Following up on claims about debt

[snousle]

Commenting on a comment from a while back:

...socialism and ever-increasing debt go hand-in-hand, and are not sustainable.

O rly? Anyone who beleives this maybe ought to check a list of countries sorted by debt as a percentage of GDP before making that claim. Greece and Italy, as we know, are total basket cases and are dragging the rest of Europe down in a bad way. But as individual countries, you will see that Canada, the EU as a whole, most of the individual EU nations, and a smattering of lefty countries such as New Zealand all enjoy a smaller debt-to-GDP ratio than the United States.

This particular comparison is complicated by the large, recent increase of the US budget deficit, the greater part of which is attributable to the Bush tax cuts and other factors originating in the Bush administration:



[I was a bit shocked by this chart at first but have seen no serious challenges to this claim; Bush really was a disaster, and we're going to be paying for his bad decisions for a long, long time.]

Ignoring the endlessly slippery definition of "socialism", which changes depending on whatever point someone's trying to prove, the debt-to-gdp chart shows that left-leaning economic policy has, on the whole, either no relation or a modestly negative relation to government debt. Debt is more about the fiscal irresponsibility of governments, regardless of ideology.

My wild-ass guess about what is really behind the differences in national debt? I'm tempted to attribute it to "excitability". If you've traveled around Europe you know that Greeks and Italians tend to be easily spun up, while Swedes, Germans, and the French tend to be more sanguine and critical of what they hear, and not so reactionary. New Zealanders are positively stoic. The Japanese, to be sure, are a huge exception but don't completely overturn this relationship. Americans strike me as particularly excitable across the political spectrum, and IMHO this is generally associated with short-term economic thinking that carries negative long-term consequences.

(*Update - the chart here seems to show some confusion between public debt and gross debt when compared to the linked table, which gives different numbers; there are many different measures of debt. However, as far as I can tell the definition used is consistent within each source and still supports the claims I make here.)

Comments

[furr-a-bruin.livejournal.com]

And they wonder why some describe Shrubbie as a "Category 5 President."

[bluebear2.livejournal.com]

Interesting theory of a culture's excitability. I think Canada's calm coolness is from both being a northern people and also watching the embarrassing things the U.S. does and not wanting to look like that.

I used to have a theory that cattle ranching causes right wingism and agriculture caused left wingism. (Just compare the traditional politics of Saskatchewan vs. Alberta.)
Anyway, I don't think it's all that simple but geography and industries do influence politics for sure.

[equinas.livejournal.com]

How many times do I have to say it? Socialism works in (some of) the countries you described because they have A TAX SYSTEM TO SUSTAIN IT. My comment that socialism and debt go hand in hand and are unsustainable was with regard to the U.S. - we do not have, and will not have (without a civil war) the 50% income tax and 20% sales tax that Norway has. Therefore the only way to sustain the socialist ideal of the nanny state is to go deeper and deeper in debt, and that is exactly what our government has been doing.

There is no way this chart is correct or it's being misinterpreted. The spending by both presidents has been charted and by far the Obama administration has pushed us deeper into debt than Bush. I'll find that side-by-side list.

...left-leaning economic policy has, on the whole, either no relation or a modestly negative relation to government debt. Sure, if you're willing to take the WHOLE policy including their tax scheme. There's no way that can happen in the U.S.

[snousle.livejournal.com]

OK, well it wasn't totally clear from the comment that it was a US-specific judgment.

The US is going to either have 50% higher taxes across the board, or it's going to have to cut Social Security and Medicare to the point where people will be actually dying on the street. Faced with those two alternatives, I suspect the US will ultimately go (mostly) with much higher taxes. We will know for sure within a decade one way or another.

I would be very interested to see an accounting of debt in which Obama's policies make the more substantial contribution. I don't believe it's even close.

Taken on its face, he has indeed "pushed us deeper into debt than Bush" simply becuase Bush came first and we continue to be stuck with the deficits he created. It's not like Obama can magically undo all of what Bush did, or single-handedly reinstate all the taxes he eliminated. I don't believe that the initiatives taken under the Obama administration are actually more expensive, unto themselves, than the ones Bush put through. Because the tax cuts were really, fantastically expensive and remain so despite the "compromise" extension of 2010.

[equinas.livejournal.com]

OK, after a bit of looking around I will concede that things have changed somewhat. I first saw that list (compiled by CNN) as a comparison and a projection, back in 2009. Since then, Obama has, I will grant, been able to recover about 65% of the stimulus plan, especially from the bank. What I'm finding now it CBO giving Bush policies 33% of the blame, Bush policies Obama continued 20% of the blame, and new Obama policies 10%. Everything else I can find (including this chart http://upload.wikimedia.org/wikipedia/commons/thumb/2/23/Federal_Debt_1901-2010.png/800px-Federal_Debt_1901-2010.png) seems to show them neck and neck, too.

(I have to hand it to Clinton, he really did deal well with our debt situation.).

So things have changed and I'll concede that. I still find the $4T increase in just the first 2 years of Obama's administration as alarming, as well as the increase of federal employees by 123,000.

But in the end, it doesn't matter. Neither Romney nor Obama can stop the inevitable end. I do not agree with you that we will move to higher taxes. What's going to happen is the derivatives market will collapse this summer (as Ron Paul predicts), which will put us on the path to full economic collapse. We will emerge from that, non unscathed, but with a healthy economic base and probably a new currency. I hope I'm wrong, but I don't see any way out of it now.

[snousle.livejournal.com]

Well, then, we are mostly in agreement. I was thinking a lot about the tax cuts and wondering, after 2010, "who owns that?"

My feeling is that the "policies Obama continued" category is more like "things Obama would have changed if he could, but couldn't for political reasons". So I am not sure about the "neck and neck" judgment but otherwise this breakdown seems to be on the mark.

I still think the American economy is pretty resilient and things will work out without actual collapse.

[barbarian-rat.livejournal.com]

Pres. Bush cut taxes, increased spending [two wars are not cheap], and increased the size, and scope. of the Federal Gov't ... with No Child Left Behind, Dept of Homeland Security, etc.
Yet our current economic situation is all Pres. Obama's fault.

My feeling is that the "policies Obama continued" category is more like "things Obama would have changed if he could, but couldn't for political reasons".

Unfortunately Pres. Obama has continued such things a the Bush Tax Cuts, but it really does appear he did so against his better judgement, and due to political pressure from the right.