Why was the American economy prosperous under Clinton?

[Brian4Liberty]

Gold started to decline after hitting a peak during its bubble in 1980. That continued until roughly 2004. It was following a decline in the price inflation rate. It is true that the Fed severely contracted the money supply at that time and that caused the spike in gold prices.

Gold went from ~$250 to ~$425 from 2000 to 2004. Get your facts straight.

[Zippyjuan]

Sorry I was off by a couple of years. It was still a decline in price for 20 years with some ups and downs in between. I did say roughly. 2001 was the bottom.

http://goldprice.org/30-year-gold-price-history.html

[Zippyjuan]

First of all, I don't put any faith in government statistics, or the vast majority of statistics.

Now, the reason for any amount of reduced government spending during that boom is due to people voluntarily leaving government employment and joining the booming private sector. It was not a choice by the government. It was the result of the booming economy.

So people quit government jobs and the government didn't fill them? Sorry- that was not the case. Some did leave but they were replaced by others. In dollars, spending did increase- but by a small amount- as said, the smallest amount of any president since WWII. The chart shows it decreasing as a percent of GDP because the GDP was rising. The big thing is that revenues were rising faster and that is why the deficit shrank.

But it is interresting to see that we have gone from the government giddily spending all the higher revenues under Clinton

Bullshit. The California Legislature was giddy about spending the tiniest bit of surplus that we had for one year at the height of the bubble. The Feds likewise took full advantage of the excess revenue.

to government spending being lower because people were leaving the government for the private sector:

Now, the reason for any amount of reduced government spending during that boom is due to people voluntarily leaving government employment and joining the booming private sector. It was not a choice by the government. It was the result of the booming economy.

He certainly did benefit hugely by the dot com bubble and the tax revenues that generated. But Clinton and the Repubican Congress also did not allow spending to rise along with the increased revenues which has not happened very often. Then Bush came along and said the "surplus" should go to "the people" so he cut taxes and increased spending and entered two wars and the budget deficit exploded to where we are today.

[sailingaway]

1. it was a bubble, remember dot com?
2. he stole (borrowed) money from social security to pretend to balance the budget so the debt wasn't as visible leading to the current problems with that program.
3. There WAS real truth to dot.com, the internet was new, and an entirely new economy was born. That was like invention of the printing press, and Clinton had nothing to do with its causation.

[Brian4Liberty]

So people quit government jobs and the government didn't fill them? Sorry- that was not the case. Some did leave but they were replaced by others.
...

Either you work for the government or are their biggest cheerleader. So you should know that government hiring takes place at a glacial pace. And when there is a booming economy, people leave government for higher pay. The government doesn't have the flexibility to bump up pay on a moments notice. When people can make more money in the private sector, it is hard for government to hire people. They certainly don't get replaced overnight as you are inferring.

And just because the government has a cost pulled out from under their feet doesn't mean that they will not spend like drunken sailors to try to make up for it.

And it was all crashing down before Clinton even left office. The next President was going to inherit a bad economy no matter what.

[matt0611]

1. it was a bubble, remember dot com?
2. he stole (borrowed) money from social security to pretend to balance the budget so the debt wasn't as visible leading to the current problems with that program.
3. There WAS real truth to dot.com, the internet was new, and an entirely new economy was born. That was like invention of the printing press, and Clinton had nothing to do with its causation.

That sums it up.

I want to strangle anyone who thinks "higher tax rates made the economy boom".

[Bossobass]

How it works:

The Social Security Administration is legally required to take all its surpluses and buy U.S. Government securities, and the U.S. Government readily sells those securities--which automatically and immediately becomes intragovernmental holdings. The economy was doing well due to the dot-com bubble and people were earning a lot of money and paying a lot into Social Security. Since Social Security had more money coming in than it had to pay in benefits to retired persons, all that extra money was immediately used to buy U.S. Government securities. The government was still running deficits, but since there was so much money coming from excess Social Security contributions there was no need to borrow more money directly from the public. As such, the public debt went down while intragovernmental holdings continued to skyrocket.

Example:

Of the $142 billion surplus projected by the end of 2000, $137 billion will come from excess Social Security taxes.

