions scaled up by 3.2 points to 111.3.

3) The bellwether expectations index exploded upward by 6.4 points to 87.6.

None of this should really be too surprising, with the economy climbing at a 3.4 percent clip last year (including 3.5 percent in the fourth quarter), jobs growing by nearly 200,000 a month, wages increasing more than 4 percent, and real disposable personal income rising more than twice as fast as in 2005. Even better, the Federal Reserve looks as if it's stuck on pause in fiddling with interest rates.

So much for the income-disparity crowd.  And then there's this:

The historical average for tax revenues as a percentage of GDP for the last 45 years—roughly, the span of the modern taxation era—is 18.2%; in 2006, the government collected 18.4% of GDP as tax revenues.  Even if you throw out the Bush budgets of 2002-2006, the average rises only a tenth of a percent, meaning that America is still above its historical average.  The same holds true for budget deficits.  The historical average is 1.6% with the Bush years, 1.5% without, making last year's 1.8% budget deficit look less than outlandishly out of line.

The interesting thing is that no one knows these happy facts.  Democrats are still harping on budget deficits as if (a cynic would say "because") they were a gigantic mess, rather than a shrinking problem.  This is not an excuse for running deficits, of course; there is no reason that a prosperous nation should be borrowing money to run its government when the economy is booming.  But America's budget deficit is small enough that it is now unlikely to be having any sort of measurable effect on the economy, and inflation and economic growth will quickly erode the value of recently accumulated debt.  Mr Bush may leave a large number of problematic legacies for future generations, but the revenue shortfalls of recent years will not be noticed among them.

No doubt this will have little impact on the don't-bother-me-with-the-facts crowd.

Comments

[MikeInSeattle]

Did you happen to wonder why these number are so, shall we say, "odd"?

For example, the budget and deficit numbers are for "the last 45 years—roughly, the span of the modern taxation era". Now, isn't it "unusual" that they chose to only pick 1963-2007 and then do most of their numbers saying, "and not counting the current Bush administration". So, really, they're only looking at 1963-2001. Odd that they chose to skip Truman, Eisenhower, most of Kennedy and "W".

And then, on top of that, they're comparing numbers as a part of that. They're actually saying "one year's difference isn't much over 45 years" and acting as though that says something.

But. OK. Let's work with those numbers...

They cite tax revenue as a percentage of GDP. Now, really, that's only a measure of average tax rates. If there were a totally flat tax (including corporations) that would be the tax rate. They say that it's been about 18.2% as an average over their self-selected period. (Now, remember, that's including the best of "tax relief" and the worst of "add a tax" types in our memory) Then they say that Bush's 18.4% is nothing to matter.

What it really means is that Bush, despite all the gifts he's given in tax breaks to his backers has actually raised taxes by 5% over the AVERAGE administration since, say, Brandy was born. So much for "it's your money".

Now this is part of why they chose those particular years. If you look at revenue as a percentage of GDP, you'd find that the lowest years (the ones with the lowest taxes) were 1949 and 1950 under Truman with taxes of 14.5 and 14.4% respectively. Guess you can see why they didn't want to count that in the average.

They're even worse on fudging the data on the deficit. Again, they do the averaging trick. But here, they're averaging surplusses along with deficits to flatten them out.

Again, they probably want to skip the Eisenhower surplusses of 1956 and 1957. Of course, they can't skip the fiscal responsibility of the Clinton years where the 26.6% deficit of the end of the Reagan/Bush era (yes, over 1/4 of all government spending was using borrowed money back then) were tamed and brought to an 11.7% surplus.

The number they choose to ignore is actual government spending as a percentage of GDP. This is the measure of how big the government is. I suspect they don't want to let everyone in on the GOP's dirty little secret. Here it is:

Government grows when Republicans are in office.
Government shrinks when Democrats are in office.

Small Government Fan?
You should be a Democrat.

The biggest government in their odd 1962-2000 time frame?

1983 - Government spent 23.5% of the GDP

The smallest government in their odd 1962-200 time frame?

1962 - Government spent 17.2% of the GDP

Some high points? Nixon/Ford who inherited the Vietnam war expenses and then spent not only the savings but increased the government to over 21%.

Reagan was the biggest spender.

The best at shrinking government? Clinton who dropped the size of government from 21.5% in his transition year of 1993 to 18.4% in 2000.(yes, he cut the size of the government by 15% and brought it down to the same size it had been under Kennedy. And this was consistent every year no matter who was in Congress (before you decide to award it to Newt)

Just a few facts for the real "don't-bother-me-with-the-facts" crowd.

(oh, all my fact come from the offical OMB numbers available on their website for anyone who want to see facts rather than just be told what they're supposed to think)

[MikeInSeattle]

Oh, to save people from figuring it out...

Small Government Fan?
You should be a Democrat.

The biggest government in their odd 1962-2000 time frame?

1983 (REAGAN - REPUBLICAN) - 23.5% of the GDP

The smallest government in their odd 1962-200 time frame?

1962 - (JOHNSON - DEMOCRATIC) 17.2% of the GDP

Really, being a "Reagan Republican" meant making the government much bigger and borrowing from foreign nations to cover your spending spree.

Why do people think the opposite?

Killing programs that help millions of people is very visible and gets lots of press. (and thus gets you a reputation for cutting programs)

Adding programs that give billions to a very few people is not visible, nobody pushes for it to get press and thus it doesn't get you a reputation for anything from people who don't bother to read budgets.

