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'W' is written into our historical memories, as well as our federal budget

By Mike Konczal

It would be hard to think of the period of 2001-2010 as anything other than the "W" years. Even with Obama in office riding the wave of a new kind of political energy and organizing, the first two years have been spent trying to put out the economic and financial fires stoked over the past 10 years, and actually trying to start reforms for problems related to health care, immigration and pricing carbon. Reforms that should have been started a decade ago.

So "W" is definitely part of the mental landscape. But what about the budget? While going through materials about the federal budget, Roosevelt Institute fellow Arjun Jayadev made a great catch. If you plot CBO historical revenue data from 1970 to now and use projections going forward, there's a giant "W" carved into the total revenue numbers:

It's like a teenage rebel scrawling his name into his desk -- "The Gorch Was Here!" -- but with our federal government. Arjun:

Future economic historians will have no problem identifying the reason and apportioning the blame for the collapse in US public finances in the early part of the 21st century. All they have to do is look at the data and see the ‘W’ staring back at them (as outlined above). The factors behind the two collapses in the tax take as a percentage of GDP? The George W Bush tax cuts and the financial crisis under Bush (not necessarily caused, but aided and abetted by the administration). The latter of course, is the main reason for the increase in debt, not the ‘profligate spending’ of the current administration. Note that US is at the lowest tax take in nearly 40 years, and the projected increase in revenues from 2010 onwards comes about primarily because of an end to the tax cuts. The result of this collapse, amazingly, is a call for retrenchment of government spending, particularly on social expenditure (for e.g. see Blinder’s piece in the WSJ).

If people ask when Obama and others should stop blaming the former President Bush for our current economic crisis, I will now say that we can stop blaming him when our budgeted revenue is out of the "W."

Mike Konczal is a fellow at the Roosevelt Institute. He blogs about finance, economics and other topics at Rortybomb and New Deal 2.0, and you can follow him on Twitter.

By Washington Post editor  |  May 26, 2010; 3:39 PM ET
 
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Comments

It's right out of a Mad, Mad, Mad, Mad World.

Posted by: MerrillFrank | May 26, 2010 4:14 PM | Report abuse

neocons like Kevin will look at that graph and claim with joy that there were two sudden increases in revenues because of his gloriousness Bush...

...and the media will go along with it.

Posted by: Lomillialor | May 26, 2010 4:22 PM | Report abuse

Consider also the vital (inverted) relationship between this and the Mortgage Pig by Tanta. (http://www.calculatedriskblog.com/2008/11/happy-thanksgiving.html; http://www.calculatedriskblog.com/2009/03/interesting-technical-pattern.html)

Posted by: ptands | May 26, 2010 5:25 PM | Report abuse

If people ask when Obama and others should stop blaming the former President Bush for our current economic crisis, I will now say that we can stop blaming him when our budgeted revenue is out of the "W."


Looks like 2011 or so to me. I'll hold you to that Mike (well as long as you're around here). I don't expect all liberals to feel that way though.

I do notice that the individual income tax revenue line is increasing from 2011 going forward. Way to go Dems!!

Posted by: visionbrkr | May 26, 2010 5:26 PM | Report abuse

The Bush administration did not just create a long-term gap in revenues. It also implemented expensive policies which are difficult for the current administration to reverse. In addition, the recession that started under Bush made more people eligible for government support programs, therefore increasing spending.

According to this (somewhat outdated) New York Times chart, the federal government was expected to run an average $850 billion SURPLUS in 2009-2012, according to the 2001 CBO Projections. Bush's policies and Bush's economy brought turned that into a $1 trillion deficit on average. Obama's new policies are only contributing $200 billion a year to the deficit. Could you or Ezra find an update on this chart? I think it would counter the narrative that the current deficits are all Obama's fault?

Posted by: wcampb17 | May 26, 2010 6:17 PM | Report abuse

For some reason they didn't let me post the link to the chart. Here it is:

http://www.nytimes.com/interactive/2009/06/09/business/economy/20090610-leonhardt-graphic.html

Posted by: wcampb17 | May 26, 2010 6:19 PM | Report abuse

@lom: "neocons like Kevin will look at that graph and claim with joy that there were two sudden increases in revenues because of his gloriousness Bush..."

Lom, if I'm a neocon, you're a communist.

"Conservative" is the word you're looking for.

What is it with you people and your name calling?

Otherwise, you're reasonably close. Although Bush was not nearly conservative enough for me, most of the time. Compassionate conservatism, my butt.

That being said, the fact that he was able to write an actual 'W' into the taxes-as-percentage-of-GDP makes him the most kick-butt, Chuck-Norris worthy president evah!

@Mike: "If people ask when Obama and others should stop blaming the former President Bush"

Please don't. Indeed, the most devestating political campaign you can possibly execute for 2012 is one that blames Bush for every bad thing during Obama's 1st term. That will be so totally awesome.

Victory as far as the eye can see.

Posted by: Kevin_Willis | May 26, 2010 9:40 PM | Report abuse

Chuck Norris got his butt kicked by a tiny chinese dude.

And like I predicted, you'd find a way to rationalize the data instead of acknowledging the devestation he wrought. In essence, your arguments are never based on reality but images, like cowboys kicking butt.

