United States National Debt

 

An Analysis of the Presidents Who Are Responsible for the Borrowing

 

By Steve McGourty

 

Update History

Fifth revision started 14 Oct 08

21 September 2008, fourth Revision

6 May 2007, third Revision

June 2006, second Revision

April 2005, first Revision

July 2003, Original

 

The chart below, Figure 1, shows the United States national debt (per Microsoft’s Encarta Encyclopedia[1] and US Government data[2]) with the various Presidents’ terms marked by vertical lines.  Under President Clinton the growth in debt ceased, but note the radical change in direction since George W. Bush entered office.  There is no question and a lot of mathematical proof that the steepest upward rises in debt since the end of World War II, started with President Reagan and continued with other so called Neo-Conservatives.  (See red in Figure 1 below.) 

 

(Click on any graph in this paper to get a larger view.)

 

Figure 1

 

For those who would prefer to see this debt data presented on a log scale click this link.  The log scale certainly shows the WWII debt in a different perspective, and tends to flatten the more recent debt numbers.  Changing the scale does not mask an obvious slant towards increased debt during Neo-Con administrations.

 

While the data prior to 1946 is included for historical reference, most of this paper will concern itself with the years since World War II -- the last time this nation was in an all out war.  The undeclared wars since 1946 have never required the mobilization of the entire population and thus would skew the modern data.  Most of one lifetime is a wide enough sweep of time to cover[3].

 

For the mathematically inclined, if you take the first derivative of the data presented to find the slope of each President’s debt increase, you will find that the Republican slopes are consistently more positive than the Democratic slopes.  For everyone else, this just means that unbiased mathematical proof exists to support the claim that since 1945, Republican presidents have borrowed more than Democratic presidents regardless of the inflation rate[4].

 

The government has adjusted its projections since last year, they now show a one year slow down of incurred debt as our current president leaves office.  To achieve this fiscal miracle the government accountants are assuming that the Bush tax cuts will not be renewed, thus it will appear to bring in more government revenue.  This allows the current administration to claim less growth in debt at the same time they are calling for making these cuts permanent.  Of course if the tax cuts are made permanent the debt for that year will more than triple.

 

 

Historical Perspective

 

               "I place economy among the first and most important republican virtues, and public debt as the greatest of the dangers to be feared. To preserve our independence, we must not let our rulers load us with perpetual debt."
 
                               Thomas Jefferson, third US president, architect and author (1743-1826)

 

 

Figure 2

 

            Please note the graph above, Figure 2, is using a log scale, otherwise as you can see in Figure 1, the older debt is over powered by inflation.

 

            Our nation began its existence in debt from the Revolutionary War.  Jefferson argued to eliminate the debt, and Hamilton argued it was necessary to keep the nation together.  The Hamiltonians won, the conservatives of their time, and consequently it has also been argued that this difference between these two founders was the beginning of the liberal/conservative split in our country.

 

            Figure 2 shows that we keep that original debt until the Jackson administration.  Jackson did not believe in debt, or banks for that matter, and he made a real effort to eliminate all federal debt.  He got it down to $18,000 just before leaving office.  As you can see there has not been another serious attempt to reduce the debt significantly since then.  It is clear that debt increases from every major war, and it’s equally clear to see that the debt is hardly ever reduced.  Even when it is reduced it ain’t by much, or for very long.  This obvious fact seems to be overlooked by the folks that tell us they want to reduce your taxes and shrink government – every time they increase the debt it is forever, because this nation does not pay its debt off, ever!

 

Since 1938 the Democrats have held the White house for 35 years, the Republicans for 36.  Over that time the national debt has increased at an average annual rate of 8.5%.  In years Democrats were in the White House there was an average increase of 8.3%.  In years the Republicans ran the White House the debt increased an average 9.2% per year.  Those averages aren’t that far apart, but they do show a bias toward more borrowing by Republicans than Democrats even including World War II. 

