Fact Check : 91% of the Debt Since 2001 Comes from President Bush Policies or Failures

20 Tea Party radicals claim that they have a right to shut down our entire government because of an out of control president who does not listen to "The People" (meaning the couple thousand white folks they represent in their little gerrymandered district of Texas or Kansas).  The president, they allege, has contributed to runaway spending, deficits, and debts.  He must be stopped and since the Constitutional, legal approach has not worked, they must act outside the law.  After all, as at least one of these tea people said repeatedly, "We are right."  Actually, they are as wrong as rain.

9%.  Remember that number - it's the percentage of the increase in debt since 2001 that can be attributed to President Obama's single round of 2010 stimulus spending (if you blinked and missed it, you can be forgiven; the GOP seems under the impression the clock stopped (and started) in 2010).

91%.  Remember that number also - it's the percentage of the increase in debt that has nothing to do with President Obama and everything to do with policies or events that were launched by President Bush.

Breaking it down by president and percentage:
  34% simply results from the Bush Recession and economic collapse (leading to a collapse in tax collection - bankrupt households and businesses don't pay tax);
  16% stems from the Bush tax cuts (which led to 14% higher interest on the debt). 
  War and defense spending added another 29%. 

Legacy costs of the war, including increased VA and Medicare (veterans have and use Medicare and injured ones more) spending from the Bush wars (all those brain injuries and posttraumatic stress disorder cases have to be treated, no matter how much the Tea Party would love to figure out a way not to spend taxpayer money doing so) are not even included in these figures, which would make the relative Obama contribution smaller still than 9%.  



2001-2011 Debt Increase:
 % inc $T* Item
34%   3.5   Bush recession -> lower tax revenues
16%   1.6   Bush tax cuts
15%   1.5   Bush defense spending increases
14%   1.4   Bush wars in Afghanistan and Iraq
14%   1.4   interest from higher debt (marginal)
  9%   0.9  Obama stimulus spending

          10.3  Total    *trillions of dollars
 
By the way, these numbers are not from some left wing think tank but from the CBO, THE final referee and authority on budget squabbles.  In the interest of full disclosure, I also used a calculator and a sharpened pencil.

So the GOP 91% of the debt we are now facing and for which the Republicans are trying to make President Obama grovel before authorizing more borrowing.  Only 9% of the debt comes directly from his stimulus plan which, when you think about it, was only necessary because of the Bush Recession!

Making President Obama beg before granting him the right to operate a government deeply in debt from failed Republican policies is sort of like making your neighbor mow your lawn before you will "let" him mail your mortgage payment for you.


Sources:  "National Debt of the United States", CBO changes in 2001 Projections

If We All Behaved Like Congress : Government Partially Defunded in One Man Tax Revolt

Government Partially Defunded in One Man Tax Revolt

Joe Smith/The New York Times

Obama's Statement on Unpaid Taxes: President Obama urged Mike Victor to pay his taxes, saying it would be the “height of irresponsibility” not to.

By JOE BLOW

Published: September 30, 2013 2036 Comments

GENEVA— A flurry of last-minute calculations by Mike Victor failed to break a bitter budget standoff with the IRS over President Obama’s health care law, setting in motion the first non-payment of taxes by Mike Victor in nearly four decades.

The impasse meant that no individual federal tax return would be filed since no agreement between Mike Victor and the IRS could be reached.  

After a series of back and forth letters and faxes, the IRS affirmed that despite individual opposition to a particular law, Mike Victor could not unilaterally attempt to block that law, not paying the taxes owed to finance its implementation.    The amount in question worked out to less than $1.00 and in back years would be positive (meaning Mike Victor would have to pay taxes for savings realized by healthcare reform) but it was enough to bring the entire tax return filing process to a screeching halt.  

"We simply cannot allow the selective funding of laws that citizens like or don't," a representative from the IRS said, speaking on condition of anonymity because of the sensitivity of the one-man tax revolt.  "That is not how a country of laws works.  Mr. Victor had his opportunity to express his opposition to the law years ago when he voted for his Congressional representative.  He also could have called his representative or showed up - armed or unarmed - to a town hall meeting set up to discuss healthcare reform."

The IRS dismissed as game-playing Mike Victor's proposal to begin "conference committee negotiations."  "What conference?  What negotiations?  It's a law, get over it, pay your damn taxes."

Mike Victor expressed frustration that the IRS said they felt they had a "gun to their heads." He admits coming close to failing to pay his taxes in the past but had always reached a last-minute agreement to head off penalties and fines the IRS promised to levy.  

In the hours leading up to the deadline, Mike Victor and his wife, in a vote of 1 to 1 along gender lines, approved a new plan in which all of his taxes would be paid except for the $.12 they estimated the new law would cost, tied to a one-year delay in a requirement that individuals buy health insurance.

But with almost no debate, the IRS dismissed this proposal in a curt letter.  An IRS official admitted there had been no debate or serious consideration of the proposal and expressed consternation that there would be.  

“He's lost his mind," the official said, before disposing of the House bill. “He keeps trying to pull the same stunt year after year.  You don’t get to extract a ransom from your government.  You're a citizen?  Pay your damn taxes."

Mr. Victor called the IRS hotline shortly before midnight, but he spoke with a representative for less than 10 minutes, without any sign of progress.

“I talked to the IRS tonight,” Mr. Victor said.  He summed up the IRS's remarks as: “I’m not going to negotiate. I’m not going to negotiate.  In fact, the representative I spoke with was quite rude, pretending not to know what I was talking about.”

Mike Victor's most ardent conservative friends were resigned to seeing through his private war on the health care law to its inevitable conclusion, a failure to file that could test the IRS's patience with his brinkmanship.

Cracks in his marriage were opening into fissures of frustration.  “My husband is obsessed with this issue," his wife said.  "He keeps saying somehow if I'm not with him, I'm for Obamacare.  He even says this to the children.  Our 8-year-old started crying last night, asking what Oblamacare is.  He ruined dinner by explaining it to her, even the individual mandate.   She had nightmares about a government takeover of one-sixth of the economy.  It’s just getting a little old.  It’s moronic not to pay any taxes over this."

Asked if she would remain married indefinitely under these circumstances, she looked away.  “I don’t know. I don’t know.  But what can I do?" she asked.  "He has the Turbotax software.  He has taken over this entire process, locked our W2 and mortgage interest forms in his office.  They're my taxes too, but he keeps saying 'I'm the decider.'" She put the blame for the failure to file any return at all solely on his shoulders.  

In one of his final moves, Mike Victor offered to attach language to his return that would promise payment in full of the amount owed if the government would delay the mandate that individuals obtain health insurance.    "The IRS representative just hung up on me, saying she had to help people with real questions.  Is that not a real question?"

Mike Victor's tax revolt — if followed by any other Americans -  could threaten to close federal offices and facilities, idling thousands of workers around the country.  It stemmed from an unusual push by local Republicans to undo a law that has been on the books for three years, through a presidential election, and that the Supreme Court largely upheld in 2012. A major part of the law is set to take effect Tuesday: the opening of insurance exchanges, where people without insurance will be able to obtain coverage.

Mike Victor argues that the administration has itself delayed elements of the law.  "The administration delay is clear evidence that even the president does not think the bill is perfect.   What kind of a country is this when we allow imperfect bills to be executed?"  When Mr. Victor was reminded that the bill was actually a law and had been for years, he shook his head defiantly.  "Next you're going to tell me that President Obama is not a Kenyan-born socialist muslim," he said.  "I'm not buying it for a second."

