Wordsmith Wonders

"Hey kid, you can stay."
--Eddie Wilson (Eddie & the Cruisers)

I saw a video clip this morning of a Democratic senator boasting about former Democratic President Clinton achievement to balance the budget in the late 1990s. This balance was subsequently lost when Republican President Bush to over.

Let's make sure we understand a few things.

In the business world, a budget is simply a spending target. In the world of the politics, a budget is the difference between receipts and expenditures. A 'balanced budget' means that you took in more than you spent.

Using CBO data, during the Clinton yrs (and in most yrs of any administration, Dem or Rep), receipts never declined. And expenditures never declined. In 1999 and 2000, receipts merely exceeded expenses, resulting in the infamous 'balanced' situation.

What economic/market phenomenon corresponded to this period? The tech bubble yrs, which resulted in a captial gains windfall for the Clinton folks (you can bet bureaucrats understand the benefits of market prosperity on their livelihood).

The real bogey is government spending. The table I'm looking at here only goes back to 1970, and spending has never declined YOY since then. I know there are older series out there; I believe the last time government spending declined with any significance YOY preceded, unsurprisingly, the rise of the Progressive movement.

The point here is to not get caught up in the budget mumbo jumbo. Think spending.