 

If you look at the 60+ year record of debt since the end of WWII, starting with Truman’s term, the difference between the two parties’ contributions to our national debt level change considerably.  Since 1946, Democratic presidents increased the national debt an average of only 3.2% per year.  The Republican presidents stay at an average increase of 9.2% per year. Republican Presidents out borrowed and spent Democratic presidents by a three to one ratio.  Putting that in very real terms; for every dollar a Democratic president has raised the national debt in the past 63 years Republican presidents have raised the debt by $2.84[5].

 

Prior to the Neo-Conservative takeover of the Republican Party there was not much difference between the two parties’ debt philosophy.  They both worked together to minimize it.  However the debt has been on a steady incline ever since the Reagan presidency.  The only exception to the steep increase over the last 30 years was during the Clinton presidency, when he brought spending under control and the debt growth down to almost zero.

 

            Comparing the borrowing habits of the two parties since 1981, when the Neo-Conservative movement really took hold and government spending raced out of control, it is extremely obvious that the big spenders in Washington are Republicans and their party’s presidents.  The only Democratic president since then, Mr. Clinton raised the national debt an average of 4.3% per year.  The Republican presidents (Reagan, Bush, and Bush II) raised the debt an average of 10.8% per year.  That is, for every dollar a Democratic President has raised the national debt in the past 30 years, Republican presidents have raised the debt by $2.52[6].  Any way you look at it Neo-Conservative Republican presidents cannot or will not control government spending.

 

            For the first eighteen years after WW II, Truman (1945-53), Eisenhower (1953-61) and Kennedy (1961-63) all worked vigorously to keep spending under control.  Of the seven years Truman was in office, the national debt came down in four.  In 1946 & 7, with a Republican Congress for his first two years in office he brought down spending.  The following year, with a Democratic Congress he reduced what was commonly called the “War Debt” again. Two of the eight years Eisenhower served as President saw debt reduction during the years when Democrats were in charge of Congress, 1956 & 7.  Kennedy reduced the debt by over 4% his first year in office, 1961, then it went up slightly his next two years.  JFK was dealing with a Democratically controlled House and Senate when he managed to reduce the debt.

 

Since 1961 the United States national debt has never gone down.

 

            It is interesting to note who controlled Congress versus what party was in the presidency during the seven years that the debt was reduced throughout the terms of Truman, Eisenhower and Kennedy.  Three times the Democratic Party controlled both Houses of Congress and the Presidency (1948, 1951 & 1961).  The other four years all had a mix of control, with Republicans in the White House (1956 & 1957), in charge of Congress (1946 & 1947), but never both.  At no time since 1945 when Republicans have been in total charge of both elected branches of government have they ever reduced spending.  They talk about it a lot, but they never deliver.

 

While the debt did go up every year during Johnson’s time in office (1963-69), he was the last president before Clinton to submit a balanced budget, and Johnson did this during a time of a very hot Cold War.  Johnson’s average was a debt increase of 3% for the six years he served.   He had a Democratic Congress to work with all his years in office.

 

Even Nixon (President from 1969 to 1974, when he resigned in disgrace) only had one year when he raised the debt more than 6%, 1971.  His average was 5% for the six years he was in office.  Between uncontrolled inflation and Ford’s conservative bend the debt increased 17% his first full year in office (1975), and 13% his second (1976).  Ford’s plan to impose a policy of price controls failed to bring government overspending and inflation under control.  Both these Presidents faced an opposition Congress controlled by Democrats during their time in office.

 

            Starting in 1977 President Carter tried to control government spending even during inflationary times.  The national debt increased an average of 9% per year while he was in office, and his policies eventually brought inflation under control with the help of a semi-cooperative Democratic Congress.  He was thrown out of office after one term for making and implementing the hard decisions required to cut spending and deal with the energy crisis.  (Had we followed his policies all these years we would not be dependant on foreign oil as we are now under Republican leadership.)

 

            As President Reagan entered office in 1981 he repeatedly called for a balanced budget amendment to the Constitution, yet never submitted a balanced budget himself[7].  Many on the right reflexively blame the Democratically controlled Congress for the “big spending” during his administration, even though Republicans controlled the Senate for the first six years of his two terms.  Only during the last two years of the Reagan administration was the Congress completely controlled by Democrats, and the records show that the growth of the debt slowed during this period.  It appears that the frequently referenced Reagan’s Conservative mythology is contrary to the truth, he was an award winning, record setting liberal spender and government grower.  

