So, recently this happened on Fox News.
While the usual suspects were galloping along with their common narrative that Biden — being a Democrat — has engaged in “Massive Spending”, their token Democrat, Jessica Tarlov, dropped a truth bomb right in the middle of their War Whoops to dramatically “CUT SPENDING.”
Donald Trump added $7 Trillion to the Federal Debt, about 30% of the current total. And Joe Biden in his first two years managed to bring the deficit down by all-time record of $1.4 Trillion.
The narrative that Republicans are “Fiscal Hawks” while Democrats are wild and crazy drunken spend thrifts was totally shattered in that moment.
It’s simply not the case. It’s a delusion, one among many, that continues to fuel and sustain a party that is devoid of ideas, devoid of goals other than pandering to the rich, and devoid of policy.
To be clear, this is what the Federal Deficit has looked like for the past 23 years.
As you can see in the year 2000, the deficit was Negative. The Budget was balanced, we were running a slight surplus of $131 Billion. And then what happened?
The Bush Tax cuts happened.
In two years by 2002 that $131 Billion surplus had turned again into a $370 Billion deficit — a shift of almost a half $Trillion. To be fair, over the rest of the Bush presidency, the deficit slowly shrank, mostly as the economy grew. The dot com crash which had prompted Bush to implement his tax cut eventually ended. Jobs came back and tax money flowed into the government bring the deficit down to just $160 Billion by 2007.
Then 2008 happened with the Housing Crisis and Crash. That year the deficit sprang back up to $450 Billion, and then in 2009 with massive jobs losses and emergency spending to save many companies including the entire U.S. Auto industry it skyrocketed to $1.42 Trillion.
The recovery following that crash was slow and anemic, but it did happen.
By 2015 the deficit had shrunk back down to $440 Billion which was back down to where it had been seven years earlier in 2008. That’s an improvement and deficit reduction during that period of about $990 Billion.
This is where the GOP started to mess things up.
The House had been taken back by the GOP in 2010 and after his failed attempt to become Vice President Speaker Paul Ryan used the debt ceiling threat to hammer out a “bipartisan” budget deal that included almost a half $Trillion in tax cuts.
As a result, the deficit began immediately to rise again going back up to $590 Billion by 2016 and continuing to rise each year after that.
That was during Trump’s term where yet again, the GOP passed yet another tax cut which added an estimated $2 Trillion to the debt over the next ten years. It was supposed to “trickle down.” By 2019 it was clear that It didn’t.
Two years ago, President Donald Trump and Republicans in Congress cut the corporate tax rate from 35 percent to 21 percent via the Tax Cuts and Jobs Act of 2017 (TCJA). At the time, the Trump administration claimed that its corporate tax cuts would increase the average household income in the United States by $4,000. But two years later, there is little indication that the tax cut is even beginning to trickle down in the ways its proponents claimed.
In selling the large corporate tax cut to Congress and a skeptical American public, the Trump administration claimed that corporate tax cuts would ultimately translate into higher wages for workers. The tax cuts would trickle down to workers through a multistep process. First, slashing the corporate tax rate would increase corporations’ after-tax returns on investment, inducing them to massively boost spending on investments such as factories, equipment, and research and development. This investment boom would give the average worker more and better capital to work with, substantially increasing the overall productivity of U.S. workers. In other words, they would be able to produce more goods and services with every hour worked. And finally, U.S. workers would capture the benefits of their increased productivity by successfully bargaining for higher wages.
That simply didn't happen. Instead, corporations used their newfound extra tax money to implement stock buybacks which increased their stock dividends but didn’t improve the wages or conditions for their baseline workers by a single iota.
U.S. corporations spent a record amount buying back their own shares last year, using 2017′s tax-cut windfall to reward shareholders rather than to invest or expand their businesses.
Companies in the S&P 500 spent $806 billion on stock buybacks in 2018, blowing away the previous record of nearly $590 billion set in 2007. The information technology and financial service sectors were the biggest spenders, with Apple leading the pack. When share prices plunged in the fourth quarter it only encouraged companies to spend more, setting a fourth consecutive quarterly record for buybacks.
Companies can return profits to shareholders either via dividends or buybacks. Buying back shares has the advantage of reducing the number of shares outstanding, which often gives a boost to closely watched financial metrics such as earnings per share.
This brings us to 2020 and the Covid Crash.
With unemployment soaring to 12% and the massive government spending of the PPP Bill at $1.9 Trillion and the CARES bill at $2.2 Trillion the deficit not so shockingly went ballistic and exploded that year literally to $3 .13 Trillion.
