Fiscal Conservatism

In the last 30 years what President was the most fiscally conservative?

Feb 26, 2009
* Fiscal conservatism advocates a reduction in overall government spending (smaller federal government) while at the same time balancing the federal budget or “pay as you go,” i.e., PAYGO. Fiscal conservatives champion spending programs at the state level where they say they are better kept in check rather than far off in Washington D.C.
* Fiscal socialism on the other hand refers to a broad set of public services through large outlays in federal funds, usually with borrowed money. By capturing funds at the federal level fiscal socialists believe that social programs can be dealt with more efficiently and more uniformly for the good of all citizens, especially the poor. Examples of federal funding for socialist causes are interstate highways, schools (no child left behind), social welfare (right to life and stem cell research), agriculture (farm subsidies), and energy (offshore drilling).

Question. Who has been the most fiscally conservative President over the last 30 years? To answer this we need to look at three economic figures posted at the end of each administration:
(1) The percent of debt to gross domestic product (GDP) (the total market value of all final goods and services produced in a country),
(2) The percent national debt increase from the last President, and
(3) The difference in "Revenue Increases" to "Spending Increases."

(1) Percent of debt to gross domestic product at the end of term in office
Rank / Pres / Debt at end of term in trillions / GDP in trillions / % debt to GDP
1 / CARTER / $0.9 / $2.8 / 33.3%
2 / REAGAN / $2.7 / $5.1 / 52.6%
3 / CLINTON / $5.7 / $9.8 / 57.7%
4 / BUSH I / $4.2 / $6.3 / 65.9%
5 / BUSH II / $11.0 / $13.6 / 81.0%

(2) Percent the national debt was increased under his administration
Rank / Pres / Debt increase during term in trillions / % of debt increase
1 / CLINTON /$1.5 / 35.6%
2 / BUSH I / $1.5 / 55.6%
3 / CARTER / $0.3 / 42.3%
4 / REAGAN / $1.8 / 88.8%
5 / BUSH II / $5.0 / 89.0%

(3) Difference in "Revenue Increase" to "Spending Increase."
Rank / Pres / Rev Incr / Spend Incr / Difference
1 / CLINTON / 35% / 09% / +26%
2 / CARTER / 20% / 13% / +07%
3 / BUSH I / 17% / 18% / -01%
4 / REAGAN / 15% / 25% / -10%
5 / BUSH II / 10% / 25% / -15%

Winner and the most fiscally conservative President in the last 30 years – Mr. William Clinton
Rank / Pres / Party
1 / CLINTON / Democrat
2 / CARTER / Democrat
3 / BUSH I / Republican
4 / REAGAN / Republican
5 / BUSH II / Republican
http://www.cedarcomm.com/~stevelm1/usdebt.htm
http://www.skymachines.com/US-National-Debt-Per-Capita-Percent-of-GDP-and-by-Presidental-Term.htm
http://en.wikipedia.org/wiki/National_debt_by_U.S._presidential_terms

And the most fiscally socialist award goes to Mr. George W Bush II. But wait. Isn’t this an upside down non-traditional view of history? Aren’t the Republicans supposed to be the conservative party and the Democrats the more socialist leaning? To get a better understanding of these results, we need to look back at the U.S. economic history of the last 65 Years.