 

The fact is that Reagan was able to push his tax cuts through both Houses of Congress, but he never pushed through any reduced spending programs.  His weak leadership in this area makes him directly responsible for the unprecedented rise in borrowing during his time in office, an average of 13.8% per year.  The increase in total debt during Reagan’s two terms was larger than all the debt accumulated by all the presidents before him combined.  From 1983 through 1985, with a Republican Senate, the debt was increasing at over 17% per year.  While Mr. Reagan was in office this nation’s debt went from just under 1 trillion dollars to over 2.6 trillion dollars, a 200% increase.  The sad part about this increase is that it was not to educate our children, or to improve our infrastructure, or to help the poor, or even to finance a war.  Reagan’s enormous increase in the national debt was not to pay for any noble cause at all; his primary unapologetic goal was to pad the pockets of the rich.  The huge national debt we have today is a living legacy to his failed Neo-Conservative economic policies.  Reagan’s legacy is a heavy financial weight that continues to apply an unrelenting drag on this nation’s economic resources.

 

            George Bush Sr. meekly followed in Reagan’s shadow after his election in 1988, by increasing the debt on average a mere 11.8% a year during his four years as President.  In his last year in office he quite responsibly worked with Democrats to raise taxes to help reduce the massive yearly increases in the national debt.  This bipartisan plan got the growth down to under 11% in 1992, but it was too little too late and didn’t make much difference in the overall trend. The Neo-Conservatives controlling the Republican Party rewarded him for putting the nation’s future above his party’s ideology by throwing him out of office even though it had hardly been a year since he was credited with winning the Gulf War.

 

            In 1993 President Clinton inherited the deficit spending problem and did more than just talk about it; he fixed it.  In his first two years, with a cooperative Democratic Congress, he set the course for the best economy this country has ever experienced.  Then he worked with what could be characterized as the most hostile Congress in history, led by Republicans for the last six years of his administration.  Yet, under constant personal attacks from the right, he still managed to get the growth of the debt down to 0.32% (one third of one percent) his last year in office.  Had his policies been followed for one more year the debt would have been reduced for the first time since the Kennedy administration.  Contrary to the myth fostered by our right-wing friends, under a Democrat, revenue increased and spending decreased.

 

When President Bush II came into office in 2001 he quickly turned all that progress around.  With the help of a Republican controlled Congress he immediately gave a massive tax cut based on a failed economic policy; perhaps an economic fantasy describes it better.  The last year Mr. Clinton was in office the nation borrowed 18 billion dollars.  The first year Mr. Bush II was in office he had to borrow 133 billion[8].  The first tax cut Bush pushed through a willing Republican Congress caused an upswing in government borrowing that was supposed to stimulate the economy, but two years later Bush had to push through yet another tax cut.  The second tax cut was needed because it was clear that the first one did not work.  Economic history tells us the second did not work either.  As a result of all his tax cutting with no cutting in spending, in 2003 President Bush set a record for the biggest single yearly dollar increase in debt in the nation’s history.  He did it again in 2004, increasing the debt more than half a trillion dollars.  Since 2003 total borrowing has typically been around $500,000,000,000 per year.  Even Mr. Reagan never increased the debt that much in a single year; Mr. Reagan’s biggest increase was only 282 billion, half of GWB’s outrageous spending.  As a result of the fact that the debt was already pretty high when Bush II entered office, his annual rate of increase is only averaging 7% per year so far.  In 2006 he was holding press conferences bragging that the debt was increasing at the rate of only 300 billion dollars a year, yet in reality it was twice that.  Again the facts do not match Neo-Con rhetoric.

 

Of course 7% growth is a misleading figure as it does not make clear that by so drastically increasing the total debt, the amount of the annual US budget dedicated to service the debt has grown to almost 10%.  Thanks to misguided Neo-Con ideological thinking, over a tenth of our budget does nothing to contribute to the growth or health of the nation.  If interest rates go up our country will be in real trouble.