From the US Treasury:

FY1993 09/30/1993 $4.411488 trillion
FY1994 09/30/1994 $4.692749 trillion $281.26 billion
FY1995 09/29/1995 $4.973982 trillion $281.23 billion
FY1996 09/30/1996 $5.224810 trillion $250.83 billion
FY1997 09/30/1997 $5.413146 trillion $188.34 billion
FY1998 09/30/1998 $5.526193 trillion $113.05 billion
FY1999 09/30/1999 $5.656270 trillion $130.08 billion
FY2000 09/29/2000 $5.674178 trillion $17.91 billion
FY2001 09/28/2001 $5.807463 trillion $133.29 billion

Despite the windfall from the Bush Sr (largest increase ever) and Clinton (2nd largest ever, by a nose hair) tax increases and SS slush fund, anyone see a reduction in public debt? The PD under Clinton grew by $1.5 Trillion when he easily should have been able to actually do what he claimed and pay down some of that debt.

The Cost Of Doing War:

The on the sheet cost of the Balkans intervention was under $20 Billion. Both Bushes plus Obanana have spent 200 times that. Relative peace saves money... scads of it.


And Zipster, WTF is with your 'gold is shit' fixation? Even conservatively playing the ups and downs of gold since 1971 bests the DOW by 10 times, especially in the years you cited.

[robert68]

The first is how much government spending fell during President Bill Clinton's eight years in office and how low it was when he left office. When he became president in 1992, government spending was 23.5% of GDP, and when he left in 2001 it was 19.5% of GDP. President Clinton, in conjunction with a solid Republican Congress, cut government spending by more than any other president in modern times, and oversaw one of the greatest periods of economic growth and prosperity in U.S. history.

http://online.wsj.com/article/SB1000...257188398.html

[Zippyjuan]

And Zipster, WTF is with your 'gold is shit' fixation? Even conservatively playing the ups and downs of gold since 1971 bests the DOW by 10 times, especially in the years you cited.

Check the dates when such comparisons are made. Most start in 2001 when gold hit its low price. During the years of 1980 to 2001 the price of gold went from $800 an ounce to about $265 an ounce by 2001. Did stocks go down by a bigger amount during that period? Yes, this comparison uses the opposite extreme- picking the highest price for gold and the least favorable period for its price. The comparison is just as bad. We can both find times when one did better and times when the other did better. Neither is always the best investment.

This article uses the same point selection bias for his long-term data but you did say it would apply even to the years I cited:

http://www.cbsnews.com/8301-505123_1...-stock-market/

As gold hits $1,500 an ounce, the buzz is ramping up and the gold bugs are going strong. Predictions of gold at $3,500 per ounce are once again common place. The University of Texas has turned into a gold bug taking possession of a billion dollars worth of the shiny metal. But how has gold performed versus the US stock market? The answer is that it has kept up with the stock market in the short-run but badly lagged in the long-run.

Gold over the last two years
Two years ago, gold was trading for the bargain price of $877.00 an ounce according to Kitco.com. At yesterday's closing price of $1,501 an ounce, that represents a 71 percent gain. While there's no denying this great gain, a broad US index fund like the Vanguard Total Stock Market Index ETF (VTI), clocked in an almost identical 71 percent gain. And because the long-term capital gains tax rate is not available on gold, the index fund actually outperformed gold on an after-tax basis.

Gold since 1980 - The long-run
It's somewhat arbitrary to pick a date to measure the long-run. I use the beginning of 1980 since that happens to be when I bought gold coins at $664 an ounce with the absolute certainty that it wou7ld hit $2,000 in a year or two. Despite the fact that gold has more than doubled, my return still amounts to a very unspectacular 2.6 percent annual return. It also lagged inflation, which means that I can buy less today than when I made my investment, even before Uncle Sam takes his cut of my nominal gain.

While my $3,320 college graduation money investing in gold in 1980 is worth $7,500 today, I probably would have been far better off if I had invested in American capitalism. Because with the US stock market racking up an 11.6% annual return, my $3,320 would have been worth $102,853. A $95 thousand greater return than my gold, how depressing is that?

(Sorry for getting off- topic)

Clinton- higher revenues from dot com bubble combined with Republican Congress not spending more money.

[Tpoints]

Prosperous is a very broad and misleading term.

How was Clinton years prosperous? Or how was Bush years prosperous?