The Debt Dance
Their hypocritical admonishment of the size of the national debt when out of power and when deficit spending is besought for the common good, but when in power, their repeated increasing of the national debt, mostly in tax cuts, primarily to the benefit of the smallest percentage of the wealthiest of us and by increasing patronage military spending. (4)
The Size of the National Debt and the Republican Party
Since the “Reagan Revolution” the party has assailed all non-republicans on the size of the national debt. Who hasn’t seen the parties ticking debt clock of the out-of-control obligations we all share. Have you noticed that we only see the clock when Republicans are NOT in power? The hypocrisy of the self-proclaimed “fiscally responsible” party is that today’s debt, since Regains term, is not just ENTIRELY of the Republicans making, but that it was made so with a total disregard to the economic wellbeing of this country.
Republican candidate Reagan In his 1980 campaign for the US presidency, promised to cut taxes, increase defense spending, promote deregulation, and balance the federal budget and his campaign posters declared “Let’s make America great again,” Sound familiar?
President Reagan’s supply-side economic policies, often called Reaganomics, set out to grow the economy by cutting taxes, depending on the idea that corporations and wealthy individuals would reinvest their tax savings to build businesses, create jobs, boost profits, and spur economic growth. Admittedly, there was some logic to it; it might work and so the Economic Recovery Tax Act of 1981 was passed. The act reduced the marginal income tax rates in the United States by 25% over three years, with the top rate falling from 70% to 50% and the bottom rate dropping from 14% to 11%. This act slashed estate taxes and trimmed taxes paid by business corporations by $150 billion over a five-year period. Unfortunately, the deficit ballooned, which in turn, drove interest rates from around 12% to over 20%, which, in turn, drove the economy into the second dip of the 1978-82 "double dip recession. The second Reagan tax act in 83, advertised to simplify taxes by eliminating the top tax rate of 50% down to the 28% level and eliminating the bottom tax rate of 11% bringing it up to the 15% bracket was great for the top bracketers, but it also cut tax loop-holes to be more deficits natural; in fact many in the Republican Party lamented that it turned into a tax increase. Indeed it was an increase and believe it or not, the economy rebounded (until the Home Saving and Loan bankruptcies). Non the less, the tax cuts of 81 took the debt, During the Reagan and Bush 1 terms, which as a percentage of GDP had been going down ever since WW2, from below 40% of GDP to over 60%. The Saving and Loan collapse, due to Republican deregulation of the finance laws for Saving and Loan Banks, by itself, increased to the national debt by 10%.
So on the other hand, President Bill Clinton, as soon as the economy rebounded from the Reagan Recession, signed the Deficit Reduction Act of 1993. The short of it is that he raised taxes on the top earners during the beginning of a business cycle; the economy prospered. The growth rate of his second term was consistently higher than 4%, and more importantly, decreased the debt, such that, were it not for the Reagan tax cuts of 81, the debt would have been close to ZERO. Because Clinton Presidency was the most fiscally responsible administration in modern history and the debt was in such good shape that, Gore in has bid for presidency vowed to make United States debt free by 2012; Bush on the other hand campaigned to cut taxes by almost $500 billion over five years. Bush won and his tax cuts, in 2001 and 2003, along with his wars, increase the debt by over a trillion and a half. The economy, on the other hand, did not do so well. Though responding well to the first tax cut (or perhaps it was the war) the yearly GDP rate climbed for one short time to 4% around 2003 (in time to get him reelected) but then continuously dropped throughout his second term to what Obama would inherit, to a negative annual growth rate of 4%, and a business contraction unlike anything since the Great Recession. But just as damaging as the second Republican Recession, due again to deregulation of the finance industry, was that now the debt, at the end of the Bush presidency was over 80% of GDP.
So two Republican administrations (Reagan/Bush1 and Bush 2); both quickly lower taxes for the wealthy and secondly deregulate the finance industry. Had they not lowered the taxes in times when our economies was in a business expansion, Obama might have had a zero deficit from which to save capitalism from the equally disastrous results of the Republicans deregulating the finance industry. With depressed taxes coming from a depressed economy, a need to bailout the finance infrastructure, as well as the American Auto industry, Obama had no choice but to borrow as deeply as any president. It was costly but we brought ourselves out of what might have been a depression type disaster. Obama would have liked to have repeated the Clinton success of calling on those wealthy Americans who were not suffering, at a time when many were, to endure higher taxes for the sake of the country that gave them the opportunity to earn that wealth in the first place. To prevent this call to patriotism of the rich, the Republican Party made all if its members sign a contract with its rich donners not to raise taxes under any circumstances! The Republican Congress would shut down the government before they would raise taxes! Incredibly they started the Tea Party movement complaining about the “Obama debt”. The debt clock was all over the news media. The Republicans demand to cut off the deficit spending of Obamas fight to keep the country afloat is like the arson complaining about the incompetence of fire fighters as they are turning off the water. But the Republicans during the Obama administration would say of themselves that they are now the new Party, the new finically responsible Republicans. So now we have Trump and the “new Republicans” in total charge of the country. At a time when the business cycle is again at the perfect place for a fiscally responsible government to pay down the debt, the Republicans instead lowered taxes for the rich and for corporations.