Mr. Victor claims that "millions" of Americans agree with him but is unable to name any.  He is unaware if anyone else decided to face the massive penalties that will come with willful failure to file any tax return at all.  "I had a couple friends who sounded interested, but they all said they had kids to put through college and could not afford a battle with the IRS right now."  He looked disgusted.  "Did the Minute Men say that at Concord?  Did the Greatest Generation say that on D-Day?"

An IRS spokesman said that to her knowledge no other taxpayers have joined Mr. Victor who seems to be driven by the most extreme elements of Fox News who first suggested using the federal tax filing system to extract concessions on health care that Republicans could not win through the traditional legislative process.

Sean Hannity himself could not be reached for comment, but a transcript from several shows indicates that he clearly suggested a tax revolt.  A Fox News representative said that Mr. Hannity never really intended anyone not to file at all and that doing so would be "stupid.  Mr. Hannity says a lot of things that are stupid and provocative for entertainment value."  At any rate, "the tax code does not deal with pennies.  Round off $.12 per tax payer and you still get the same net bill in dollars."  

When confronted with this information, Mike Victor seemed a bit shaken but still firm in his resolve.   "I refuse to admit that I can't get my way," he said.  "And I refuse to pay any taxes if some of the taxes go to things I do not like.  Isn't that what America is all about?"

   

If the Middle Class is so well-off, the top 1% can afford to pay more in taxes

In a recent column  ("No Time Like the Present", 9/16/13) in Barron's, Donald J. Boudreaux, a libertarian economist, makes an excellent point - in absolute terms middle class Americans are better off than their 1950s counterparts - but uses this observation to counter an argument no one is making.

The "left-wing propaganda" of economists such as Nobel Laureate Paul Krugman whom Boudreaux has made a career of attacking is far less nostalgic for the bad old days of the 1950s than are many on the far right who wax about the days before Medicare, Medicaid, the EPA, and desegregation as some kind of Fathers Knows Best utopia.  

The actual arguments made by Krugman can be (honestly) summarized as:

1.)   The extraordinary increase in wealth over the past few decades has been shunted disproportionately to the top 1% with American middle class workers earning no more than they earned decades ago despite soaring worker productivity.

2.)  Economic history shows that the oft-repeated right wing talking point that economic growth is strangled by top marginal income tax rates above 30% (or wherever they happened to be last year) is wrong.

In one sense, Boudreaux's column helps make point #2.   The technology driving all that Cheap Stuff Americans enjoy today, as well as the advances in medicine, public safety, and hygiene that prolonged life expectancy did not happen overnight.   We are beneficiaries today of a process that was in full bloom in the 1950s, a period when top marginal tax rates topped 90%.  The fact that high marginal income tax rates did not choke off an economic and scientific boom then makes it hard to defend maintaining tax rates only a third as high today.

The author also confuses and conflates many developments that were financed by the higher income taxes he bemoans.  We live longer in large part because our workplaces and highways are safer.   Motor vehicle deaths per mile traveled, for example, are a fraction of what they were in the 1950s in large part because of technological changes such as seat belts, anti-lock brakes, and airbags that were fought vociferously by free market advocates and only developed and installed when the federal government mandated them.  Safety devices in the workplace, such as obligatory carbon monoxide detectors in coal mines, were not installed out of the love of coal mine owners' hearts.   The air we breathe is cleaner not because Big Oil had an epiphany about CO2 emissions and lung cancer.  Rather, our government, based on extensive taxpayer-funded research, mandated that cars have cleaner emissions and smokestacks have filters.

Life expectancy of course has nothing to do with marginal tax rates or the ability to buy big refrigerators inexpensively.  It has to do with access to clean, running water, cars that don't kill us in a crash, and access to healthcare (it does us no good to live in a society with vaccines and antibiotics if workers lack health insurance).   Although we continue to lag other developed countries, the United States made massive progress in insuring its citizens through programs that have nothing to do with low income tax rates and everything to do with government intervention:  Medicare, Medicaid, and now the Affordable Care Act, all of which were vociferously opposed by "right wing propagandists" as an apocalyptic scheme to deprive us of our liberty.  During 2008 presidential campaign, Sarah Palin famously cited one such campaign, quoting (without attribution) then actor Ronald Reagan's 1961 tirade against the "Socialist Dictatorship" that would inevitably follow the implementation of Medicare.

No one argues that we are not better off materialistically than we were in the 1950s.  The point is whether the middle class is sharing the extraordinary profits they created.   From income to net worth skew, the answer clearly seems to be no.   We can argue about the reasons - perhaps the fact that income tax is less progressive and unions have been gutted is simply coincidental - but no one can deny that the lion's share of the wealth the middle class created has been transferred to a managerial and speculative elite.   (Interestingly, the magnitude of this wealth transfer deviates dramatically both from what people think it is and what people when surveyed believe is fair.)  Active unions and progressive income taxes arguably help offset some of this wealth transfer as indeed they do in Western Europe.  If Bordeaux's thesis were correct, workers in European countries with more progressive income taxes and powerful unions should not live longer or enjoy higher standards of living than their American counterparts.  And yet they do.

Boudreaux has argued elsewhere that the idea that "America's middle class has stagnated economically since the 1970s" is a "spectacularly wrong… 'progressive' trope."  His bottom line seems to be:  middle class, stop whining.  You don't need to be paid more, have more job security or benefits, or join a union because you can buy a cheap refrigerator and live 8% longer.   Anyone who says otherwise is just spinning "left wing propaganda."

Fair enough.  So let's apply this same logic to those who whine incessantly about how they will not work or hire if they have to pay a penny more in taxes.  The ratio of CEO-to-worker pay surged 1,000 percent since 1950; Fortune 500 CEOs earn 204 times as much as their workers, up from 20 times in 1950.   This means that CEOs today could suffer a 90% income tax haircut and still have the same relative wealth as their 1950s counterparts - they would still earn 20 times as much as their workers (the ones who live so long and can buy all those cheap refrigerators).   The fact that no one is proposing anything like a 90% top marginal income tax rate is irrelevant, but illustrates how strident and divorced from reality the conversation about optimal income tax rates has become.   

If Bordeaux is correct, then surely at the top should be ecstatic at making 2,000% of what the fat and happy American middle class earns.  The fact that they are not satisfied earning even 20,400% of what workers speaks volumes about the true economic reality in America.

Who is More Harrased - the IRS or the Far Right Groups Who Specialize in Harassing Women and Their Providers?

So far right, anti-choice groups claiming religious tax deductions and credits to finance their lobbying are angry that the IRS is actually certifying whether those deductions and credits are legitimate:

Please explain how all of your activities, including the prayer meetings held outside of Planned Parenthood, are considered educational as defined under 501(c)(3). Organizations exempt under 501(c)(3) may present opinions with scientific or medical facts. Please explain in detail the activities at these prayer meetings. Also, please provide the percentage of time your organizations spends on prayer groups as compared with the other activities of the organization.

