Friday, June 19, 2015

Can't be done.

Yesterday I showed the difference between the overall and primary budget balances for the federal government. The overall number is described on the graph as the "unified" number:

Graph #1: Overall Budget Balance less Primary Budget Balance

Today I want to play with that thing. I inverted the graph, so that when deficits are bigger the line goes up. It's just more intuitive. And you don't have to explain, like JW Mason does, that "The balances are shown ... with surpluses as positive values and deficits as negative." I don't want you to have to pay attention to trivia detail like that.

So I inverted the graph and split it into three sections (three different colors) based on three different trend paths you might see in the data.

Graph #2: Broken into Three Time Periods
Then I put exponential trend lines on the blue and orange parts:

Graph #3: Exponential Curves added for Two of the Three Periods
The early years are a good match to a gradually-increasing exponential trend (blue). The middle period is a good match to a rapidly-increasing exponential trend (orange). There is a significant difference between the two periods.

The change-over happens around 1973. I know, the familiar story is that the "federal government ran small budget deficits through the 1960s and 1970s" and then "during the 1980s the deficits ballooned". But by 1980 the "overall less primary" line is way off from the 1950-1973 (blue) trend. The graph just doesn't fit that familiar story. Faster increase, represented by the orange exponential curve, takes over around 1973. In other words, we don't have to wait for the Reagan years to see that faster increase.

I know Jazz won't care. He wants to blame Reagan and he's gonna blame Reagan come hell or high water. To each his own, I guess.


I went back then to the first graph and looked at it a different way this time. Jazz says "I like to look at this kind of stuf as YoY % change". Me, too. So that's what I did:

Graph #4: The orange line shows Year-on-Year Percent Change for the blue line
The numbers on the right-hand scale show the Percent Change values for the orange line. The high point -- something over 30% -- comes in 1981. It looks to me like there was a general upward trend from 1951 to 1981, and a general downward trend after 1981.

I added exponential trends lines for the periods through 1981 and since 1981:

Graph #5: Percent Change, with Exponential Trends
The exponentials cross directly under that 1981 peak. This graph tells us that the difference between overall and primary was accelerating until 1981, and since 1981 has been decelerating.

Graph #3 shows faster exponential growth taking over around 1973. This does not contradict Graph #5. It tells us you should find on Graph #5 a faster increase from 1973 to 1981 than in the years before 1973.

Taken together, these graphs show increase from 1950 to 1973, faster increase from 1973 to 1981, and decline after 1981.

Jazzbumpa wants to use these data to argue that Reagan "blew up the primary budget" after 1981.

Sorry, Jazz. Can't be done.


Jazzbumpa said...

I think you've over analyzed, and in the process gotten a little bit confused.

A few points -

1. Graph 3 nicely illustrates the growth and decline in the change of the interest portion of the annual deficits

2. In graph 4, you're looking at the YoY % change in the interest due portion of the deficit. Interest rates fell rapidly after the summer of '81, as you point out with graph 5. This might be a bit of a challenge to JWM's point, but it has nothing to do with mine. You've illustrated in a different way that the growth of interest debt was declining. Remember, I'm blaming Reagan for the Primary budget explosion, and you have subtracted that away.

3. "Taken together, these graphs show increase from 1950 to 1973, faster increase from 1973 to 1981, and decline after 1981."
Exactly so - for the growth of the interest contribution to federal debt.

4. "Sorry, Jazz. Can't be done."
This remains unproven. What you've done is interesting, but unrelated to my premiss.


The Arthurian said...

Oh yeah, good point. Thanks, Jazz.