December 2, 2012

Graphs of the Day: The Fiscal Mess Is Not the Fault of Bush’s Tax Cuts

Filed under: Economy,Taxes & Government — Tom @ 10:42 am

The economy was on its way to a budgetary balance five years ago, but leftists want us to remember otherwise:

Graph1  Graph2

Graph3

The first two charts are from a Friday Investor’s Business Daily editorial. The third is from Reason (HT Instapundit).

You might think I will argue that if it weren’t for the Democratic Congress’s spend-happy cadre taking control of Congress in 2007 and beginning serious budgetary damage at the beginning of fiscal 2008, the nation might have seen a balanced budget within a year or two.

I’m not going to argue that. I will instead argue that it weren’t for the Democratic Congress’s spend-happy cadre taking control of Congress in 2007 and beginning serious budgetary damage at the beginning of fiscal 2008, the decades in the making blowup in housing and mortgage lending brought by Democratic Party legislation such as the Community Reinvestment Act and hundreds of billions of dollar of fraudulent misrepresentation of loan quality made to ratings agencies by Democratic Party crony-driven “government-sponsored enterprises,” the nation might have seen a balanced budget within a year or two.

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2 Comments

  1. Hey Tom,

    Thanks again for your great work explaining this stuff to me, a mere engineer. Please bear with me as I play liberal troll by asking, “Let’s say that the increase in receipts during the last years of Clinton’s presidency were due to the dot-com bubble rising, which wasn’t real wealth being created. Could you say the same about 2007 receipts, but this time due to the housing bubble? That is to say that the Bush economy wasn’t really creating wealth, but instead just rising on an artificial housing bubble.”

    I look forward to your setting this thinking straight.

    Thanks!

    Comment by GW — December 5, 2012 @ 9:36 am

  2. #1, thanks for the nice words. There is some validity to both premises.

    The crying shame is that in both instances it didn’t have to work out that way. Clinton’s SEC looked the other way while dot-coms who never had a realistic plan to sell anything went public with inflated valuations, while the housing bubble was fueled by explosive subprime lending (and deception of the ratings agencies) by Freddie Mac and Fannie Mae. Both prosperities were sustainable, and both ended up not being so because of government failures.

    Comment by Tom — December 5, 2012 @ 10:12 am

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