The Republican debt and what we bought with it.
There is so much creative math and revisionist history these days around the debt and deficit issue. Let’s look at some hard facts.
First the debt. We had to borrow massively to fight WWII. Debt to GDP ratio at the end of the war was 120%, yet no one on the right OR left has claimed we should not have fought WWII or could not afford to.
But until Reagan, we did the responsible thing. Every single president since WWII has paid down part of the WWII debt, except three: Reagan, Bush and Bush. When Jimmy Carter left office, our debt was under $1 trillion (just over 30% of GDP).
Enter Ronald Reagan. Reagan figured out that you could borrow from our children, give the money to your rich friends, call it “morning in America” and buy some fake prosperity. He tripled the debt. Bush, after calling this scheme “voodoo economics,” continued Reagan’s policies and by the time he left office, Reagan and Bush had quadrupled the national debt. Debt to GDP ratio was back to Truman era levels, nearly 70% of GDP. Plus, the interest on the Reagan/Bush debt saddled the country with $300 million a day in interest, 2.6% of GDP. So now, to Clinton’s, W Bush’s and Obama’s deficit, we have to add the compounding interest on the debt.
National Debt vs. GDP since 1930
Conservatives argue that it wasn’t Reagan, but a free spending Democratic Congress that ran up spending.
Not. True.
In fact, Reagan’s borrow and spend policies were supported by all Republicans and opposed by all but a few blue dog Democrats in the House. The Senate was solidly Republican. And even with that coalition of Republicans and blue dog Dems, Congress gave Reagan less than he wanted to spend, so deficit and debt would have been even higher if Congress gave Reagan all he wanted. Not much different though, as you can see below. Reagan and Bush got to spend pretty much what they wanted to.
Suggestions that pet project “pork” (earmarks) ran up the debt. But, the total of “earmarks” (both parties) was $200 billion for the entire Reagan era; A mere 0.2 trillion.
Clearly, Congress did not write budgets any higher than Reagan asked for and often lower. Here’s the chart:
Reagan and Bush got what they wanted
Bill Clinton, like every other president at the time except Reagan and Bush, paid off some of the debt. He cut the debt back to around 55% of GDP, over GOP objections that his policies would “destroy the economy.”
Now, the right has latched onto the Grover Norquist line that GOP politicians love to trot out: “We don’t have a taxing problem. We have a spending problem.” Really? Let’s actually look at some numbers.
Most of the "Obama" deficit is from Bush
It’s pretty clear that unpaid for tax cuts, unpaid for wars and the crash itself are the major parts of the deficit. It turns out, we DO have a revenue problem, and the key components of the deficit are Bush’s tax cuts and wars, not Obama’s spending. See that little white stripe at the bottom of the chart? That’s where our “spending problem” would be. In “all other”.
Republicans put all their spending on the national credit card, and now the GOP balks at paying the bill for what THEY bought. Look at where the “Obama deficit” would be without the supply siders’ borrow-and-spend policies. Around $200 billion. 0.2 trillion.
So, almost all of the current deficit is from the supply-siders’ crash (“deregulate!”), and from unpaid for Bush wars and tax cuts. Now let’s look at that $14.3 trillion national debt.
National Debt Since Reagan
The green line shows how the economy could have looked if Reagan and Bush had kept debt to GDP ratio even, not even paying it down as their predecessors had always done. Clinton could have paid off the WWII debt almost entirely without the 2.2 trillion in interest on the Reagan/Bush debt. The Republican party created the vast majority of our debt, and the numbers prove it. The supply-sider debt is $12 trillion of the $14.3 trillion total, plus most of the current deficit is also the result of GOP policies.
The numbers used in these charts are all from the respective administrations, that is from the OMB.
Here’s the data in spreadsheet form (xls) for anyone who wants to drill down into the raw data and try to find any manipulations (as if Bush’s OMB would exaggerate his deficits and debt.)
What we bought
We know what we bought the last time we ran up a huge debt. We fought WWII, shifted manufacturing to weapons building, then rebuilt civilian manufacturing, employed millions, created a vibrant middle class, partly through the veterans act, FHA mortgages, federal student loans and similar programs, built an interstate highway system, went to the moon, built a world class infrastructure of hydro dams, bridges and such, a world class research capability through NASA, NIH, USDA, DOE, DOD and partnerships with Universities. All the while we were steadily reducing the national debt. Let’s go back to that graph.
National Debt vs. GDP since 1930
Remember all the great things America did while paying down that massive WWII debt.
THAT’s what we bought last time we got out the national credit card.
Let’s look at what we bought this time.
When Reagan and the supply-siders came to town, we changed course into a borrow-and-spend spree of tax cuts and military spending that were supposed to stimulate the economy, but have resulted instead in a massive decline in the middle class and a 30 year program of income redistribution from the bottom UP. Here’s how Americans have fared under the supply-side regime of the last 30 years.
For 80% of our population, income has been stagnant for 30 years, and share of income has declined. For the top 1% it’s been a feast, nearly quadrupling their income and more than doubling their share of the pie, while nearly everyone else’s declined.
Put another way, in the past 30 years, the richest 1% have gained as much as the bottom 80% have lost.
The resulting concentration of income and wealth is startling.
Here’s how America’s wealth, its “net worth” is divided.
One third of everything in America belongs to the top 1% of Americans. Two thirds belongs to the top 10%. The bottom 90% owns just over a quarter of the wealth.
Remember, this is supposed to be a democracy. We could change this, just by returning to the times when we could both afford great things and pay down the debt.
Finally, with such overwhelming wealth disparity and so much of the Nation’s wealth concentrated at the top, who pays America’s bills? I hear from conservative rich guys that they pay a disproportionately large share of the taxes that run this place. Let’s see. Keep in mind, this is for non-investment income, so those who don’t work, but just invest, get the super sweet tax rate of 15%:
This is enormous wealth redistribution upward, and has devastated the middle class, American manufacturing and jobs.
The American middle class has been the source of our economic strength for over one hundred years. Republicans are eating the golden goose. They just don’t seem to get it, that you can’t run a business without customers, and if you ship all your customers’ jobs to low-wage countries, the jobless can no longer buy your products. Do they think Chinese buyers can pay $90 for a pair of shoes that Chinese workers make for $2? Of course not. The Chinese will make Nike knockoffs for Chinese buyers. In fact, they already do.
Please, correct me if I’m wrong. With facts and links, not op-ed, pundit or blogger opinions. Are there any facts on the GOP side? Or just spin?
