Or, over the past quarter century, have Democrats and Republicans acted differently?
In comments to my previous post on whether tax receipts were surging in an unprecedented fashion, and if so, what this meant for the fiscal outlook, I was admonished for not discussing further revenue versus spending trends. In response, here are two pictures I will present without further comment, except to acknowledge intellectual property rights — Figure 1 was inspired by a similar graph by Jeff Frankel (slide 37) (my tweak is to add recession dates and a “standardized” budget balance measure — to take out cyclical effects among other things — and to subtract spending to GDP).
Figure 1: Net lending by Federal Government, and CBO standardized budget surplus, as a share of nominal GDP. Source: For net lending, NIPA Table 3.2, line 45, June 29, 2006 release; for standardized budget surplus 1962-2005, CBO, The Budget and Economic Outlook, January 2006, Appendix F, and for 2006 estimates, CBO The Cyclically Adjusted and Standardized Budget Surplus, March 2006. Fiscal year figures converted to quarterly data using a quadratic match average process which fits “…a local quadratic polynomial for each observation of the low frequency series, then use this polynomial to fill in all observations of the high frequency series associated with the period.” (EViews manual). Recession dates from NBER.
Figure 2: Federal Government debt held by public (including Federal Reserve), and by private investors, as a share of nominal GDP. Source: U.S. Treasury via St. Louis Fed FRED II. Recession dates from NBER.