The U.S. Economic History of the Last 65 Years

Congress passes spending bills, but for the most part Congress has gone along with the President on spending and tax policies. Since WWII and for 36 years the ratio of national debt to GDP slowly dropped from 121.7% under three Republican and four Democratic Presidents (Harry S. Truman-Democrat, Dwight D. Eisenhower-Republican, John F. Kennedy-Democrat, Lyndon B. Johnson-Democrat, Richard Nixon-Republican, Gerald Ford-Republican, and Jimmy Carter-Democrat). Mr. Truman was considered the most fiscally conservative of these seven presidents reducing the percent of national dept to GDP from 121.7% to 73% (48.7% drop). Mr. Eisenhower followed reducing the percent of national dept to GDP from 73% to 55% (18% drop). Even Mr Johnson, during a large scale war in Vietnam lasting his entire administration, was able to reduce the national dept to GDP from 51% to 40% (11% drop). He pledged both guns and butter and delivered. When Mr. Reagan entered office the percent of U.S. debt relative to GDP was down to 33.3%. For his economic center piece, Mr. Reagan argued vociferously to reduce the level of socialist spending. However, the only real effort he pursued was to get taxes cut while increasing spending (revenue increased 15% but at the same time spending increased 25% from the Carter years). The Reagan tax cuts and spending increases caused the national debt to grow from $2.7 trillion to $5.1 trillion and the percentage of debt to GDP to grow from 33.3% to 51.9% for an 18.6% increase. The percentage of debt to GDP continued to grow under Mr. Bush I and Mr. Clinton until two years into the term of Mr. Clinton when the U.S. debt to GDP peaked at 67.3%. But by the end of the Clinton administration, under a Democratic President with a Republican Congress, this percentage of debt to GDP had dropped to 57.6%. So who should have taken credit here? The answer is both Congress and the President. Mr. Clinton was part of a fiscally conservative Democratic Leadership Council advocating fiscal conservatism along with a Republican-dominated Congress led by Speaker of the House Newt Gingrich. Under Mr. Gingrich’s leadership Congress created the “Contract with America” document that required a balanced budget which resulted in the Omnibus Budget Reconciliation Act of 1993 (or more popularly called the Deficit Reduction Act) cutting government spending and raising taxes on the rich (the top personal income tax bracket was raised from 31% to 39.6%). Also taxes were restructured to help the middle class and small businesses. This stimulated the economy so much that America saw the largest increase in government revenue in history or 35% while spending only increased 9%. Also the Republican Congress enacted the first PAYGO (pay-as-you-go) rules for the purpose of reducing the massive deficit that had grown during the Reagan and Bush years, and balancing the budget for the first time in decades. After the implementation of these fiscally conservative bipartisan efforts, the United States was able to reduce the $5.7 trillion national debt by $360 billion and create the largest federal budget surplus ever ($236 billion in fiscal year 2000).
http://en.wikipedia.org/wiki/Omnibus_Budget_Reconciliation_Act_of_1993 http://en.wikipedia.org/wiki/Fiscal_conservatism
http://clinton4.nara.gov/WH/New/html/20000204_3.html
http://takingnote.tcf.org/2009/02/deficits-past-and-future.html

Then on Jan 20, 2001 Mr. Bush II came into office. He had everything going in the right direction by inheriting a shrinking government and a shrinking debt. And he had at his command a conservative Republican House and Senate who were ready and willing to say “yes” to Mr. Bush II, especially on his economic policies. But with his first budget Mr. Bush II managed to increase the national debt to GDP ratio from 57.6% to 60.0% by cutting taxes and increasing spending. By 2004 this ratio was up to 63.7%, as a result of additional tax cuts with more spending increases. And when Mr. Bush II left office the national debt to GDP had increased a total of 23.4% to 81% with an accompanying 25% increase in spending vs. 10% increase in revenue for a record breaking 15% differential. The US debt almost doubled under Mr. Bush’s leadership (or lack of it) in real dollars, and the fiscally conservative side of Mr. Bush never revealed itself (if there was one to be had).

In an interview on March 15, 2009 with CNN's "State of the Union," Former Vice President Dick Cheney said he and Bush had to spend money to deal with the September 11, 2001 attacks, the resulting war in Afghanistan, the disaster of 2005's Hurricane Katrina, and the costly war in Iraq. Mr. Cheney said, "stuff happens” (a repeat of Mr. Bush II’s Secretary of Defense Donald Rumsfeld when he alienated the world with the same statement after the looting of Baghdad’s museum April 12, 2003). In comparison, while Mr. Bush II increased the national debt to GDP by 23.4% while being burdened with a 140,000 troop war, Mr. Truman dealt with a 13,000,000 troop war in Korea while driving down the national dept to GDP 48.7% and Mr Johnson dealt with a 500,000 troop war in Vietnam while driving down the national dept to GDP 11%. Katrina cost the federal government $80 billion and the Afghani and Iraqi wars - $800 billion. That leaves unaccounted $4.1 trillion. Here are few examples of how Mr. Bush II mismanaged and wasted tax payer money.
* Mr. Bush II pursued the Iraq War as primarily a mercenary one with more civilians than soldiers in the theater of operations who were paid exorbinate amounts and in some cases over $1,000 a day. While Vietnam claimed 58,000 American lives, far more than the 4,259 (Mar 16, 2009) lost in Iraq. But in today's dollars Vietnam cost only $549 billion, or about half as much as the war in Iraq. Further, many contracts in support of the Iraq War were awarded sole-source, no-bid with huge markups. Currently the Senate is investigating these funding abuses.
* Mr. Bush II strong-armed a Republican Congress into passing the first new entitlement program in 40 years, the Medicare Prescription Drug and Modernization Act of 2003, that is estimated to add over $11 trillion to Medicare’s unfunded liabilities.
* Back in 1996, the Republican Congress under Mr. Clinton made abolition of the Department of Education a cornerstone of their campaign promises, calling it an inappropriate federal intrusion into local, state, and family affairs. But Mr. Bush II expanded the reach of the Department of Education through the "No Child Left Behind" law, increasing federal control over local schools and increasing federal education spending by nearly 61 percent.
* Mr. Bush II created energy policies that saw the American balance of payment to Middle East Oil states slide more and more into the red. The U.S. imported 60% of its oil and petroleum products during the first 11 months of 2008, up from just under 53% in President Clinton’s last year in office. This 7% increase came about despite the fact that starting in with Mr. Bush II Energy Policy Act of 2005 each American household was paying $700 each year in subsidies to hugely profitable oil companies, but just $57 in wind and solar subsidies. The oil industry as a whole received about $113 billion per year in direct federal subsidies as a result the law.
* Mr. Bush II created a radically new socialist program called the Office of Faith-Based and Community Initiatives that doled out money to a select group of churches that pledged allegiance to his reelection and policies. The Office of Faith-Based and Community Initiatives yearly budget grew each year and was up to $15.3 billion for the 2007 budget year, money that went to a select few churches.
* Mr. Bush II reversed six years of Republican efforts to wean farmers from huge government subsidies by signing into law a bill that increased those federal payment price supports by more than $83 billion over the next 10 years.