 

It does not matter if you call it a war or an occupation, supporting Iraq is expensive.  It just boggles the imagination of any fiscally responsible person that the Republican Congress and President have repeatedly cut taxes during this overly aggressive and very expensive era for our military.   The nation is borrowing money so that we can spend more on our military than all the other nations on Earth combined, and still the Neo-Cons are calling for even more tax cuts and even more military spending.

 

Mr. Bush is constantly claiming that the economy is great!  What he leaves out is that he is buying that simulated good economy with his borrowed dollars; it is a false economy that is starting to crash.  Recent bank and insurance company failures are proving that this federal borrowing can not go on forever, but what is the answer we are being given to this problem – borrow more money to cover the bad debt already out there!  If a Democrat was suggesting this course of action you can bet a bevy of Republicans would be screaming in unison that Congress is Socializing Wall Street.

 

 

Trickle Down Theory Myth

 

History has shown that the “trickle down theory” does not work.  Republican President Hoover tried the “trickle down” theory (his words) to solve economic problems during the last few years of his only term, when the greatest economic depression this country has ever faced began.  It is often called the Republican Depression because it was their financial philosophy that led to the collapse of the economy.  Tax cuts for the rich did not work and things got worse.  (We are seeing the same problem repeat itself encouraged by the deregulation of the financial industry.) 

 

President Roosevelt got into office, raised taxes on the rich, created jobs for the poor and turned things around.  Mr. Reagan employed Hoover’s failed trickle down theory again in the ‘80s and again it did not work.  The rich got richer, but the poor got poorer and the economy declined.  Mr. Bush Sr., who always had a problem with the “vision thing”, continued the failed policy of his immediate predecessor. 

 

Mr. Clinton took a more progressive approach and, as Roosevelt had done, turned the Hoover model upside down.  Instead of making the rich richer in the hope that they would spend that money and thus create demand and therefore jobs, he created a tax environment that encouraged the creation of jobs directly.  It was an economic environment where everyone could get rich, not just a few, and it worked.  Lots of jobs and lots of new millionaires were created while Clinton was in office.  More new millionaires were created during the Clinton administration than at any other time in our history. 

 

President Bush II slipped into office and once again applied the Neo-Con manta of the old trickle down tax model and immediately created a need to raise the debt level to pay for an unjustified tax cut in 2001. Predictably (and before 9/11) the nation lost jobs and there were fewer new millionaires.  Not learning from his past mistakes, Bush pushed through yet more tax cuts in 2003, 2005 and 2006 -- all while expanding the military, the largest single component of the budget.  He and his lap dog Republican Congress never learned from their mistakes.  As a result, the national debt has increased an average of $1.5 billion per day since the beginning of 2002.

 

While it is a great jabbing sound bite, the facts show that the “tax and spend” rhetoric Republicans often spew about Democrats is not as bad as it sounds.  Taxing before spending actually reflects good government.  The facts also show that it most often takes a Democratic President to control and reduce spending.  The truth is that the Republicans are the party of “borrow and spend”.  They hate taxes, but love to spend; their solution is to put off paying till later for our security today.  They prefer to see our children pay for their debt.  Neo-Conservative thinking has run up over an 9.5 trillion dollar debt that will not be paid off for a generation or more, and is still increasing at an astounding rate with no end to deficit spending in sight. 

 

Every time we have seen massive tax cuts there was a bubble in the economy followed by a recession.  Tax increases on the wealthy have caused a slow steady growth in the economy.

 

 

 

 

Figure 3

 

 The graph above in Figure 3 illustrates the myth that you can cut taxes and increase spending and expect to get increased government revenue.  Interestingly, since Johnson, every Democrat has increased revenue more than spending.  However in the opposite case, under all five Republican Presidents, since Nixon, government revenue has decreased and spending has increased.  This is positive, unambiguous proof that cutting taxes does not increase revenue.  Yet Republicans are still trying to sell that old canard.

