more on Creative Accounting Only Goes So Far

[David Farber <dave () farber net>]

Begin forwarded message:

From: Daniel Berninger <dan () danielberninger com>
Date: September 9, 2004 12:28:39 AM EDT
To: dave () farber net
Subject: Re: [IP] Creative Accounting Only Goes So Far

Dave,

One does wonder how the candidates got this far without discussing the
deficit and national debt.

The supposed return of economic growth this year and last disappears if 
one
subtracts deficit spending (the proportion of growth borrowed from 
future
generations) and adjusts for the effect of inflation.

Doing the math over the years the "economic growth" in Reagan and Bush I
similarly disappears if one takes into account the leveraging of future
generations.

The deficit as a percent of GDP happens to exceed GDP growth in 5 of 8 
years
during Reagan, 3 of 4 years during Bush I, and the last two years for 
Bush
II for a net negative of 10% during these years.   Looking at the 
chained
numbers below you can see Clinton reversed the negative trend from Bush 
I
and Bush II reversed the positive trend received from Clinton.

This would seem a repudiation of tax cuts = economic growth.  Tax cuts =
shift growth from future generations to the present and suffer enormous
interest payments.

Setting aside the dim prospect of reducing the $8 trillion national 
debt,
the country now suffers annual interest payments of the same magnitude 
of
all discretionary spending - approx $350 billion.  This number also
approximates the defense budget.  Notice it also approximates the 
current
deficit.  In other words, the current 400 billion deficit just pays the
interest on previous deficits.

National bankruptcy comes to mind.

Dan

.......................................
Daniel Berninger
202.250.3428
www.danielberninger.com

> > > > > > > > > > > >
Real GDP Growth

G = Percent GDP Growth minus inflation
D = Deficit as percent GDP
Year    G  -  D  =  Real GDP Growth
Reagan
1981  2.5 - 2.7 = -0.2
1982  2.0 - 4.0 = -2.0
1983  4.3 -6.0 = -1.7
1984  7.3 -4.8 = 2.5
1985  3.8 - 5.0 = -1.2
1986  3.4 - 4.9 = -1.5
1987  3.4 - 3.2 = 0.2
1988  4.2 -3.0 = 1.2
Bush I
1989  3.5 -2.8 = 0.7
1990  1.8 -3.9 = -2.1
1991  -0.5 - 4.5 = -4.0
1992   3.0 -4.7 = -1.7
Clinton
1993  2.7 -3.9 = -1.2
1994  4.0 -2.8 = 1.2
1995  2.7 -2.2 = 0.5
1996  3.6 -1.4 = 2.2
1997  4.4 +0.2 = 4.6
1998   4.3+ 0.8  = 5.1
1999  4.1 +1.4  = 5.5
2000  3.8+ 2.4 = 6.2
Bush II
2001  0.3+ 1.2 = 1.5
2002  2.4 - 1.4 = .8
2003  3.0-4.2 = -1.2
2004 (estimate) 3.0-4.2 = -1.2



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