Please. I am sure that women presenting for breast exams and pap smears feel far more harassed by these extremist groups than the groups feel by the IRS. And asking a question is not harassment - it's what regulatory agencies such as the IRS do. It's their job. I get pieces of paper from them every year asking questions about various returns, usually questions I can answer with a phone call or mailing them a photocopied document. Sure, it's not fun having someone asking if you really deserve that tax deduction or credit or there are plenty of tax dodgers out there, and frankly I have a bigger problem with subsidizing someone else's religion in effect with my tax dollars. But that is another issue. You can't ask for the tax exempt status then cry "religious persecution" when the agency in charge of making sure your claim is valid does its job. If you want to pray personally in your home or church or even in the middle of your algebra exam, no one will ever stop you or question you. But if you want me to pay for your to pray, well, expect a few raised eye brows and some pesky forms to fill out.

Open letter to Mr. Huckabee on the recent election

Dear Mr. Huckabee, 

You believe that the defeat of your party in the most recent election must be evidence that "our country has slipped into a deeper state of dependence on government than I wanted to believe."  I am confused as to how an election victory for one party can have anything to do with our "dependence on government" unless of course you believe that anyone who votes for a black man must ipso facto be either of color, dependent on government, or both.  Since most of those who are dependent on government - through programs from social security and Medicare to Medicaid to veterans benefits to food stamps - are white, and many of them voted for Mitt Romney, how does this support your thesis?  Do you really believe, as your colleague at Fox News Bill O'Reilly claims, that minorities are looking for handouts from their government, like children looking for free candy?  What evidence do you have from exit polls or other demographic data do you have that this is the case?  

As a man well-versed in Biblical allegories, you compare your national government to "Goliath."  Since Goliath was a giant individual, not a giant government, is this not an odd comparison?  Also, in the Biblical contest between David and Goliath, David, not Goliath, won.  If you are trying to make the case that Mitt Romney was trying to slay what you call the "Goliath of government", why did he lose?  Since the Old Testament story is an attempt to show that god favored David even over a giant, doesn't the latest electoral outcome say exactly the opposite - that god must (at least this election cycle) favor what you see as a giant government?  Or perhaps Mitt just wasn't up to the role of playing David. 
Of course, for any of this to make sense, President Obama must have been responsible for runaway growth of this "Goliath" of a government. As it turns out, most of the growth in government came from his predecessors, particularly the last one, and only two presidents since Eisenhower have had lower rates of government growth than President Obama. 

You go on to claim that our "real problems are not political, but spiritual."  Do you really believe that those flooded out of their homes, men, women and children of all faiths, would agree with you?   Do you think FEMA should be put in charge of setting up places of prayer rather than distribution shelters for food and shelter (through cash vouchers)?  Do the one out of five American children in poverty many of whom have to skip at least one meal a day and go hungry - many who belong to devout families - really need spiritual fulfillment more than food in their bellies?  And why can't they have both?  Since both campaigns generally agreed on the problems facing our nation from the effects of the Great Recession to foreign policy difficulties abroad, what puts you in a position to be able to second guess both, identifying "real problems" that were evident to neither Obama nor Romney?  Since Romney never offered a spiritual solution for what ails us, how would voting for him have solved these "real problems" you believe actually face us? As you admit, "both parties have failed to acknowledge that" (meaning agree with you).
You claim that "Democrats have not wanted to even acknowledge the need for God in our public institutions" to which I must respond that you have not even wanted to acknowledge the need not to split infinitives.  

But I digress.  In virtually every public address, President Obama, a Christian, has acknowledged god in some form and has led prayers during time of national tragedy.  At no time has he moved to strip religious language from the Pledge of Allegience, for example, even though it was inserted in 1954 during the McCarthyist era.  He has not challenged any courthouse displaying the 10 Commandments, and has gone out of his way to please the bishops lobbying against having to implement healthcare reform, offering them multiple exceptions that they have publicly and loudly denounced through press conferences (rather than negotiating in good faith). 

You further claim that Republican leadership mentions god not to out of humility but only selectively, such as in the unquestioning, unconditional support of the current right-wing Government of Israel, which you describe as a "badge of courage."  I can agree with the absence of humility part, but how are Republicans behaving like lambs on the issues of "life and marriage"?  As I recall, they quite vocally opposed abortion prohibition even in the case of rape or incest and the life of the mother (which they believe is never endangered by pregnancy, something that many obstetricians would be curious to hear), and as recently as a week ago, Paul Ryan was telling evangelical Christians that President Obama was waging a "war on religion." The Republican party even went so far as to claim that conception through rape is god's will and that in the case of "legitimate" rape a woman's body has a way to "shut that whole thing down."  Is this lamb-like behavior?  

Regarding the Lion of Judah, his mention in the Bible is not associated with a war on abortion or gay marriage, none of which are really mentioned in the Bible at all.  In your Christian tradition, the Lion of Judah has come to represent Jesus who is allegedly (according to one Biblical version, contradicted by another) from the tribe of Judah.  In Revelation 5:5, this lion makes a cameo appearance:  

And one of the elders saith unto me, Weep not: behold, the Lion of the tribe of Judah, the Root of David, hath prevailed to open the book, and to loose the seven seals thereof.  

Again, loosening seals is not very violent and has nothing to do with gay marriage.  Even the version of the Lion of Judah that entered pop culture through Aslan in C. S. Lewis's Chronicles of Narnia does not rant against marriage equality or in vitro fertalization or stem cell research, as you seem to imply he should. 

You suggest the Republican party should "gear up and get ready for the next battle."  What battle?  We transfer power peacefully in this country via ballots, not bullets.  Are you advocating a coup?  And if you just accused the GOP candidates of being lambs rather than lions, why do you write next battle?  You just said they didn't really fight for what you call our "real problems."  I am confused. 

You claim that the Republicans are a "party of principle" but what principle are you referring to?  Do you not mean principal - it's accumulation and freedom from taxation?   Are you implying that the Democratic party is not a party of principle?  Or could it just be that we share many principles, but prioritize them differently, or that we see different means of achieving the same ends from alleviating poverty, providing healthcare to all citizens, ending war and capital punishment, and other Christian mandates?   Is it really your role, as a mortal among mortals, to be claiming that yours is the party of god and that any Christians who vote for President Obama would go to hell as you did prior to the election?

After bemoaning how the Republican party didn't mention god enough or in the right way, you then claim that they should not "stop believing what we believe" but rather "do a better job of doing what we're supposed to do."  Circularity aside, that claim seems to negate everything you said earlier.  

Finally, you claim that [only by Republicans] "attract[ing] voters and win[ning] elections" can you "save America from herself." Why are you so mistrustful of America that you feel she is inherently self-destructive and needs to be saved?  And do you honestly believe that this salvation can only come from the Republican party?  Since America is not a fixed entity, but a work in progress and a democratic one at that, who says America has to agree with you?  Apparently "she" doesn't.  You seem to confuse losing an election with losing a great Biblical battle between good and evil.  Isn't this a tad grandiose?

One thing the Bible does warn us against is idol worship.  When agreement with our own ideas becomes a litmus test for godliness and righteousness, are you not really saying "my will" rather than "thy will" be done? And if so, how is this compatible with the humility of a good Christian?