[MikeInSeattle]

I’m happy to provide some more facts for the "don't-bother-me-with-facts" crowd for the post-war time prior to the current occupant.

For example, facts that show that the “Big Government Democrats” like Clinton decreased the size of government while the “Small Government Republicans” grew it
• Government spending in 1954 under Eisenhower: 18.7%
• Government spending in 1983 under Reagan: 23.5% (The largest US Government since World War II and over 25% larger in 29 years!)
• Government spending in 1999 under Clinton: 18.7% (Back to where it had been 45 years earlier)

Or that deficit spending and government growth are both traditional Republican strategies while fiscal responsibility has been almost totally the mark of Democratic Administrations
• Post-WWII Republican Administrations that either cut the deficit or increased it by less than 5% per year: 1 out of 6 (Only Eisenhower showed this much fiscal responsibility)
• Post-WWII Democratic Administrations that either cut the deficit or increased it by less than 5% per year: 4 out of 5 (Truman, Kennedy, Johnson and Clinton all met this goal)

Percentage of Post-WWII Republican Administrations that increased deficits by an average of MORE THAN 10% per year: 50% (Yes, fully half of them!)
Percentage of Post-WWII Democratic Administrations that increased deficits by an average of MORE THAN 10% per year: 0% (Right, none of them – not one!)

Biggest out-of-balance budget since WWII: 1983 when Ronald Reagan’s Administration spent 34.6% more money than the government actually had!
$ 600.6 Billion budgeted
$ 808.4 Billion spent
$ 192.2 Billion spent that they didn’t have and added to the national debt in just one year. (And that’s in 1983 dollars)

[MikeInSeattle]

Actually, that last number's actually worse.

Biggest out-of-balance budget since WWII: 1983 when Ronald Reagan’s Administration spent 34.6% more money than the government actually had!
$ 600.6 Billion budgeted
$ 808.4 Billion spent
$ 207.8 Billion spent that they didn’t have and added to the national debt in just one year. (And that’s in 1983 dollars)

For those of you who think it's not a "gigantic mess", imagine you make 60,000 per year and spend over 80,000 per year. And did that pretty much every year...

Think your bank would say that's not a "gigantic mess"?

[Jane Galt]

MikeinSeattle: if you'd read the comments to this or any of the other posts on the topic, you'd know why those years were chosen: they are the years for which uniform data is available from the Congressional Budget Office. Also, the early sixties are thought to be the beginning of the modern tax era; that's when really widespread federal programmes got going. Comparing the 1950's, which had no Medicaid, little Social Security, barely any WIC or AFDC, or almost any other entitlements, is very tricky.

[MikeInSeattle]

Actually, data has been available for the entire history of the Republic. What? You think we didn't have accountants prior to 1962?

As for how we did spending? Take a look at either CBO or GAO figures. Entitlement programs come and go but government grows under Republicans and shrinks under Democrats.

Really. Go look yourself. It's clear you didn't.

I have and have revisted the numbers for years so it's pretty obvious when somebody knows what the data says and when somebody's been lied to and would rather repeat the lies than learn a harsh truth.

[Mike in Seattle]

Oh, and if 1962 (for some bizarre reason) was when "really widespread federal programmes got going" then why was the government size the same under Clinton as under Eisenhower when Clinton had all those "widespread federal programmes" and Eisenhower didn't?

Now, are you saying you want to go back to Eisenhower?

Cool.

Let's go back to a minimum wage that in current dollars is over $11/hr.

That's what Eisenhower had.

Let's go back to a 90% tax rate for the richest Americans.

That's what Eisenhower had.

Let's go back to CEOs making just a couple of dozen times more than their line workers and not gift baskets that make movie stars and Paris Hilton drool with envy.

That's what Eisenhower had.

So, really, if you want to talk the 1950s and economics, feel free. I'll be happy to roll back all the corporate welfare and bribe paybacks to wealthy campaign donors that have crippled the US economy. And I, for one, have the facts to back up my claims.

(Oh, and FYI, welcome to the USA. We spell the word "programs" in this country.)

[pedro]

Windy in here.
Mike, most of your stuff ignores a hell of a lot of important factors. Here are two:
1.) Congress
2.) Today's Democrats have nothing in common with Truman or Kennedy save the name. After reading some of President Kennedy's speeches, I honestly have no idea what the Republicans of that era were all about. I vaguely remember Nixon's wage & price controls. Today's labels, while meaningful, have little or nothing to do with yesterday's.
3.) I knew you'd rise to the "don't-bother-me-with-facts crowd" line. GO ME!
4.) Actually, the main point was that things are great. And they are.

[pedro]

And an almost fanatical devotion to the Pope!

[MikeInSeattle]

1) Interestingly, if you look at the numbers (I have. I'm guessing you haven't) the size of government goes up no matter who is in Congress if the President is Republican.

2) I'm using actual numbers not personal impressions of speeches.

3) I'm presenting the facts. Are you?

4) Actually, the economy sucks. (only counting the stock market is the equivalent of saying the economy is good because gambling is up)

[MikeInSeattle]

On a non-numbered note ...

If you DO want to learn about what Republicans were like in the Kennedy era, there's an excellent discussion comparing the current GOP and the early '60s GOP and other evolutions of the various US Conservative movements in John Dean's excellent book "Conservatives Without Conscience". Dean was good friends with Barry Goldwater and talked with him about those changes quite a bit.

It's on my Book List on my blog at http://mikegalos.spaces.live.com