Posted by: Lomillialor | May 26, 2010 10:39 PM | Report abuse

Kevin,

you forget that in Lom's world Dems get little to no blame. It doesn't matter much that Clinton signed off on the end to Glass-Steagal. It only matters that he had a surplus during his time. Sure the Republican congress was initially responsible for the deal and to blame as well but its his signature that's on that mess that is greatly responsible for the "W" that Mike gets so much glee out of showing us. It'd just be nice once to have some Dem apologist on here to take some responsibility for that instead of giving 100% of the blame to Republicans.

Posted by: visionbrkr | May 27, 2010 8:15 AM | Report abuse

he also conveniently forgets that the Democratic congress has been in power since 2006. If they had seen the mortgage crisis coming they could have increased interest rates to alleviate some of the damage but the hope of affordable housing (no matter how contrived it was) was too much for Dems to not run towards even though like Republicans they were running straight into a brick wall. A brick wall I might add that's being re-cemented now so that we can do it again in another 5-10 years.

Posted by: visionbrkr | May 27, 2010 8:21 AM | Report abuse

@vision: "Kevin, you forget that in Lom's world Dems get little to no blame."

Actually, I forgot that many liberals have no sense of humor. At all. And precious little respect for Chuck Norris, which may be an even bigger flaw.

Also, they see things that aren't there. @lom: "And like I predicted, you'd find a way to rationalize the data". How did I rationalize the data? I'm not in a position to confirm or dispute the data, at this moment.

"It'd just be nice once to have some Dem apologist on here to take some responsibility for that instead of giving 100% of the blame to Republicans."

I don't think you "never" see that. But there's a problem--not the least of which is that liberals who point out the bi-partisan nature of most of our problems get viciously attacked by their left flank (just as can happen on the right). And there's a tendency for dedicated partisans (of either side) to define themselves by who and what they are opposed to.

Then there are regular human tendencies to see the guy in charge at the top as responsible for everything that happens, which is not remotely accurate. Obama is no more responsible for the oil spill than Bush is responsible for the economy under his watch. There were multiple efforts under Bush to reign in tendency of Freddie Mac and Fannie Mae to encourage sub-prime lending (and to take a closer look at the solvency of Fannie Mae and Freddie Mac), well before the housing bubble burst. These efforts were stymied almost entirely be Democrats. So who is responsible in this scenario for the severity of the housing crisis? Democrats, who fought Republican's efforts to restore some sanity to mortgage lending, or Republicans who essentially said: "Well, if you're going to fight us, then I guess we won't do anything." Clinton signed off on the idiotic repeal of Glass-Steagall (that was enthusiastically pushed by certain Republicans, and certain Democrats--but more Republicans), but also made changes to the Community Reinvestment Act that ended up assisting our crazy mortgage bubble up higher and higher. And it started under Carter. But there was plenty of stuff that happened under Reagan . . . and in every case, there were bureaucrats, both elected and unelected, from all sides of the political spectrum, that had a hand in what ended up happening.

Frankly, trying to accurately and objectively apportion responsibility is exhausting. Much easier to say: "Man, I lost my job when Bush was president, and my dog died. That's what happens with Republicans. We lose our jobs and our dogs die! Vote Democrat!"


Posted by: Kevin_Willis | May 27, 2010 9:00 AM | Report abuse

Kevin_Willis,
It doesn't smatter how you reach the right conclusion, as long as you eventually do.

Posted by: snarky2 | May 27, 2010 10:20 AM | Report abuse

Kevin_Willis,
It doesn't matter how you reach the right conclusion, as long as you eventually do.

Posted by: snarky2 | May 27, 2010 10:21 AM | Report abuse

"he also conveniently forgets that the Democratic congress has been in power since 2006. If they had seen the mortgage crisis coming they could have increased interest rates to alleviate some of the damage but the hope of affordable housing (no matter how contrived it was) was too much for Dems to not run towards even though like Republicans they were running straight into a brick wall. A brick wall I might add that's being re-cemented now so that we can do it again in another 5-10 years."


visionbrkr,

The Democrats took over the House of Representatives in 2007. Bush still had a Democratic Senate through the end of 2008.

If you think that Nancy Pelosi sets mortgage interest rates, and that the housing bubble could have been prevented in 2007 by something done within the House of Reps, please enlighten us on how that scenario would have played out...?

"I don't think you "never" see that. But there's a problem--not the least of which is that liberals who point out the bi-partisan nature of most of our problems get viciously attacked by their left flank (just as can happen on the right). And there's a tendency for dedicated partisans (of either side) to define themselves by who and what they are opposed to."

Kevin_Willis,

I haven't seen liberals disagree that Clinton's economic team was too optimistic about the prevailing theory that the financial system could stand fewer regulations, or that it was mistake for Clinton to have signed Gramm-Leach-Biley into law. Read Krugman (and many others).

That being said, it does not change the fact that the housing bubble, the bad loans, and the resulting "toxic assets" all occurred under Bush's watch, and his Treasury department and other regulators seemed to have been completely blind to the problem, which right talk radio seems to want us all to believe is somehow all Barney Frank's fault.

Posted by: Patrick_M | May 27, 2010 9:29 PM | Report abuse

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