Sincerely,


Mike Victor


Appendix:

Growth of government:
After the spending burst of 2009, Mr. Obama, constrained by Congress and aided by repayments of bank and auto bailouts, increased spending just 0.5 percent a year over the next three fiscal years when adjusted for inflation; only two other three-year periods since Eisenhower had lower spending growth. - New York Times


Full O'Reilly and related quotations:

– BILL O’REILLY: “The white establishment is now the minority. And the voters, many of them, feel that the economic system is stacked against them and they want stuff. You are going to see a tremendous Hispanic vote for President Obama. Overwhelming black vote for President Obama. And women will probably break President Obama’s way. People feel that they are entitled to things and which candidate, between the two, is going to give them things?” [Fox News, 11/6/2012]

– RUSH LIMBAUGH: “It’s just very difficult to beat Santa Claus. It is practically impossible to beat Santa Claus. People are not going to vote against Santa Clause especially if the alternative is being your own Santa Claus. [The Rush Limbaugh Show, 11/7/2012]

– SEAN HANNITY: “One other thing that we need to come to terms with as a result of last night. What appears to have happened is that the liberal welfare state in this country has now grown. More and more Americans have become dependent on that welfare state. As they have, they have found themselves siding with the party of government.” [Fox News, 11/7/2012]

– STUART VARNEY: “With Obama’s victory, the takers have taken over. The makers are clearly in the minority.” [Fox Business, 11/7/2012]

Romney's Tortured View of Money, Logic, and What it Means to Pay Taxes

Links to the complete video of Mitt Romney's May 17th "47%" remarks were released along with a transcript and if you wade through the remarks, they raise all sorts of interesting questions.


The comment that got him in the most trouble was the 47% Mitt Romney will "never care about":

47% of Americans pay no income taxes. So our message of low taxes doesn't connect... And so my job is not to worry about those people. I'll never convince them that they should take personal responsibility and care for for their lives. 

Wow. So if you don't pay federal income taxes, you are not taking personal responsibility or caring for your life?

The most interesting question is why he didn't disown his remarks immediately after they were made public. Not Mitt.  He seemed to endorse them, quibbling only that they were not elegantly expressed.   Not elegantly stating something is when you call your friend fat instead of "heavyset" or "stocky." Either way, you are still saying they are heavy.
Mitt just called 47% of the country dependent on the federal government (which is silly) and therefore (as night follows day) pro-Obama. I am not sure how he could have stated that more elegantly. The idea was rude (and baseless) not its expression.  (For the record, I neither depend on government aid, pay zero federal taxes (I pay a higher rate than Romney), but I do support President Obama.)
The issue is not that the video was put out there or even that it was taken but that Mitt Romney, a candidate for president of 100% of the people, actually said these things about 47% of the people he would like to represent. Instead of admitting that we got him and he really doesn't think those things (the "I was lying to a bunch of people to get $10,000 a plate from them" defense) he doubled down and essentially endorsed the idea, quibbling only about the elegance of its expression.

Romney has a very strange view of money. On one hand, he believes that his father's money played no role in defining him. His father's wealth and political connections had nothing to do with his wealth and political connections. (Why, he might even be better off if he were Mexican!)
On the other hand, if someone is poor,disabled, unemployed, or leaves the workforce to care for an elderly parent, the absence of taxable income automatically makes that person irresponsible and not caring for themselves.
So, to review, high family income has no effect on individual worth (meaning any financial success must come from some other factor, such as talent for hard work).  Low or modest family income, however, automatically means the person is irresponsible. (Even worse, it means they vote Democrat.)
When I hear Mitt Romney talk about the poor or even the middle class, he reminds me of an opinionated barber sounding off loudly about parts of the world he has never visited.  As David Brooks points out in his column Thurston Howell Romney:

It suggests that Romney doesn’t know much about the culture of America. Yes, the entitlement state has expanded, but America remains one of the hardest-working nations on earth. Americans work longer hours than just about anyone else. Americans believe in work more than almost any other people. Ninety-two percent say that hard work is the key to success, according to a 2009 Pew Research Survey.
It says that Romney doesn’t know much about the political culture. Americans haven’t become childlike worshipers of big government. On the contrary, trust in government has declined. The number of people who think government spending promotes social mobility has fallen.
The people who receive the disproportionate share of government spending are not big-government lovers. They are Republicans. They are senior citizens. They are white men with high school degrees. As Bill Galston of the Brookings Institution has noted, the people who have benefited from the entitlements explosion are middle-class workers, more so than the dependent poor.
Romney’s comments also reveal that he has lost any sense of the social compact. In 1987, during Ronald Reagan’s second term, 62 percent of Republicans believed that the government has a responsibility to help those who can’t help themselves. Now, according to the Pew Research Center, only 40 percent of Republicans believe that.

And what sort of view of taxes does Romney really have?  He is on record as saying that he pays not a dime more than he legally has to and I know from the tax record he has released that he pays a much lower marginal income tax rate that I do, but after months of being criticized for this low rate and what it might say about him as a person, it seems Romney actually agrees that there is a direct relationship between taxes paid and personal responsibility.
But having Romney lecture us about paying our fair share of income tax is like having George W. Bush lecture us about serving in the military in a time of war. These guys always act as though we are incapable of Googling them.

Here is a thought experiment: since Bush was working so hard to lower taxes and theoretically (if his rhetoric was true and these were not just tax cuts for the very rich) increasing the number of Americans at the margin who pay no income taxes, are the Republicans trying to increase the number of people who "are not taking personal responsibility or caring for" their life? If the Tea Party gets its way and government is shrunk to as close as zero as they can get it, doesn't that mean that most Americans will turn into deadbeats by Romney's definition of those who pay no taxes?  Is the Tea Party and the GOP therefore promoting irresponsibility?

Here is another thought experiment: if a population ages and a greater proportion is elderly, most of whom pay no income or low income taxes, does this mean that medical advances and the care of our elders create personal responsibility? Is a society with less advanced medical care and no social security or Medicare equivalent more personally responsible therefore? Should a medical researcher be discouraged from developing the next generation of artificial hip or a cancer drug out of fear that such developments are mathematically guaranteed to make the number of irresponsible people not caring for their lives rise, all things being equal?
Ditto for abortion: consider that most terminated pregnancies are unplanned for and unwanted. If forced to bring every pregnancy to term, the resultant children would be much more likely to be poor and a net consumer of federal, state, and local resources. By Mitt's logic, these children are irresponsible and not caring for their lives. So is Mitt Romney making a case for abortion? Or does he think he will encourage a pregnant woman to carry an unintended pregnancy to term by calling her and her child irresponsible and not caring for her life?


But in another setting, Romney tells us that he would have been better off Mexican.  Yes. If he were Mexican and he could find someone like his dad who paid for his private school, tutors, college, law school, and bought his house for him. And if no one discriminated against him along the way or asked to see his papers then got a little trigger happy when he was reaching for them. If he didn't "self deport" out of frustration for Arizona's discriminatory immigration laws White Guy Mitt supports. That sort of thing.

It's a very strange world where someone with ideas so offensive is polling at 45%.