 

The contrast between Clinton’s tax policies and the second Bush’s are dramatically evident from this data.  By setting up taxes to help the middle class and small business Clinton stimulated economy so much that we saw the largest increase in government revenue in history.  The Neo-Con “trickle down” policy clearly does not work.  You cut taxes and you reduce government revenue, period.  That is the real truth, no matter how many times we are told you must make the wealthy just a little richer to improve the economy.  That does not work and the numbers above prove it. 

 

US Debt v. GDP

 

Many people in this country describe our current level of national debt as insignificant relative to the GDP.  Below, in Figure 2 (a chart comparing the US debt, in red, to the debt’s percent of GDP, in blue) are some facts that those folks might not be aware of…

 

Figure 4

 

The ratio of debt to GDP had been generally dropping since the end of World War II.  When Mr. Reagan entered office the percent of US debt relative to GDP was down to 33.3%.    He argued vociferously to reduce the level of all that liberal spending.  However the only real effort he pursued was to get taxes cut while increasing spending.  You can see in Figure 2 above that cutting taxes and increasing spending predictably made the debt increase - in real dollars and as a percent of GDP.  During his eight years in office the percentage of debt to GDP grew to 51.9%.  This amounts to a 64% increase in debt relative to GDP while Reagan was in the White House -- a rather significant increase by anyone’s measure.

 

The percentage of debt to GDP continued to grow until 1996, when Mr. Clinton began to get government spending under control.  The US debt peaked at 67.3% of GDP under his administration.  By the end of the Clinton administration this percentage had dropped to 57.6%.  Debt as a percent of GDP dropped almost 10% in four years under a Democratic President with a hostile Republican Congress.  Mr. Clinton showed steadfast fiscal leadership against all odds and in spite of right-wing attacks and misinformation.

 

Mr. Bush II inherited a shrinking government and debt in 2001.  With his first budget he managed to increase the debt to GDP ratio to 60.0%, by cutting taxes but not spending.  By 2004 this ratio had risen to 63.7%, as a result of additional tax cuts but no significant corresponding cuts in spending.  Government estimations (which are notoriously low) predict that the debt to GDP ratio will grow to 69.3% by 2008, two percent higher than the previous peak in 1996.  Mr. Bush will completely wipe out the gains we made under a fiscally responsible Democratic President. 

 

Some of Mr. Bush’s debt can be blamed on the justified and almost forgotten Afghan war, and the ill-conceived Iraqi war and occupation.  Now, years later, with a so called “booming” economy, per the mantra of tax cutting logic the debt ratio should be going down.  Yet it is still growing.  Using government projections, US debt will double under Mr. Bush’s leadership (or lack of it) in real dollars.  The nation has to wonder when the fiscally conservative side of Mr. Bush will reveal itself.  He only has a few months left in office and while he talks about reducing the debt, the fact is that he has so far only increased it.  He keeps telling us that cutting taxes will pump up the economy and thus generate more revenue for the government.  The facts do not support his, the Gipper’s, his Dad’s or Hoover’s unsubstantiated trickle down claims on this point.

 

It is interesting to note that the projected GDP keeps getting rosier with every new forecast out of the Bush administration.  They keep telling us how great the future will be if we will just end all regulation and taxes, thus allowing the market to do as they please.  We have seen that this is not working and no one should believe the projected GDP being put out by the government either, it just does not make sense in light of reality. 

 

No matter how you choose to look at the massive debt that the liberal spending Republicans are generating, it is creating an oppressive burden on this nation.  (Even the conservative Mr. Greenspan agrees with that conclusion.)  Under Republican leadership the debt has doubled in size relative to the GDP.  To call the doubling of our debt insignificant is at best demonstrating a gross misunderstanding of the situation.  At worst it is an out right lie designed to mislead the public into accepting tax and trade policies that will ruin our future economy for the sake of short term gains for the very wealthy, meanwhile devastating the Middle Class.

 

 

Isn’t Congress In Charge of Spending?