By creating such an oppressive burden on this nation as a result of the massive debt that this socialist spending President generated over the last eight years, Mr. Bush II must be undeniable recognized as the most fiscally socialistic President of all time.

Revisionists’ History

Conservative columnists and TV and radio talk show hosts Sean Hannity, Bill O'Reilly, Glenn Beck, Rush Limbaugh, Neal Boortz, Mark Levin, Greta Van Susteren, Ann Coulter, Michael Savage, and others have been telling Americans for years that cutting taxes will pump up the economy and thus generate more revenue for the government. This may be true if spending in turn were reduced, but somehow these political amateurs have been way out of balance by turning a blind eye to the spending part of this equation or PAYGO and have given the past three Republican Presidents (Reagan, Bush I, Bush II) a free pass by ignoring the fact that they have run the debt up by an astronomical $8.3 trillion or a little over ¾ of our entire national debt. By ignoring the obvious and carefully crafting revisionist history in a way their listeners want to hear it, they have attacked the last two Democratic Presidents (Carter and Clinton), morphing the blame as though socialist government expansion and debt were theirs alone. But presidential economic history shows that since Johnson, under each one of four Democratic Presidents (Lyndon Johnson, Jimmy Carter, and Bill Clinton) government revenue increased and spending decreased, and under each one of the last five Republican Presidents, since Nixon (Richard Nixon, Gerald Ford, Ronald Reagan, George H. W. Bush, and George W. Bush), government revenue decreased and spending increased. Cutting taxes does not increase revenue unless spending is also cut. Conservative Reaganomics or “trickle down” economic policy calls for like spending decreases when taxes are cut. Therefore, these Republican Presidents (including Mr. Reagan himself) were not following conservative guidelines, and the entertaining pundits who call themselves conservatives continue to deliberately mislead their listeners. Now they are crucifying Mr. Obama by somehow superimposing this massive debt onto his shoulders and working diligently on revisionist history. But, ha, they sure are entertaining! There are some out there that even believe them; which goes to show that some people will believe anything. Their rhetoric is beyond the pale and must be considered laughable as the Daily Show with Jon Stewart on the Comedy Central network so artfully captures -
http://news.aol.com/political-machine/2009/01/23/fox-news-and-rush-limbaugh-attack-obama-early-and-often/

“Media Matters” has demonstrated time and again, Fox News' Sean Hannity has been a prolific and influential purveyor of revisionist history. http://mediamatters.org/items/200812170007

HANNITY: On Fox News, Feb 24, 2009, Hannity repeated claims that the $787 billion stimulus package was full of pork. He said, "The salt harvest marsh mouse that gets $30 million. The railway from Los Angeles to Las Vegas: that is a pork project." Media Matters for America has noted, the bill does not contain any language directing funds to the salt marsh harvest mouse or its San Francisco wetlands habitat, a fact a House Republican who originated the claim has confessed is false.
http://mediamatters.org/items/200902250006

HANNITY - December 8, 2008 on the Hannity & Colmes Show, Hannity continued his praises for Mr. Bush II saying, "We had a good six and a half years with the economy [under Bush].” And throughout the 2008 presidential campaign Hannity embellished Mr. Bush II's economic record:
http://mediamatters.org/items/200812090014

Comparison of Debt to GDP World-Wide

The US debt is $11 trillion, and our annual GDP is $13.7 trillion, so our debt amounts to 81% of our GDP. That compares to the following estimates for other countries and shows our situation getting worse.