President Reagan, We Hardly Knew You... And the Tea Party Hardly Remembers What You Did and Didn't Do

Presidential candidate Michelle Bachmann continues to cite Reagan and his "economic miracle" as something to be emulated.   But I believe that she, Sarah Palin, and other Tea Party members of the Government-Hating Ronald Reagan Fan Club must be talking about a different Ronald Reagan.
The Reagan I remember once said, "If an individual wants to discriminate against Negroes... it is his right to do so" and launched his presidential campaign in Philadelphia, Mississippi - where 3 civil rights workers had been brutally murdered - with a nudge-nudge, wink-wink speech about state's rights, code word for the right to own slaves, later morphed into the right to segregation.  He's also the guy who coined the phrase "welfare queen" and popularized the notion - which would be witty if true - that government is not part of the problem, it is the problem, an interesting stand for someone who spent most of his life as a government employee in one form or another.  He even voted for FDR every time he could.   In fact, before he was against Democrats, he was a Democrat.  Not only was he for unions before he started to bust them, he actually was president of a large and powerful union, the Screen Actors Guild.
Bachmann perhaps didn't get the memo, but Reagan is not all that popular.  Reagan's popularity averages 52.8% (behind JFK, Clinton, Ike, LBJ, and even Bush I).  A third of Americans wanted him to resign after Iran-Contra.   Reagan said he hated taxes but raised them every year except for his first and last, and although he lowered the top marginal tax rate, it was still a "socialist" 50% by the time he left office (now Bachmann believes that raising it from 35 to 40% would be the mother of all tax hikes, unaware perhaps that Obama has the lowest income tax rates of any president going back to the 1930s, and the only real area where Reagan unquestionably was superior was in his propensity to tax.  If nudging tax rates up to Clinton levels is socialism, then Reagan must be an outright communist.  In fact, Reagan's 1982  Tax Equity and Fiscal Responsibility Act was the largest peacetime tax increase in U.S. history.
Even the nonsense that Reagan won the Cold War is revisionist history at its worst.  4 days after the Berlin Wall fell, a USA Today poll found far more people credited Gorbachev (43%) than Reagan (14%).   The Cold War did not end with the nuclear sword, but with the negotiating pen.  START would have been mocked as "appeasement" by the Tea Party today, but it worked.
Reagan had some oddly progressive views on terrorism, calling the death of civilians in anti-terrorism operations "terrorism itself."  He was foolish enough to put American Marines in harm's way in Beirut, but wise enough to withdraw them (cut and run) shortly after our country's first introduction to suicide bombing.  Had Bachmann been president, perhaps we would still be fighting and dying there.
Reagan's adviser, Paul Bremer, took the decidedly un-Republican position that terrorist suspects should be tried in civilian courts to "delegitimize them."
And let's not forget Reagan's strong stance against torture.  In 1988, he signed the United Nations Convention Against Torture, which stated that torture could be used under "no exceptional circumstances, whatsoever."  A Treaty signed and ratified becomes US law, so isn't it ironic that Reagan's action criminalized the behavior of Bush and Cheney decades later?
Oh, and that whole "smaller government" thing was as much a myth under Reagan as under Bush II.  Federal spending grew by 2.5% after inflation under Reagan.  Since he did not think it necessary to pay for his expansion of the size and scope of federal government,  national debt exploded, increasing from about $700 billion to nearly $3 trillion, a far greater proportional increase than even under Bush and certainly than under President Obama   For someone who hated federal employees, he sure created a lot of them, increasing their ranks by 200,000, from 2.8 million to 3 million;  government-loving Clinton, in contrast, trimmed that number back to 2.7 million.
Reagan violated a campaign pledge to get rid of two Cabinet agencies as promised - Energy and Education - and even managed to add a new one (Veterans).
Oh, and let's not forget that the "pro Life" (meaning abortion prohibitionist) Reagan legalized abortion in California as governor in the late 1960s (we all owe him a debt of gratitude for that), never sought a constitutional ban on abortion, and appointed Sandra Day O'Connor to the Supreme Court.
In short, Reagan (President Reagan, not the B Movie Actor Bachmann is obviously confusing him with) did some good things, but they are generally things the Tea Party hates, and the reasons they say they love him fit their faux populist pseudo-libertarianism far more than Reagan's actual record as president.  
As you run through his accomplishments, many of which should please Americans who are not on the far right, we might even like him if it weren't for his lying to Congress, selling weapons illegally to Iran (while openly supporting our Man in Baghdad Saddam Hussein (remember him?) in a bloody, US-supported war against the Great Satan du jour) then using the profits to illegally support terrorist groups in Central America, like the Contras in Nicaragua or those CIA-supported operatives in the Honduras who had a penchant for throwing nuns out of helicopters far out at sea.  If he didn't misrepresent his own actions and philosophy, demonizing the federal government while expanding it greatly, then he would not have legitimized a generation of overt "starve the beast" gubment-haters.   If he had stopped blathering about the importance of empowering this "problem" government to force a woman to carry an unintended pregnancy to term, instead pointing out to the religious right that he had neither the intent nor the ability to overturn Roe v. Wade, we would have all moved on to other topics (or they would have abandoned Reagan for someone even more right wing who would not have been electable).
I think Reagan should have stuck to his first impulse, remaining a loyal Democrat while dabbling in B Westerns.  He could have had a happy life with his second wife and none of us would be bothered if an occasional Republican would get confused as to whether he really was the Gipper or simply played one on the silver screen.

Why does the Tea Party say such easily disprovable things?

8/26/11:  As Ron Hillman recently pointed out, the Tea Party and its shills on the far right are in need of some basic reality checks:

JUST A REMINDER:Evolution is real.The Earth is 4.54 billion years old, not 6,000.The Founding Fathers did not free the slaves.The Revolution was NOT fought over slavery.Paul Revere warned the Americans, NOT the British. Federal law trumps state law. The Civil War was about slavery, NOT state’s rights.

I still believe that the Middle 80% politically (and most of the Bottom 99% economically) are decent, hard-working, honest and innovative people who are badly served by a tiny elite who have managed to dupe a minority who will be victims of their economic and political carnage into shilling for policies that will harm them deeply. This tiny elite, the top 1% who own a disproportionate amount of the wealth of this country but want even more, have their own news station and their own faux-populist party. They say stupid things because if they said out loud what they really advocate no one would support them. Closing down public schools and firing teachers to prevent a fraction of a percentage of Americans the inconvenience of having to visit a financial planner to avoid the estate tax just doesn't have the same ring as calling it a "death tax" and making distracting pseudo-philosophical statements such as, "Death should not be a taxable event." Allowing children, the disabled, and the poor to die of treatable conditions so that free-riders should not be bothered to do something they know they should do doesn't have much traction, but blathering on about whether healthcare is a privilege or a right and death panels that would be scary if they only existed seems to distract enough people to make support for healthcare reform, once wildly popular, now evenly split. Pulling stimulus spending and badly needed federal aid to states away at the worst possible time - an economic slow-down - would be viewed as economic suicide if it weren't for the misinformation campaign of the far right that tells the unemployed the reason they don't have a job is because of the "burden" of big government that must be slashed right now (while taxes should never be raised to Clinton- or Reagan-era levels because that would make the "job-creators" not in the mood to hire (not that they seem in all that much of a rush to hire now after 10 years of tax cuts)). I think the moronic statements on the age of the earth, the role of slavery in the first century of our country or the Civil War, or the non-role of Christianity in the founding of our secular government are all meant as a warm-up, loosening up the audience for the big whoppers about how tax cuts that have neither paid for themselves nor stimulated the economy for the past decade might start working if they were only deeper and longer.

History versus the Tea Party: Why Most of the Tea Party's Economic Claims are Simply Not True

Debt v. GDP:  Are High Levels of Government Debt Harmful to Economic Growth?

It has become such a Tea Party axiom that high levels of government debt crush economic growth that you think the two must be strongly inversely correlated, that periods of high government debt are followed by periods of lower economic growth and vice versa.

Although there is a relationship, it is not nearly this simple.  

First, of course, the two variables are not independent.  As economic growth declines, government debt increases as tax revenues of a slower national income stream dry up while more people require expensive government programs from unemployment benefits to Medicaid.  Conversely, when economic growth picks up, so does government revenue, while demand for government services drops as fewer people require public assistance.  