 

 “All bills for raising revenue shall originate in the House of Representatives; but the Senate may propose or concur with amendments as on other bills…”

US Constitution, Article 1, Section 7

 

 “The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United Sates; but all duties, imposts and excises shall be uniform throughout the United States:…”

US Constitution, Article 1, Section 8

 

The Constitution makes it clear that Congress theoretically holds the purse strings of government.  However the Presidents set the direction for the country, and have great power to push the nation in whatever direction they choose.  During the time span covered by this paper, history has shown that Congress tends to follow much more than it leads when it comes to most matters, especially fiscal ones.

 

Since the Neo-Con Republicans took over both Houses of Congress and the White House in 2000 they have been unwilling or unable to say no to the President’s disastrous economic policies.  The Republican controlled Congress has marched to President Bush’s tax cut mantra since he entered office.  Unfortunately for the future of our nation, Mr. Bush has not seen fit to shrink spending even though he has insisted on cutting taxes during a time of war and occupation.  Despite his rhetoric, his actions show controlling spending has certainly not been one of his priorities.  For eight years we have watched as government spending continues to increase and he continues to insist on cutting taxes.  He continues to tell us reduced taxes will somehow generate more tax income for the government, yet all real evidence disagrees with this misguided concept.

 

Figure 5 below is a chart showing when the debt increased or shrank and the political parties of the President and both Houses of Congress from 1938 to the present.  The parties in charge of the various branches of government are colored blue for Democrats and red for Republicans.  The debt is colored blue the years it decreased and red for the years it increased.  There are four rows containing debt or political control data for each year.  The power of this chart is revealed by concentrating on the vertical columns of the data.  Each column provides a Congress-by-Congress record of the parties in power from the 75th Congress to the first year of the 110th.  For easy reference, the President’s names are spaced chronologically across the top of chart, again color coded for their respective parties. 

 

Figure 5

 

The chart confirms that the Neo-Cons got control of both Houses of Congress in 1995, and singular control of our government from 2000 to 2006, and yet, as the debt charts prove in Figures 1 & 3 above, even with all that power in 12 years they never controlled spending.

 

When Mr. Reagan was in office he had a Democratic House and a Republican Senate to deal with.  But the “Great Communicator” used the bully pulpit to force both Houses of Congress to go along with his tax cuts on the promise that spending cuts would follow.  However, the spending was never reduced.  The mixed-party Congress, with no presidential leadership, failed to follow through on reducing spending.

 

How did Mr. Clinton lead the nation into fiscal responsibility?  When there was a Democratic run Congress he worked with them to put a policy in place that the Republicans dumped the minute Mr. Bush entered office.  That reasonable and responsible policy was; if you cut taxes you must make a corresponding cut in spending.  They called it “pay as you go.”  We need that kind of responsible leadership again.  Under President Clinton the Republican Congress lived within the ‘pay as you go’ rule and spending was extremely well controlled. 

 

The Republicans rapidly abandoned this rule when Mr. Bush entered office in 2000 and deficit spending started skyrocketing immediately.  Republicans have proven they do not have the guts or the political will to do what it takes to get spending under control.  For the country’s sake we were hoping a new Democratic Congress would change the direction of this otherwise certain economic train wreck.  They tried, but could not overcome Republicans using the filibuster more times than in any other Congress to block all progressive bills.   Republicans chose gridlock over progress.

 

One thing the chart above makes clear, in stark contrast to their rhetoric, is that in the last 60 years when Republicans held all the power, they never used it to reduce the debt; in fact they always increased it.  If you want deficit reduction you need Democrats in control, because the “borrow and spend” Republicans have never done it on their own.

 

 

The Debt Tax

 

In 2002 the debt tax was eighteen cents out of every federal tax dollar.  This is the amount required to pay the interest on the existing national debt, and pays nothing toward principal.  Due to the drop in interest rates it is now about ten cents out of every federal tax dollar and if interest rates increase it will only get more onerous.  If the Neo-Conservatives really wanted to lower our taxes, they would have lowered the debt and thus the debt tax.  That would insure a permanent tax cut for the whole country (but it would not help them with their apparent goal to further concentrate the nation’s wealth in the hands of a few).