Today, including the large debt increases need by Obama to again save capitalism, the American debt is over 105% of GDP. We are nearing a debt level, 120% of GDP, which we had after WWII! Without regard to how we got here and whose fault it was, prudence requires some consideration to these numbers. We are 10 years into the Obama expansion; we all know it will not last forever. But since the current trajectory of the economy, even before the Trump tax cuts, has been very strong, no one would say that in 2017 our economy needed a stimulus; and every truly “fiscally responsible” lawmaker would say it is an opportune year to strengthen our balance sheet. So how do we explain the Republican tax cuts? Was it:
- That the Republicans cannot remember the results of their past?
- That it is so ingrained in Republicans that cutting taxes will somehow increase tax revenue that a tax cut is seconded nature to them?
- That it looked like it was the only thing they were capable of doing in 2017?
- That they were just doing the bidding of international conglomerates who would rather have a tax cut today and leave the long term tax liability, increased by financing more debt, to the citizens they will leave behind in the next recession?
- Or that they were doing the bidding of international concerns like Russia, wanting to weaken us going into the next recession so that it might bankrupt the free world?
- All of the above?
One other issue, about the national debt needs to be addressed. While it seems more likely that our country is in more danger from the finance world then it is from the military one; the Republicans have never meet a military budget that is too high. We are reminded by President Trump, very very often, that Democrats have weakened our military through repeated military cuts and the “Obama military sequestration”.
The claim that the Republican Party is more concerned about funding the military is just partisan talk. As there first proof, Republicans clam, that when the president is a Republican, military spending goes up and during Democratic administrations it goes down. That is true, but unspoken is that the Republican presidents start wars and Democratic presidents end them; Nixon-Ford expansion of the Vietnam war, Carter had no wars, Reagans “star wars”, and Bush 1 Kuwait liberation (well done Bush 1), then there was the Clinton administration that slashed “star wars budgets” and instead worked with Russia for nuclear reductions treaties and had only the Bosnian conflict, then the Bush 2 wars in Afghanistan and Iraq, finally the Obama administration removing and drawing down our troops from those wars. The sad fact is that if you remove the special funding for these wars both political parties have been equally strong on military spending (about 3.2% of GDP). Indeed military spending owes its bi-partisan political popularity to probably being the biggest source of pork barrow spending around.
There second clam is to cite “Obama military sequestration”, as if somehow we would forget about how responsible the Republicans were in making that happen. In real history, “sequestration” was across-the-board cuts to both military and non-military spending that neither democrats nor republicans wished to happen. They were negotiated in 2011 to keep the country running temporarily and were designed to force Congress to strike a bipartisan deal. During those negotiations it was the democrats that, because of the recession, wanted to spend more money on both defense and non-defense needs; it was the republicans who wanted to be, at this time, “fiscally responsible” by only slashing non-defense spending. When negotiations fell apart, the cuts went into effect across the board. For those, the republicans, who opposed the spending to portray others as being responsible for the military cuts is a typical behind the bench political joke; let’s call what was “congressional sequestration”, “Obama sequestration” and in the republican world that makes it all better.
While, for good or for bad, the military budget seems to be a consistent long-term interplay between both congress and military experts, what is more concerning about republican budgets is a question of motivation. Why should a country that spends more on military then the next, (how many?) countries in the world combined, be so razer focused on increasing military spending.
Is the reason that the Republicans never ask this question because that they seem to see us primarily as a modern empire; this school of thought is often referred to as nationalist. As such, peace is not the goal; the goal is world dominance. The persistent call to increase military budgets seems to be explained by that mindset.
Prior to Trumps Republican Party, one might have assumed that the nationalist, were a small fringe group brought out only at election time. Trump is definitely a nationalist. He has done everything he can to underfund institutions of shared values of preserving and spreading democracy: the state department, United Nations, NATO, trade agreements, standing treaties and instead brought to the foreground the military to back up his unilateral demands around the world.
Democracy is the art of living together in peace. Nationalism is the art of controlling people. While Nationalism clams that it exists to deliver the same things that we work for in a democracy, it gives so much power to such few unchecked people, that in time it has always failed to deliver. In short it fails because, in an undemocratic world, the sustainable power of the leader requires the continued weakness of its people. This Republican budget talk, of ensuring a continuously stronger military, is to what end? Is it for democracy or is it for them?
2009-2016 Obama, 2001-2008 Bush 2,
1993-2000 Clinton 1981-1992 Reagan-Bush 1,
1977-1980 Carter 1969-1976 Nixon-Ford
1961-1968 Kennedy-Johnson 1953-1961 Eisenhower