Voters who are concerned about U.S. deficit spending and the growth of the federal government in general should vote not for Republicans, nor for Democrats, but for divided governments, where one party controls the House of Representatives and the other party controls the Presidency. Other factors (war, an aging population, and recessions) strongly affect the deficit, but it isn’t easy to change those at the ballot box. Getting a divided government is easier, and reasonably effective.
To confirm divided governments reduce deficits, don’t look at the deficit numbers themselves. Deficits are often high because they were high the year prior, and it isn’t fast or easy to implement a new tax or end a government program. To give each Congress and Presidency its fair chance, look at the rates of change in the deficit. Do not ask if a year saw a high deficit, but whether its deficit was higher or lower than the preceding year. Here, for example is 2001-2015, both the deficit and the change in deficit per year.
In the graph of Change in Deficit per year, seeing 2009 have a value of -953.2 means that 2009 had a deficit 953.2 billion greater than 2008. It is immediately apparent that it is not a hard and fast rule that Divided governments are more likely to curb the deficit. True, the United Democratic government in 2009 was especially egregious, and the United Republican government in 2001, ’02, and ’03 grew the deficit while the divided governments in 2007, ’08, and ’11 through ’15 reduced the deficit. Even so, the Republican government in 2005 and the Democratic government in 2010 also reduced the deficit, while the divided government in 2008 increased the deficit. So, let us pull up the statistical quintiles for 1940 to 2016.
The median for change in deficit per year for divided governments is actually positive. On a median year, a divided government reduced the deficit by 19 billion 2009 dollars, or about 0.3 percentage points of the GDP. Both united Democratic and Republican governments made the deficit worse, but they did so in different ways. Democrats spend more and raise taxes to pay for it, but they don't increase revenues by enough. Republicans spend more and cut taxes to pay for it (smaller piece of a bigger pie), but this does not increase revenues by enough.
Republicans are serious about cutting taxes. Whatever the claims that lower taxes will result in equal revenue by growing the economy overall, Republican control of both houses results in a median loss of 15.5 billion dollars per year to federal revenue, or about -0.25 percentage points of GDP per year. Both Divided and United Democratic governments increased federal revenue, although the divided governments generally increased it more. Again, this is only in regards to the median; in 2005 and 2006 revenues increased under a united Republican administration, although that was attributed to increasing income inequality more than any government action.
At the same time, united Republican governments increase federal spending. However, while they do increase more than United Democratic governments when measured in constant 2009 dollars, they actually do a hair less measured as percentage points of GDP; Democrats raise it by 0.25 percentage points per year, while republicans raise it by 0.20. Even so, divided governments do raise outlays in Constant 2009 dollars, but they actually shrink it in percentage points of GDP.
More differences are evident in federal employment. Again, this isn’t looking not at the number of people employed every year but at the rate at which that number changes. This is shown because a smaller government will have fewer bureaucracies and fewer people running them.
Democrats are more likely to increase civilian employees and shrink the military, while Republicans are more likely to shrink civilian departments and grow the military. Divided governments shrink both, and more drastically than either party would with complete control.
For one last demonstration of the ability of divided government to shrink the size of the federal government, here is the rate of change in the Federal Code of Regulations and the Federal Register. If the Federal code grows, it means that there are more federal laws regulating more things, which is synonymous with bigger government. The federal register is its own publication each year, but this graph still reflects only the relative change year to year; it shows if agencies are proposing more rules than usual or not.
Again, Republicans want smaller government, so even when they control the government, they don’t pass as many laws as Democrats would, and the Code grows more slowly. Divided governments grow the code even more slowly, but not by much. In fact, at the lower quintiles, Republicans grow it much more slowly. In 2003, it even shrank by more than 900 pages. This trend is mirrored in the Federal Register.
Donald Trump is calling for more tax cuts, and I am confident he will get them; we have a united Republican government, and that species is very good at reducing taxes, reducing regulation, and reducing the number of people in government overall. They just aren’t very good at managing the deficit or reducing spending. For that, voters would have needed another divided government.
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