Country/Public debt as % of GDP/Date of Information
* Iceland's current external debt is more than 500 per cent of the country's GDP
1 Zimbabwe 218.20 - 2007 fiscal year end (Sep 30)
2 Lebanon 186.60 - 2007 fiscal year end (Sep 30)
3 Japan 170.00 - 2007 fiscal year end (Sep 30)
4 Jamaica 126.50 - 2007 fiscal year end (Sep 30)
5 Sudan 105.90 - 2007 fiscal year end (Sep 30)
6 Egypt 105.80 - 2007 fiscal year end (Sep 30)
7 Italy 104.00 - 2007 fiscal year end (Sep 30)
8 Singapore 96.30 - 2007 fiscal year end (Sep 30)
9 Seychelles 92.30 - 2007 fiscal year end (Sep 30)
10 Greece 89.50 - 2007 fiscal year end (Sep 30)
11 Sri Lanka 85.80 - 2007 fiscal year end (Sep 30)
12 Belgium 84.60 - 2007 fiscal year end (Sep 30)
13 Norway 83.10 - 2007 fiscal year end (Sep 30)
14 Bhutan 81.40 - 2004
15 Israel 80.60 - 2007 fiscal year end (Sep 30)
15 United States 81.0% - Jan 2009
16 Cote d'Ivoire 75.20 - 2007 fiscal year end (Sep 30)
17 Jordan 72.40 - 2007 fiscal year end (Sep 30)
18 Morocco 67.40 - 2007 fiscal year end (Sep 30)
19 Hungary 67.00 - 2007 fiscal year end (Sep 30)
20 Germany 64.90 - 2007 fiscal year end (Sep 30)
21 Uruguay 64.80 - 2007 fiscal year end (Sep 30)
22 Canada 64.20 - 2007 fiscal year end (Sep 30)
23 France 63.90 - 2007 fiscal year end (Sep 30)
24 Portugal 63.60 - 2007 fiscal year end (Sep 30)
25 Mauritius 63.10 - 2007 fiscal year end (Sep 30)
26 Nicaragua 62.90 - 2007 fiscal year end (Sep 30)
27 United States 60.80 - 2007 fiscal year end (Sep 30)
28 Cyprus 59.60 - 2007 fiscal year end (Sep 30)
29 Austria 59.10 - 2007 fiscal year end (Sep 30)
30 Ghana 58.50 - 2007 fiscal year end (Sep 30)
31 India 58.20 - 2007 fiscal year end (Sep 30)
32 Argentina 56.10 - 2007 fiscal year end (Sep 30)
33 Philippines 55.80 - 2007 fiscal year end (Sep 30)
34 Tunisia 55.40 - 2007 fiscal year end (Sep 30)
35 Panama 53.00 - 2007 fiscal year end (Sep 30)
36 Colombia 52.80 - 2007 fiscal year end (Sep 30)
37 Gabon 52.80 - 2007 fiscal year end (Sep 30)
38 Albania 51.40 - 2007 fiscal year end (Sep 30)
39 Malawi 50.60 - 2007 fiscal year end (Sep 30)
40 Pakistan 50.60 - 2007 fiscal year end (Sep 30)
41 Kenya 48.70 - 2007 fiscal year end (Sep 30)
42 Croatia 47.80 - 2007 fiscal year end (Sep 30)
43 Costa Rica 46.60 - 2007 fiscal year end (Sep 30)
44 Aruba 46.30 - 2005 fiscal year end (Sep 30)
45 Bolivia 46.30 - 2007 fiscal year end (Sep 30)
46 Netherlands 45.50 - 2007 fiscal year end (Sep 30)
47 Brazil 45.10 - 2007 fiscal year end (Sep 30)
48 Ethiopia 44.50 - 2007 fiscal year end (Sep 30)
49 Switzerland 44.20 - 2007 fiscal year end (Sep 30)
50 United Kingdom 43.60 - 2007 fiscal year end (Sep 30)
51 Poland 43.10 - 2007 fiscal year end (Sep 30)
52 Vietnam 42.00 - 2007 fiscal year end (Sep 30)
53 Sweden 41.70 - 2007 fiscal year end (Sep 30)
54 Malaysia 41.60 - 2007 fiscal year end (Sep 30)
55 Dominican Republic 41.00 - 2007 fiscal year end (Sep 30)
