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Divided government and deficits in one graph

From Alicia Parlapiano, one of the Post's graphics wizards:

deficit-ezra.jpg

What you're seeing there is that it's not the composition of the government, but the growth of the economy, that drives the deficit. Wide gaps open up during the 1973, 1981, 1991 and 2008 recessions, and they close as the economy recovers. That's holding true now, too: The annual deficit fell by $125 billion between 2009 and 2010 -- the single largest drop in our history.

By Ezra Klein  | October 27, 2010; 3:15 PM ET
Categories:  Budget, Charts and Graphs  
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Comments

It's a shame, then, that Obama is preventing the economy from recovering.

Posted by: krazen1211 | October 27, 2010 4:29 PM | Report abuse

It's a shame, then, that Obama is preventing the economy from recovering.

Posted by: krazen1211 | October 27, 2010 4:29 PM | Report abuse

Ezra

The deficit has two components - revenue and spending

The current cast of characters has control over spending.

The revenue side obviously is linked to the economy - a strong economy has strong tax revenues, a recession causes revenue to drop.

However, the current crew influences the future economy - economic policies usually take years to take hold.

So the policies of Clinton have hit us in this recession. It just works that way.

Posted by: SolarEnergy | October 27, 2010 4:45 PM | Report abuse

"So the policies of Clinton have hit us in this recession. It just works that way."

Amazing how the "years" it takes economic policies to take hold is always the exact number needed for it to be the fault of the nearest Democrat...

Posted by: jimeh | October 27, 2010 5:00 PM | Report abuse

"it's not the composition of the government, but the growth of the economy, that drives the deficit."

Really? This doesn't explain why the 1980's look so dramatically different from the 1990's. The GDP lines are quite similar: early part of the decade was recession, and then we had growth. But, um, the government lines are WILDLY different.

What does explain the difference in those two eras is that in the 1980's we had a president who jacked up spending while decreasing taxes, but in the 1990's we had a president who increased taxes while decreasing spending.

I'm sorry that the facts have a partisan bias, but there you are.

Posted by: theorajones1 | October 27, 2010 5:04 PM | Report abuse

Yeah, I'm with theorajones1 on this one. You can certainly see a drop in the revenue due to recessions but Ezra's point about growth just is not consistent with the 80s vs. the 90s.

Posted by: Hopeful9 | October 27, 2010 5:30 PM | Report abuse

Alicia Parlapiano says "Speak softly but carry a big bar graph"

(parla piano means speak softly in Italian).

I'm with theorajones too. For one thing, as the graph partly shows, after the New Deal and before the ARRA, the business cycle had little effect on spending.

For another it is really just a coincidence that Kemp-Roth tax cuts and the Volker deflation were simultaneous. The recession did not cause the changes in the tax code. The changes in the tax code guaranteed deficits as far as the eye can see. Clinton's tax increase might have caused rapid growth (I think it was an important contributing factor) but it certainly wasn't caused by rapid growth -- the timing is backwards.

Posted by: rjw88 | October 27, 2010 6:20 PM | Report abuse

Two weeks before Obama took office, the CBO projected the 2009 deficit as $1.2 trillion. Even with adding the stimulus, the 2009 budget deficit was actually $1.4 trillion. 2010 was $1.29 trillion. You can disagree with Obama's policies, and you can argue that he somehow could have sped up the recovery better with different policies, but the deficit explosion in the last 2 years clearly has a lot to do with the recession and not very much to do with laws passed by this Congress.

Posted by: vvf2 | October 28, 2010 1:02 AM | Report abuse

The state of the economy helps, obviously. But what the graph shows:

1. Cutting tax rates increases the deficit. The Reagan and Bush years prove that;

2. We do best with high(er) tax rates, and control on the expenses. Look at the Nixon and, especially, Clinton years;

3. A recession is bad for the deficit as it reduces revenues all around.

Posted by: AMviennaVA | October 28, 2010 10:08 AM | Report abuse

Quick, some one send this to Morning Joe. I'm sick of hearing him use post-1994 as the only example he can think of for the fiscal utopia created by divided government.

Posted by: rcd2 | October 28, 2010 2:58 PM | Report abuse

Ezra Klein is a coward who removes comments that are perfectly compliant with the commentary rules.
He treats his readers like North Koreans.
He believes that you are so stupid, you can't handle fact-oriented commentary.
Or, maybe he was "instructed" to remove any material that rebuts the propaganda he publishes.
Who helped you with JournoList?
Was it a Center For American Progress idea?
Who pays more, WAPO or the George Soros employees who provide your talking points?

You are a liar and a coward, Klein.

My guess is, you'll leave this comment posted, as it DOES actually violate the rules.
That appears to be "the way you roll"

Posted by: MrMeaner | October 28, 2010 7:41 PM | Report abuse

Actually, Ezra, the more pertinent information "you're seeing there", is that the average rate of federal spending during periods of single party rule is much larger than during periods of divided government. The federal government has a direct impact on federal spending. The federal government has, at best, an indirect influence on GDP and the macro economy. So there is no reason to expect an explicit linkage between federal government deficits determined by the macro economy and government composition, except to the degree that it is influenced by the direct correlation with federal spending.

There is one other really obvious thing "you're seeing there" - The rate of increase in federal spending during these last two years of One Party Democratic Rule swamps everything that has gone before.

Which brings me to my sweeping conclusion (everyone else is doing it) of what the electorate's preference for divided government in 2010 is really all about...

It's the spending stupid.

Dividist.Net

Posted by: DWSUWF | October 29, 2010 2:40 AM | Report abuse

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