 

 

Political Labels No Longer Accurate

 

There has been an interesting evolution taking place in the nation’s political parties over the last 30 years.  Back when Mr. Reagan was elected the first time, the majority of Republicans believed in responsible government spending.  Controlling spending was one of the major grass roots objectives that Reagan touted in his many campaign speeches.  The Democrats wrongly defended deficit spending at the time.  Once Reagan got into office he kept talking about needing a balanced budget amendment to the Constitution.  Yet all the while he was giving lip service to the idea of smaller government, behind our backs and with the help of a mixed Congress he was making it larger.  He gave tax cuts to the rich and astronomically increased the debt.  He obfuscated the issue so well that here we are over 30 years later and it seems the only party that got the message was the Democrats, both at the grass roots level and at the national level.  Most of the folks talking about responsible government spending these days are Democrats.  The Republicans were curiously silent on the issue of debt reduction (and term limits) during their time in charge.  One might say that between 2000 and 2006 a fitting label for the Neo-Con Republicans was liberal spenders, and the Democrats were the fiscal conservatives.

 

Where have all the Republican deficit hawks gone?  Not too surprisingly they are reappearing since the Democrats regained control of both Houses of Congress in 2007.  Suddenly they are very interested in the debt, and are shocked at all the deficit spending.  They are now quite willing to stall Congress in anyway they can to prevent spending that the majority party thinks in necessary.  Their tactics have shown repeatedly that Republicans care more about their power than their country. 

 

It was interesting to watch Mr. Bush and his Party fight the Democratic Congress as it tried to implement the will of the people.  However that is probably not the best outcome for the county.  If all the President and Congress do is fight, then nothing gets done; we have too many problems to put them on hold while politicians bicker over fiscal ideology.

 

 

Grim Future?

 

The Government’s figures project a larger growth in GDP than debt for the next few years, possibly leveling off in the future.  This may or more probably may not happen.  What we have seen out of the Bush administration’s economic policies so far does not encourage one to expect a very rosy outcome.  Job growth and pay is at a modern low as we watch our jobs go overseas at record rates.  President Bush had no plan to change this situation and in fact encouraged it with his tax policies.  As the Middle Class inevitably shrinks in America there will be a very negative effect on sales of everything, thus lowering the GDP.  As the GDP shrinks the massive national debt will only grow into more of a burden on the jobless next generation who will have to deal with it, because the current generation has failed to.  It is obvious that not dealing with the massive debt now could very well crush our nation’s future economy.

 

We should be getting our financial house in order to face the future cost of the retirement of the Baby Boomers, funding Medicare and above Cold-War level defense spending.  Instead of solving the big problems the President is inventing ways to divide the nation and leading us further into debt.  He shows no sign of comprehending the problem, much less having a plan to deal with it.  Our only hope is for the new Democratic President to help Republicans understand that it will take compromise, not arrogance, to solve our country’s debt and other problems.

 

With courage and wise leadership the grim future predicted above can be avoided.  However it can only be avoided if we elect leaders willing to face the truth about where we are and where we need to go regardless of the effect on their or their party’s’ reelect ability, like President Jimmy Carter did to address the first oil crisis.  He put the power of government behind reducing our dependence on foreign oil.  He also made the brave decision to ask citizens to actually change the way they live and conserve.  History has proven his choices were the right ones and his methods worked but he was very unpopular for making us face the truth.  Our future leaders will need to find his courage to ask for unpopular sacrifices of all Americans to bring the nation’s economy back to a sustainable model.

 

 

Summary and Conclusions

 

This missive is clearly biased against deficit spending.  Getting past the hysteria, bias and rhetoric, certain facts about the United States national debt stand out:

 

1.     Since the Neo-Conservative movement has become the dominant force in the Republican Party the national debt has grown and continues to grow at an unsustainable rate, by any measure you care to use.

 

2.     Experience has shown that “trickle down tax cuts” only work to concentrate the nation’s wealth into fewer hands and never help to rebound the economy. 

 

3.    Mr. Bush has no viable plan to deal with the debt he has already created, and we cannot count on him to contain government spending in the future.

 

4.    The only time we have seen national debt reduction in the past 60 years was when Democrats were totally in charge of our government or when one party was in the White House and another ran Congress.