56 Papua New Guinea 40.10 - 2007 fiscal year end (Sep 30)
57 Turkey 38.90 - 2007 fiscal year end (Sep 30)
58 Montenegro 38.00 - 2006 fiscal year end (Sep 30)
59 Thailand 37.90 - 2007 fiscal year end (Sep 30)
60 Syria 37.70 - 2007 fiscal year end (Sep 30)
61 Bangladesh 37.40 - 2007 fiscal year end (Sep 30)
62 El Salvador 37.30 - 2007 fiscal year end (Sep 30)
63 Serbia 37.00 - 2007 fiscal year end (Sep 30)
64 Cuba 36.80 - 2007 fiscal year end (Sep 30)
65 Spain 36.20 - 2007 fiscal year end (Sep 30)
66 Finland 35.90 - 2007 fiscal year end (Sep 30)
67 Slovakia 35.90 - 2007 fiscal year end (Sep 30)
68 Bosnia and Herzegovina 34.00 - 2007 fiscal year end (Sep 30)
69 Indonesia 34.00 - 2007 fiscal year end (Sep 30)
70 Yemen 33.50 - 2007 fiscal year end (Sep 30)
71 Ecuador 33.10 - 2007 fiscal year end (Sep 30)
72 South Africa 31.30 - 2007 fiscal year end (Sep 30)
73 Bahrain 31.20 - 2007 fiscal year end (Sep 30)
74 Macedonia 30.80 - 2007 fiscal year end (Sep 30)
75 Peru 29.20 - 2007 fiscal year end (Sep 30)
76 Korea, South 28.20 - 2007 fiscal year end (Sep 30)
77 Zambia 28.10 - 2007 fiscal year end (Sep 30)
78 Trinidad and Tobago 27.90 - 2007 fiscal year end (Sep 30)
79 Taiwan 27.90 - 2007 fiscal year end (Sep 30)
* (80) Iceland 27.60 - 2007 fiscal year end (Sep 30)
* Iceland's current external debt is more than 500 per cent of the country's GDP
* http://my.opera.com/richardinbellingham/blog/show.dml/1856200
81 Paraguay 27.00 - 2007 fiscal year end (Sep 30)
82 Denmark 26.00 - 2007 fiscal year end (Sep 30)
83 Czech Republic 26.00 - 2007 fiscal year end (Sep 30)
84 Ireland 24.90 - 2007 fiscal year end (Sep 30)
85 Saudi Arabia 24.30 - 2007 fiscal year end (Sep 30)
86 Honduras 24.10 - 2007 fiscal year end (Sep 30)
87 Slovenia 23.60 - 2007 fiscal year end (Sep 30)
88 Moldova 23.30 - 2007 fiscal year end (Sep 30)
89 Senegal 22.90 - 2007 fiscal year end (Sep 30)
90 Mexico 22.80 - 2007 fiscal year end (Sep 30)
91 Namibia 22.30 - 2007 fiscal year end (Sep 30)
92 Mozambique 22.20 - 2007 fiscal year end (Sep 30)
93 United Arab Emirates 21.20 - 2007 fiscal year end (Sep 30)
94 Guatemala 20.90 - 2007 fiscal year end (Sep 30)
95 New Zealand 20.70 - 2007 fiscal year end (Sep 30)
96 Uganda 20.60 - 2007 fiscal year end (Sep 30)
97 Tanzania 19.60 - 2007 fiscal year end (Sep 30)
98 Venezuela 19.30 - 2007 fiscal year end (Sep 30)
99 Uzbekistan 18.70 - 2007 fiscal year end (Sep 30)
100 China 18.40 - 2007 fiscal year end (Sep 30)
http://www.doomers.us/forum2/index.php?action=printpage;topic=27156.0

Foreign Owners of US Treasury Securities as of Nov 2008

Nation - $billion - %
China - 681.9 - 22.1%
Japan - 577.1 - 18.7%
UK - 360.0 - 11.7%
Caribbean banking centers - 220.8 - 7.2%
Brazil - 129.6 - 4.2%
Russia - 78.1 - 2.5%
Luxembourg - 75.0 2.4%
Hong Kong - 66.0 - 2.1%
Switzerland - 63.0 - 2.0%
Norway - 59.1 - 1.9%
Taiwan - 43.3 - 1.4%
Germany - 43.3 - 1.4%