Thursday, November 12, 2015

National Debt and Budget Deficit

The Obama administration claims they have reduced the deficit by two-thirds. Another claim along the same lines, Obama likes to say he reduced the deficit more than any president in history. They also like to blame the deficit on George Bush 43. I will not spend much time trying to defend GW, because he did not do us any favors budget wise. Add to that the fact that he and Hank Paulson did not realize the country’s finances were at a breaking point until the end of his term is inexcusable.

I also know that Harry Reid, Nancy Pelosi and the Democrats had control of both houses of Congress Obama’s first two years in office and they passed budgets that were 25% higher than the last Bush budget. Obama was thrilled with these budgets and signed happily. They went on a spending spree like the country has never seen before.

We wasted over a trillion dollars on green energy projects. Most of the green energy companies went bankrupt within a year with all the company executives getting big bonuses to shutter their businesses. This was a major money transfer of our money to Obama’s friends.
National Debt by Year
I know our national debt is going up, because the debt clock keeps increasing and Obama has asked Congress to raise the debt limit every year, except one. Let me get back to my original quest to determine what they mean about reducing the deficit by two-thirds. This seems to indicate we are spending less, but are we? I will analyze what the Obama administration is referring to when they claim to reduce the deficit more than any administration in history.

Take a look at the charts. On the National Debt by Year chart it is obvious to see that our national debt increased every year under our last two presidents. So that is not what the Obama team is referring to with their claim. The Surplus / Deficit by Year chart seems to provide the answer. A couple of observations. GW Bush’s first year he had a surplus. He inherited a budget under control at the end of the Clinton Administration.
Surplus / Deficit by Year
Obama’s first budget marks their high for spending in the red. If they would have solved the crisis and stopped there, some accolades might be due, but because of the spending spree they went on to grow the government, they economy started to slow and subsequent years the deficit stayed high. After sequester the budget was decreased, thus the deficit decreased. So when the Obama administration claims they reduced the deficit by two-thirds, they mean they are still spending more than they bring in, but we are not going down the drain quite as fast. They are competing against their own high of minus $1.4 trillion down to minus $448 billion. Obama’s claim to reduce the deficit more than any president in history is only possible because he raised it so high to begin with.

It is kind of like Sears used to do. They liked to raise their prices a few weeks before they had a sale. It is called sleight of hand in some circles. We need a president and congress to attack the budget like Clinton and Newt Gingrich did. We need to reduce government spending and pay down our debt.

All Hillary and Bernie talk about is how much more of our money they are willing to spend to buy more votes. That is a really dumb idea.

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