Political-Economics in Pictures

Published on: 14:52PM Nov 05, 2010

{I have borrowed the graphics from Der Spiegel.}

 

Debt   deficit Spiegel


 Pro-business President Clinton managed to reduce the budget deficit each year of his presidency except the last which was break even. He had the good fortune to have business expansion, and bequeathed W. Bush a budget surplus. Newt Gingrich and Fox Infotainment have perpetrated the myth that it was all the Republican congress. The Republican sweep happened on 94, and was too late to be reflected prior to 95 or 96. Prior to that time, Clinton had reduced the deficit each year (bottom of the chart). W. Bush had the same Republican controlled legislature that Clinton did, but after the first year, ran significant budget deficits every year. The lessening of the Republican debt creation began in 05 but accelerated after the Democrat congress sweep of 06. Note that the last year of W’s presidency the beginning of the great depression of 2008-20?? were felt, and the deficit increased. While in the 50s & 60s the Republicans were the budget hawks, wishing to reduce both the deficit and the debt, the Reagan Revolution put paid to that idea. Now it seems the Democrats are the budget hawks. But that, too, may be illusion.

The next chart shows where our economy went – or, actually, that it went. You will notice that George W. Bush presided over (and encouraged) the export of one-third of the industrial jobs in this country. That is making the task of reinvigorating the economy much more difficult because there are simply a lot fewer multiplier-effect jobs in the economy. A multiplier-effect job is one which, by its existence, creates other jobs. Industrial jobs have long been considered to have a multiplier of five. That is, each job in the industrial base creates five jobs outside that base. Hamburger flipping jobs have a multiplier of zero, so talking about replacing industrial jobs with service sector jobs is a lose-lose proposition. That is, we lose both the industrial job itself and we lose the multiplier jobs, or at least suffer a significant reduction in the multiplier effect.

Industrial workers Spiegel

Unemploytment Spiegel

George W. Bush inherited the fewest unemployed in many a moon, just 5.7 million. He handed off to Barack Obama 14.3 million unemployed. I would be remiss not to point out that the compensation of top executives increased more than 20% under W. Evidently, the famous Republican "trickle down" effect doesn’t trickle very far down. Fiscal stimulus does seem to work. Look at the Reagan years: by dumping $1 trillion or so into the defense industry during his presidency, Ronald Reagan succeeded in reducing unemployment significantly, and although the debt and deficit grew, it was nothing like the disaster of the W. Bush years. The W. years also seem to point out the fallacy of another bit of popular wisdom: war creates prosperity. W. had a war in Afghanistan, courtesy of the Taliban and the buddies at Al Qaeda, and created one in Iraq, evidently courtesy of Cheney, Rumsfeld & Co. Despite that and despite the massive tax reductions for the top 50 companies in America, unemployment sky-rocketed, as did the federal debt. Not much prosperity to be seen when nearly three times as many folks have no jobs.