Then we had Joe Biden who did pass and implement the American Rescue Act which did spend yet another $1.9 Trillion, consequently, the deficit remained high but did come down to $2.77 Trillion, which is an improvement that year of $360 Billion — which at that point was an all-time record improvement.
Then came 2022 where, for once, we didn’t have a massive stimulus bill pass as the economy and jobs continued to recover — this year the deficit was cut in half and dropped to just $1.38 Trillion — a new record improvement of another $1.39 Trillion.
That right there, is what Jessica was talking about. That’s the improvement that she correctly credits to the Biden administration — the improvement that the GOP refuses to believe and would completely blow up their “We have to CUT CUT CUT” narrative. Biden and the Democrats have already had greater deficit reduction in the past two years — totaling $1.7 Trillion — than has ever been seen before. The deficit is now in about a slightly better position than it was at the start of the Obama Administration in 2008.
Fox News and the GOP would have us believe that the only way that we can improve this situation from here is that we now need to tighten our belt buckle and start taking painful hits on spending.
They also blame inflation on “spending” but the reality is that the PPP and Cares spending was more than twice the cost of the American Rescue plan. So if Biden’s spending was a problem, exactly why isn’t Trump’s spending twice a bad of a problem?
All of that ignores the fact that inflation is a worldwide phenomenon which has affected many countries and America right now is ranked at #13, behind Argentina, Germany, Italy, Turkey, Russia and the Netherlands. So we’re not even in the TOP 10 worst countries suffering from inflation. Did all those countries ahead of us also do a ton of government spending? I don’t think so.
Inflation is high because of the business shutdowns, sickness and deaths caused by Covid followed by the price gouging by corporations seeking to recover their losses from that time period. It has nothing to do with “spending.”
Now lets look at the GOP first suggestion out of the gate, which is to cut the funding for 87,000 IRS workers, a move that the non-partisan CBO says will add $114 Billion to the deficit over the next ten years.
The Republican proposal to eliminate billions of dollars in IRS funding will pile more than $100 billion onto federal deficits, according to a new estimate from Congress’s official budget scorekeeper.
The bill, which is slated to hit the House floor Monday night as the first legislative act of the new GOP majority, would claw back most of the almost $80 billion in new IRS funding provided under the Democrats’ massive climate, health and tax package, which was signed by President Biden last year.
Almost $46 billion of that spending would go toward agency enforcement efforts designed to prevent certain taxpayers — largely corporations and wealthy individuals — from paying less than they owe.
The Congressional Budget Office (CBO) estimated Monday that the legislation would cut federal spending by $71 billion, but would reduce tax revenue to the tune of almost $186 billion. The net effect would be a $114 billion increase in deficits over the next decade.
Not exactly a fiscally sound decision.
On top of that you have their push have a 30% sales tax on everything in a bill that would abolish income tax, estate tax and payroll taxes (which means they would be completely defunding Social Security and Medicare) and the entire IRS.
The Fair Tax Act introduced by Representative Earl "Buddy" Carter would abolish income, payroll, estate and gift taxes and propose a 23 percent national sales tax, but the effective rate would be 30 percent, according to the non-partisan Institute of Taxation and Economic Policy (ITEP) think tank.
This seems like a great way to fight the high cost of cheese, crackers, baby formula and eggs — by increasing those costs by 30% onto everyone. Particularly the poor who are currently protected from paying federal income taxes by the Earned Income Tax Credit. Again, this would be a massive tax cut for the wealthy, while shifting all the remaining burden onto the poor while, I strongly suspect yet again, exploding the deficit.
What you can see from the top chart is that every time Republicans are in power — they implement tax cuts (and crashes) which increase the deficit. Trump increased the deficit by $2.6 Trillion, Bush increased it by $1.2 Trillion. Each time Democrats are in power, they reduce the deficit. Biden has brought the deficit down by $1.7 Trillion so far, Obama brought it down by $990 Billion.
The last time we were at balance and were running a surplus was on President Clinton’s watch where he brought it into balance and a surplus of $131 Billion. He created that situation by passing his first budget in 1993 that didn’t receive a single Republican vote because it *raised* taxes on the rich, and mildly cut them for everyone else.
Frankly, the fastest way for us to get back into balance, and potentially a surplus again, would be to completely repeal the Bush, Ryan and Trump tax cuts.
That would put us back to where we were in 1999.
Partying with a surplus.
But you’ll never get the GOP to believe it. They live in denial, in the thrall of a delusion that they — and only they — are the arbiters of “fiscal discipline.”
Every Democrat needs to know this and hammer the GOP with it.