Daniel Thornton locates the start of the problems back to about 1970… after about 1970 a pattern of volatile but growing deficits emerges. The pattern is interrupted for a few years in the late 1990s by the higher tax revenues and lower social spending resulting from the unsustainable dot-com boom, but a return to the larger deficits was coming eventually. Similarly, the debt/GDP chart shows that ratio bottoming out around the mid-1970s, and then beginning to climb--again with a bump for the dot-com years of the late 1990s…
Why 1970--when nothing happens to derange either the pattern of deficits as a share of GDP or the trajectory of the debt-to-GDP ratio--rather than 1980, when the election of Ronald Reagan does change the pattern of deficits and the trajectory of the debt-to-GDP ratio?
Why speak of the late 1990s only as the era of the dot-com boom (which makes about 1/4 of the difference for the deficit) rather than the era of Clinton tax increases and spending cuts (which make about 3/4 of the difference for the deficit)--both of which were very hard-fought and hard-won, and then casually trashed and reversed by George W. Bush and his Republicans in the early 2000s?
I read this, and I sense--from Thornton and Taylor--a willful denial of a lot of the past generation's American economic history.