 

5.      In the past 60 years when Republicans were in control of the presidency and both Houses of Congress, neither debt, nor government spending was ever reduced.  The last time a Republican Congress reduced the national debt was in 1947, under Truman’s leadership.

 

6.      The last time the debt was reduced was in 1961 during President Kennedy’s first year in office.  It has been almost a half century, 46 years, since this nation has paid down any of its exponentially increasing debt.  (Had President Bill Clinton been in office one more year we would probably have seen a debt decrease in 2001.)

 

7.      The failure of the financial and insurance markets can be directly related to the tax and regulation policies of the Neo-Cons.

 

Relatively recent history tells us that there is a simple solution to the growing debt problem: Congress must adhere to a ‘pay as you go’ rule regardless of the party in control.  Unfortunately it requires a President like Bill Clinton, who was truly committed to balancing the budget, to lead the Congress, regardless of the party in charge, to do the right thing for the future of the nation.

 

Fortunately our nation is fundamentally strong and it has always had the strength to overcome bad presidents and their failed economic and foreign policies.  Our economy can and will endure the downward vortex of this misguided Neo-Conservative trend as well.  However, for the sake of our nation, our jobs, ours and our children’s future let us all hope that we see an end to the dominance of the short sighted, Middle Class-killing, Neo-Conservative economic polices soon.

 

 

 

Acknowledgements:

 

Thanks to my wife Charli, for her expert editing, insightful suggestions and encouragement.

 

I would also like to thank the dozens of folks that have written with suggestions for improvement.  I read them all and truly do appreciate them.  Almost every suggestion that comes in is positive and many have helped this paper get better with each revision.

 

 

Sources and Related Websites:

 

The GDP to debt data can be found at the US Government web site: http://www.whitehouse.gov/omb/budget/fy2006/pdf/hist.pdf

 

Link to IRS data (the IRS is a bit slow in updating their data, the newest data found on this website is from 2004):

http://www.irs.gov/taxstats/article/0,,id=130546,00.html

 

An Excel spreadsheet with the debt data and the chart above can be found at the following URL;

http://www.cedarcomm.com/~stevelm1/usdebt.xls

 

Here is a link to see what the current debt is:

http://brillig.com/debt_clock/

 

If you found this paper interesting you may like others I have written:

http://www.cedarcomm.com/~stevelm1/Bush_opinion.htm

 



[1] The debt totals in Encarta show the actual amount of money borrowed by the United States in a given year.  This total is often different, and typically larger than, the total a given budget might have stated.  Budgets are planning documents; the borrowed totals given here are what actually happened.  That is why even though the budget was balanced during Bill Clinton’s last few years in office, the debt record here shows an increase.  The budget was balanced but the nation still borrowed more money than the budget predicted, or the treasury brought in.

[2] Government data on debt and the GDP can be found at: http://www.whitehouse.gov/omb/budget/fy2006/pdf/hist.pdf

[3] There is no statistical trick being played by providing data starting with 1938.  It simply represents exactly as far back as the author could find reliable data.  In fact it would better illustrate the point of this paper not to provide any of the Roosevelt years, but I had the data so why not present it for reference.

[4] Some might argue that nominal dollars (dollars adjusted for inflation) would provide a more ‘fair’ presentation of this data.  That might be true and I challenge them to gather that data and see if it proves their point.  Then they should write a paper with that point of view, or send me the data, and I will use it.  This paper uses unbiased published government data in real dollars and is written with the open bias of a citizen who does not like to see his government spend money it does not have.

[5] This number is derived from an average of the six Republican and five Democratic Presidents’ average debt increase for their terms.

[6] This number is derived from an average of the three Republican and one Democratic Presidents’ average debt increase for their terms.

[7] Mr. Reagan also reversed all the programs Mr. Carter had put in place to make us more energy independent.

[8] In 2002 Bush’s borrowed 23 times more than was borrowed in Clinton’s last year in office, $420 billion v. $18 billion.  In only two years the unchecked Neo-Con leadership managed to get spending completely out of control.