Table One:  Debt Versus GDP and Next Year's GDP Growth 1977-2010:

Budget Year:	Pres:	Debt:	GDP:	dGDP+%
1977	Carter	0.699	1.974	12.4%
1978	Carter	0.772	2.218	12.8%
1979	Carter	0.827	2.502	8.9%
1980	Carter	0.908	2.725	12.3%
1981	Reagan	0.994	3.059	5.5%
1982	Reagan	1.137	3.226	6.7%
1983	Reagan	1.371	3.443	11.7%
1984	Reagan	1.564	3.847	7.9%
1985	Reagan	1.817	4.149	6.2%
1986	Reagan	2.120	4.407	5.6%
1987	Reagan	2.345	4.654	7.7%
1988	Reagan	2.601	5.012	7.8%
1989	Bush	2.867	5.402	6.2%
1990	Bush	3.206	5.737	3.4%
1991	Bush	3.598	5.934	5.2%
1992	Bush	4.001	6.241	5.4%
1993	Clinton	4.351	6.578	5.9%
1994	Clinton	4.643	6.964	5.2%
1995	Clinton	4.920	7.325	5.1%
1996	Clinton	5.181	7.697	6.4%
1997	Clinton	5.369	8.187	5.4%
1998	Clinton	5.478	8.626	5.8%
1999	Clinton	5.605	9.127	6.4%
2000	Clinton	5.628	9.708	3.6%
2001	Bush	5.769	10.060	3.2%
2002	Bush	6.198	10.378	4.1%
2003	Bush	6.760	10.804	6.5%
2004	Bush	7.354	11.504	6.4%
2005	Bush	7.905	12.235	6.3%
2006	Bush	8.451	13.010	4.9%
2007	Bush	8.951	13.642	4.3%
2008	Bush	9.654	14.222	5.7%
2009	Obama	10.413	15.027	5.1%
2010	Obama	13.954	15.792	3.0%

Note that both debt and GDP have increased every year in this particular time series, but it's the one most often used by the Tea Party to make their case.

Table 1b.  Debt as a Percentage of GDP Versus Subsequent 12-Month Change in GDP:

Budget Year:	Pres:	Debt as % of GDP:	dGDP+%
1977	Carter	35.4%	12.4%
1978	Carter	34.8%	12.8%
1979	Carter	33.0%	8.9%
1980	Carter	33.3%	12.3%
1981	Reagan	32.5%	5.5%
1982	Reagan	35.2%	6.7%
1983	Reagan	39.8%	11.7%
1984	Reagan	40.7%	7.9%
1985	Reagan	43.8%	6.2%
1986	Reagan	48.1%	5.6%
1987	Reagan	50.4%	7.7%
1988	Reagan	51.9%	7.8%
1989	Bush	53.1%	6.2%
1990	Bush	55.9%	3.4%
1991	Bush	60.6%	5.2%
1992	Bush	64.1%	5.4%
1993	Clinton	66.1%	5.9%
1994	Clinton	66.7%	5.2%
1995	Clinton	67.2%	5.1%
1996	Clinton	67.3%	6.4%
1997	Clinton	65.6%	5.4%
1998	Clinton	63.5%	5.8%
1999	Clinton	61.4%	6.4%
2000	Clinton	58.0%	3.6%
2001	Bush	57.3%	3.2%
2002	Bush	59.7%	4.1%
2003	Bush	62.6%	6.5%
2004	Bush	63.9%	6.4%
2005	Bush	64.6%	6.3%
2006	Bush	65.0%	4.9%
2007	Bush	65.6%	4.3%
2008	Bush	67.9%	5.7%
2009	Obama	69.3%	5.1%
2010	Obama	88.4%	3.0%

If debt were inversely correlated with GDP growth, you would expect to see this from a simple correlation of the two variables, as indeed you do:
The correlation coefficient between the two is -.612 indicating a modest inverse relationship but the R2, a measure of how well the data points fit a line, is a weak .375 (normal for noisy economic time series, however).

When debt ranged from $700 billion to $930 trillion, the average growth in GDP was 11.6% the next year*.  As debt increased, average growth in GDP dropped, with the exception of the 75th-90th percentile of debt (6.09-8.80 trillion) which was followed by a higher after GDP growth rate (5.6%) than the stratum below (5.1% for debt ranging from $4.50 to $6.09 trillion).  

When adjusted for size of the economy, the debt relationship was a bit stronger, with a -.697 correlation coefficient and a .485 R2 (1.0 would indicate a perfect fit with a straight line).

Table Two:  Starting Debt level versus subsequent 12-month change in GDP, 1977-2009:

Sliced data:			Debt
		n:	From:	To:	GDP growth:
	Min-10%	4	0.70	0.93	11.6%
	10-25%	5	0.93	1.89	7.6%
	25-50%	8	1.89	4.50	6.4%
	50-75%	8	4.50	6.09	5.1%
	75-90%	5	6.09	8.80	5.6%
	90-Max	4	8.80	13.95	4.5%
		34
In fourths:
		n:	From:	To:	GDP growth:
	Min-25%	9	0.70	1.89	9.4%
	25-50%	8	1.89	4.50	5.9%
	50-75%	8	4.50	6.09	5.1%
	75-Max	9	6.09	13.95	5.1%
		34
In thirds:
		n:	From:	To:	GDP Growth:
	Bottom	11	0.70	2.57	8.9%
	Middle	11	2.57	5.58	5.6%
	Top	12	5.58	13.95	4.9%
		34

The economy did seem to grow fastest when the debt was in the lowest quartile, but the strength of the correlation weakened as the debt increased.   In other words, average growth almost halved from the lowest quartile to the second highest quartile of debt (from 9.4% to 5.1%) but this decrease did not continue into the highest quartile which was roughly equal to the penultimate quartile and only marginally lower than the second quartile (5.1% v. 5.9%). 

Debt versus GDP year-over-year change following each debt observation 1977-2010 divided into strata by starting debt with subsequent average GDP growth.  While very low debt levels were followed by strong growth, the inverse trend flattened out with only slightly below average growth for above average debt.
 * the reason these GDP growth numbers are much higher than the headline GDP growth numbers reported is because they are nominal, using raw GDP, rather than inflation-adjusted (real) using GDP adjusted for inflation.

When debt is expressed as a percentage of GDP, the relationship becomes a bit clearer - lower levels of debt are followed by higher levels of GDP growth.  However, the highest levels of debt, those in the top decile, are followed by faster growth than those in the 75th-90th percentiles.  

Change in debt versus GDP Growth

Fair enough.  The absolute level of debt does seem to have some inverse correlation with subsequent economic growth, but what about changes in the debt level (or the deficit)?   Do markets respond better when the government is running a surplus than a deficit, and worse when the deficits are very large?  

Table Three:  Changes in Debt Year-Over-Year Versus Next 12 Months Change in GDP, 1977-2010:

Budget Year:	Pres:	dDebt%	dGDP+%
1978	Carter	10.4%	12.8%
1979	Carter	7.1%	8.9%
1980	Carter	9.8%	12.3%
1981	Reagan	9.5%	5.5%
1982	Reagan	14.4%	6.7%
1983	Reagan	20.6%	11.7%
1984	Reagan	14.1%	7.9%
1985	Reagan	16.2%	6.2%
1986	Reagan	16.7%	5.6%
1987	Reagan	10.6%	7.7%
1988	Reagan	10.9%	7.8%
1989	Bush	10.2%	6.2%
1990	Bush	11.8%	3.4%
1991	Bush	12.2%	5.2%
1992	Bush	11.2%	5.4%
1993	Clinton	8.7%	5.9%
1994	Clinton	6.7%	5.2%
1995	Clinton	6.0%	5.1%
1996	Clinton	5.3%	6.4%
1997	Clinton	3.6%	5.4%
1998	Clinton	2.0%	5.8%
1999	Clinton	2.3%	6.4%
2000	Clinton	0.4%	3.6%
2001	Bush	2.5%	3.2%
2002	Bush	7.4%	4.1%
2003	Bush	9.1%	6.5%
2004	Bush	8.8%	6.4%
2005	Bush	7.5%	6.3%
2006	Bush	6.9%	4.9%
2007	Bush	5.9%	4.3%
2008	Bush	7.9%	5.7%
2009	Obama	7.9%	5.1%
2010	Obama	34.0%	3.0%

The answer here seems to be a resounding Not Really.

First, the correlation coefficient is a positive .12, meaning that increases in debt are correlated, but very weakly, with growth in GDP.   The higher the percentage increase in debt, the higher the growth you can expect next year.  However, the R2 is .015, telling us the fit to a straight line is very poor.    At the very best, this tells us the Tea Party claim that increases in debt tend to be followed by poor economic growth is not true.  The fairest reading of these data is that there is no real correlation at all.  

It's quite clear that this relationship is neither linear nor inverse.   The economy performed weakly following periods of very low increases in debt, strongest when debt was increasing in the second quartile (50th-75th percentile) and actually performed second-strongest of all when debt was increasing maximally on a year-over-year basis (in the top decile).

If the Tea Party thesis were correct, then you would see tall bars on the left and shorter bars on the right.  You don't, so the Tea Party is wrong on this point. 

Now, this is not to argue that we should increase debt to goose the economy; there are many reasons not to increase debt and to balance your budget.  It just turns out that over the past 40 years, avoiding an economic slowdown has not been one of them. 

Does High Government Spending Lead to Slower Economic Growth? 

This is the next Tea Party thesis, that unless we shrink government spending, economic growth will be slow.  Since government spending relative to the economy has swung from a low of 18.4% under Clinton to a high of 23.5% under Reagan, it seems we might be able to answer this question. 

Table Four:  Government Spending as a % of GDP versus next 12 months change in GDP.

Budget Year:	Pres:	Expenses as a % of GDP:	dGDP+%
1977	Carter	20.7%	12.4%
1978	Carter	20.7%	12.8%
1979	Carter	20.1%	8.9%
1980	Carter	21.7%	12.3%
1981	Reagan	22.2%	5.5%
1982	Reagan	23.1%	6.7%
1983	Reagan	23.5%	11.7%
1984	Reagan	22.1%	7.9%
1985	Reagan	22.8%	6.2%
1986	Reagan	22.5%	5.6%
1987	Reagan	21.6%	7.7%
1988	Reagan	21.2%	7.8%
1989	Bush	21.2%	6.2%
1990	Bush	21.8%	3.4%
1991	Bush	22.3%	5.2%
1992	Bush	22.1%	5.4%
1993	Clinton	21.4%	5.9%
1994	Clinton	21.0%	5.2%
1995	Clinton	20.7%	5.1%
1996	Clinton	20.3%	6.4%
1997	Clinton	19.6%	5.4%
1998	Clinton	19.2%	5.8%
1999	Clinton	18.6%	6.4%
2000	Clinton	18.4%	3.6%
2001	Bush	18.5%	3.2%
2002	Bush	19.4%	4.1%
2003	Bush	20.0%	6.5%
2004	Bush	19.9%	6.4%
2005	Bush	20.2%	6.3%
2006	Bush	20.4%	4.9%
2007	Bush	20.0%	4.3%
2008	Bush	20.9%	5.7%
2009	Obama	20.7%	5.1%
2010	Obama	22.5%	3.0%

Once again, the Tea Party has got this relationship wrong.  Now it maybe that values extremely above or below the relatively narrow range of government spending we have seen in this time period may produce different results, or a different mix of government spending (more on education, research and development, less on defense, let's say) might yield different results, but if one simply looks at the aggregate size of government spending relative to the economy, government spending is positively correlated with changes in GDP:  the more government spending, the higher the economic growth the next year.   Now the relatively weak correlation coefficient of 0.25 and paltry .06 R2 means we should not base policy on this correlation, but if the Tea Party were correct, we would have a strong negative correlation coefficient and a much larger R2.

The linear equation from these data would be: 

  GDP Growth = .47 x government spending (as a % of GDP) + 3%

Again, given the very low R2, these data points do not fit a line, so it's dangerous even making such an equation, but if we had to, that is the best fit line we would make. 

Note that the highest level of government spending as a percentage of GDP led to the highest subsequent growth in GDP.  In this respect, the Keynesians are right and the Tea Party is wrong:  government spending, all things being equal, does seem to stimulate subsequent economic growth.

The sliced data tables follow:

Table Five:  Stratified Data showing various average GDP Growth Rates  for ranges of  government spending as a % of GDP:

Sliced data:			Government         Spending as a % of GDP:
		n:	From:	To:	dGDP:
	Min-10%	4	18.4%	19.2%	4.7%
	10-25%	5	19.2%	20.0%	5.3%
	25-50%	8	20.0%	20.8%	6.4%
	50-75%	8	20.8%	22.1%	6.8%
	75-90%	5	22.1%	22.5%	5.9%
	90-Max	4	22.5%	23.5%	6.9%
		34
In fourths:
		n:	From:	To:	dGDP:
	Min-25%	9	18.4%	20.0%	5.1%
	25-50%	8	20.0%	20.8%	7.7%
	50-75%	8	20.8%	22.1%	6.8%
	75-Max	9	22.1%	23.5%	6.4%
		34
In thirds:
		n:	From:	To:	dGDP:
	Bottom	11	18.4%	20.3%	5.5%
	Middle	11	20.3%	21.5%	7.0%
	Top	12	21.5%	23.5%	6.7%
		34

Do Tax Cuts Stimulate Economic Growth?

There are many ways to answer this question, but because of complexities in our tax code, the easiest way to address this question is to measure the individual income taxes collected relative to the size of the economy and see if the economy grows stronger when less is collected.   

Let's start though with all taxes collected, including individual income, corporate, estate, and excise taxes:

Table Six:  Taxes (Revenue) Collected as a Percentage of GDP versus subsequent GDP Growth:

Budget Year:	Pres:	Revenue as % of GDP:	dGDP+%
1977	Carter	18.0%	12.4%
1978	Carter	18.0%	12.8%
1979	Carter	18.5%	8.9%
1980	Carter	19.0%	12.3%
1981	Reagan	19.6%	5.5%
1982	Reagan	19.2%	6.7%
1983	Reagan	17.4%	11.7%
1984	Reagan	17.3%	7.9%
1985	Reagan	17.7%	6.2%
1986	Reagan	17.5%	5.6%
1987	Reagan	18.4%	7.7%
1988	Reagan	18.1%	7.8%
1989	Bush	18.3%	6.2%
1990	Bush	18.0%	3.4%
1991	Bush	17.8%	5.2%
1992	Bush	17.5%	5.4%
1993	Clinton	17.5%	5.9%
1994	Clinton	18.1%	5.2%
1995	Clinton	18.5%	5.1%
1996	Clinton	18.9%	6.4%
1997	Clinton	19.3%	5.4%
1998	Clinton	20.0%	5.8%
1999	Clinton	20.0%	6.4%
2000	Clinton	20.9%	3.6%
2001	Bush	19.8%	3.2%
2002	Bush	17.9%	4.1%
2003	Bush	16.5%	6.5%
2004	Bush	16.3%	6.4%
2005	Bush	17.6%	6.3%
2006	Bush	18.5%	4.9%
2007	Bush	18.8%	4.3%
2008	Bush	17.7%	5.7%
2009	Obama	14.0%	5.1%
2010	Obama	13.7%	3.0%

These numbers ranged from a high of 20.9% under Clinton's final year in office to a low of 13.7% in 2010 under President Obama.   How have they correlated with next year's growth in GDP?

Answer:  not at all.  The correlation coefficient is statistically zero (.04) indicating a small but positive correlation (higher tax collections leading to greater subsequent growth rates).  But the teeny .002 R2 indicates these numbers are all over the place, linear-speaking.  

Table Seven:  Revenues collected as a percentage of GDP versus next 12 Months Change in GDP.

Sliced data:
		n:	From:	To:	y:
	Min-10%	4	13.7%	16.7%	5.2%
	10-25%	5	16.7%	17.6%	7.3%
	25-50%	8	17.6%	18.0%	6.4%
	50-75%	8	18.0%	18.9%	6.2%
	75-90%	5	18.9%	19.7%	7.2%
	90-Max	3	19.7%	20.9%	5.1%
		33
In fourths:
		n:	From:	To:	y:
	Min-25%	9	13.7%	17.6%	6.4%
	25-50%	8	17.6%	18.0%	7.0%
	50-75%	8	18.0%	18.9%	6.2%
	75-Max	9	18.9%	20.9%	6.1%
		34
In thirds:
		n:	From:	To:	y:
	Bottom	11	13.7%	17.7%	6.4%
	Middle	11	17.7%	18.5%	6.9%
	Top	12	18.5%	20.9%	6.1%
		34

A picture is worth a thousand sound bites; if you can see a pattern in here, you're a better person than I am:

Extremely low or high tax collections are associated with weaker growth but beyond that, nothing much can be said.  The economy grows with all different rates of taxation, although admittedly the band of collection has been narrow.  Whenever total tax collection stays near 20%, taxes tend to get cut.

Do individual income tax collections inhibit economic growth?
Finally, I addressed what could be a quibble with the idea of looking at total government revenue; suppose the economy were very sensitive to changes in individual income tax collections?  If so, doing the same analysis as we did with the other variables should lead to an inverse correlation (as collections drop, the GDP grows faster).  As it turns out, more bad news for one of the Tea Party's pet theories:  the "burden" of individual income taxes holds back economic growth and lowering those taxes (which if done correctly should be reflected in lower government collection of income taxes) should lead to higher subsequent GDP growth.  It doesn't.

Table Eight:  Individual Income Tax Collections as a Percentage of GDP versus Subsequent Growth in GDP:

Budget Year:	Pres:	Individual Income taxes as % of GDP:	dGDP+%
1977	Carter	8.0%	12.4%
1978	Carter	8.2%	12.8%
1979	Carter	8.7%	8.9%
1980	Carter	9.0%	12.3%
1981	Reagan	9.3%	5.5%
1982	Reagan	9.2%	6.7%
1983	Reagan	8.4%	11.7%
1984	Reagan	7.8%	7.9%
1985	Reagan	8.1%	6.2%
1986	Reagan	7.9%	5.6%
1987	Reagan	8.4%	7.7%
1988	Reagan	8.0%	7.8%
1989	Bush	8.3%	6.2%
1990	Bush	8.1%	3.4%
1991	Bush	7.9%	5.2%
1992	Bush	7.6%	5.4%
1993	Clinton	7.7%	5.9%
1994	Clinton	7.8%	5.2%
1995	Clinton	8.1%	5.1%
1996	Clinton	8.5%	6.4%
1997	Clinton	9.0%	5.4%
1998	Clinton	9.6%	5.8%
1999	Clinton	9.6%	6.4%
2000	Clinton	10.3%	3.6%
2001	Bush	9.9%	3.2%
2002	Bush	8.3%	4.1%
2003	Bush	7.3%	6.5%
2004	Bush	7.0%	6.4%
2005	Bush	7.6%	6.3%
2006	Bush	8.0%	4.9%
2007	Bush	8.5%	4.3%
2008	Bush	8.1%	5.7%
2009	Obama	6.1%	5.1%
2010	Obama	5.7%	3.0%

The correlation between the two is very weak (.05) but positive, indicating there really is no relationship.  R2 is a paltry .002.    The stratified data show no clear overall trend, except for a counter-Tea Party one:  from the minimum to the top decile, as you increase individual income tax collection, you get a higher subsequent GDP growth until the very highest rates of individual income tax collections 9.5-10.3% of the economy, which had the lowest growth rates of all.  So perhaps the Tea Party is correct that there is a sweet spot beyond which taxation leads to slower rates of economic growth, but there was no tax rate in this range that led to negative growth and it is unclear what to make of this single slice, or whether higher rates of tax collection would have resumed the positive trend in economic growth.  

Table Nine:  Stratified data showing different ranges of individual income tax collection as a percentage of GDP versus subsequent 12-month change in GDP, 1977-2010:

Sliced data:
		n:	From:	To:	y:
	Min-10%	4	5.7%	7.4%	5.2%
	10-25%	5	7.4%	7.8%	6.1%
	25-50%	8	7.8%	8.1%	6.4%
	50-75%	8	8.1%	8.7%	7.1%
	75-90%	5	8.7%	9.5%	7.7%
	90-Max	3	9.5%	10.3%	5.1%
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In fourths:
		n:	From:	To:	y:
	Min-25%	9	5.7%	7.8%	5.7%
	25-50%	8	7.8%	8.1%	6.6%
	50-75%	8	8.1%	8.7%	7.1%
	75-Max	9	8.7%	10.3%	6.4%
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In thirds:
		n:	From:	To:	y:
	Bottom	11	5.7%	8.0%	5.7%
	Middle	11	8.0%	8.4%	7.3%
	Top	12	8.4%	10.3%	6.3%
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Individual income tax collections arranged by percentile bins versus average GDP growth in each bin.  Note that GDP growth INCREASES as individual income tax collections as a percentage of GDP increase until beyond the 90th percentile, when subsequent economic growth slows to about the same rate as at the lowest individual income tax collection rates.  

Summary
Although the Tea Party is correct that very high levels of debt are correlated, although not always, with slower rates of subsequent GDP growth, beyond the highest extremes, this relationship is weak and quickly flattens out.  Periods of very low debt have been correlated with stronger economic growth than periods of extremely high debt.

However, no other Tea Party talking points are supported by vigorous historical analysis.  

Changes in debt from year to year, the size of government spending, government tax collection, or individual income tax collection are either not correlated at all with subsequent growth in GDP or are slightly positively correlated.  There are many reasons to decrease the size of the government and its level of tax collection, but stimulating economic growth does not seem to be one of them, if the last 40 years are any guide.  And unfortunately for the Tea Party, these data are the only guide we have.