A Short History on Debts and Deficits

The debt is no excuse to destroy the lives of the most vulnerable members of our society.
A Short History on the Debt
The Founding
At the founding of the country, the individual states ran up debts during the revolution. After the revolution, the states negotiated to
have the Federal government assume those debts. As a result, in 1791 the federal government had assumed $75 million in state debts. In the years following, the country ran more surpluses than deficits and fully paid off its debt by 1836.
Civil War
During the Civil War, the country ran large budget deficits to fund the war which created a debt of $2.7
billion. In the following 47 years, the country paid down 55% of that debt, by running surpluses.
WWI
During 1914-1918, World War I increased the debt to $25.5 billion. Following
the war, the country ran surpluses for 11 straight years reducing the debt by
36%.
The Great Depression & WWII
On account of the Great Depression and WWII the Federal debt ran
up to $260 billion by 1950. This was 112% of
GDP, the highest debt to GDP percentage in the history of the country.
1950 - 1980
Due to the post-war economic expansion, the debt to GDP percentage fell rapidly
until it reached its lowest level since before the 'Great Depression' of 24.6% in 1974. It should also be noted that during this period of unprecedented economic expansion, the United States had the highest tax rates and lowest income inequality compared to any period before or after.
The Ronald Reagan Era
As much as Republicans like to hold up Ronald Reagan as the shining
example of what a true fiscally responsible conservative is, Reagan exploded the national debt.
Reagan’s economic policy slashed the top income tax rate from 70% to 28% and
drastically increased military spending. As a result the debt to GDP ratio
increased from 26.2% when he came into office, to 40.9% when he left.
The George H. W. Bush Era
Unfortunately for George H. W. Bush, he was left holding the bag
after Reagan’s spending and tax cutting spree. The debt reached a percentage of
49.5% at the end of his first and only term. Bush’s most memorable 1988
campaign slogan was “Read my lips, no new taxes”. George Bush’s pledge was
based on the assumption that the high rate of economic growth experienced under
Reagan in the 1980’s would continue during his time in office. H. W. Bush had been
left with a $220 billion deficit which was 3 times the deficit Reagan came into office
with. Bush, to his credit, was concerned about these deficits and began to
negotiate with a Democratic controlled congress to do something about it. That
negotiation led Bush to issue a proposal that would enact spending cuts
and tax increases that would reduce the deficit by $500 billion over 5 years.
Republicans in congress outraged by the proposed tax increase subverted this
proposal. As a result, Bush had to work further with Democrats to get a
majority. He signed a bill that increased the marginal tax rate, phased out
exemptions for high income earners and also included additional spending. Bush’s
standing within the Republican party never recovered even though one could
argue he acted in the best interest of the country. The increase in spending
was further justified by the fact that in the beginning of his term, America
entered into a mild recession, which would require an increase spending. When unemployment
went up, Bush also signed a bill providing benefits and relief for unemployed
workers.
The Bill Clinton Era
When Clinton took office in 1992, the debt to GDP reached 49.5%. By
the end of Clinton’s presidency it fell to 34.5% of GDP. This was due to 3
factors 1) Increased Taxes 2) Decreased Military Spending 3) Increased Revenues
from internet boom.
The George W. Bush Era
George W. Bush doubled the national debt in his 8 years. This was
caused by massive tax cuts to the wealthy, a pharmaceutical giveaway in Medicare
part D, two unfunded wars and a financial crisis from the housing boom. Bush
left office leaving the next president with a disaster.
The Barack Obama Era
Obama inherited a budget disaster. He walked into office and was
handed a budget passed by George W. Bush with a deficit of $1.632 billion. This was the
biggest budget deficit ever. On top of that, the state of the economy was in
shambles, needing necessary stimulus and industry bailouts. Obama did indeed
doubled the debt by the end of his 2nd term, but he cut the budget
deficit that he received from George W. Bush by over $1 trillion.
Donald Trump Error.... *ahem*.. Era
The Donald Trump era has only just begun, but we have already seen
the direction at which he and his party are headed. Within the next few days he
will sign a tax cut bill that will give billions of dollars to the wealthiest Americans,
raise taxes on middle class Americans and INCREASE the debt $1.5 trillion over the next 10 years. After campaigning as deficit hawks for 8 years, Donald Trump and the
Republicans could have continued to work on the progress made by Barack Obama in reducing the deficit by raising taxes on the wealthiest Americans, but
instead he is cutting them a giant check.
A simple review of our recent history displays how utterly irresponsible and incompetent Republicans are when tasked with the responsibility of US Federal budgeting. In summation
- Ronald Reagan exploded the debt and the deficit. He tripled the debt and left George H.W. Bush with large budget deficits.
- Bush worked to reduce the deficit by raising taxes, but it cost him his presidency.
- Clinton cut military spending, increased taxes and benefited from the internet bubble. His work left the next president with a budget surplus which should have been used to pay down the deficit.
- Instead, George W. Bush took the surpluses and passed huge tax breaks for wealthy Americans. He cut taxes during two wars and ended his presidency in a financial crisis. He doubled the debt, when he should have ran surpluses and paid it down.
- Barack Obama received a recessed economy and a budget deficit of 1.6 trillion signed by George W Bush. During his tenure, Obama navigated the 'Great Recession' and reduced the deficit by 66% to $450 billion.
If you are someone who is concerned about debts and deficits (like Bob Corker pretended to be), you should vote Democrat.
Simple Solution to fix the Debt and Deficit
Here is how you can fix the deficit and begin paying down the debt in 3 easy steps without destroying the
lives of the most vulnerable members of our society. The current deficit is
$440 billion. Where can we get an additional $440 billion?
Step 1
– Stop the GOP tax bill which will add $1.5 trillion to the Federal deficit.
Step 2
– Cut the military budget in half. The United States currently spends $618
billion on the military every year. If we cut that budget to $309 billion, we
would still be out spending our (as Mitt Romney calls them) greatest geopolitical
foe, Russia, by 360%.
Step 3
– Raise the taxes on the top 1% of Americans so that their average tax burden
increases from about 33% to 40%. This
move would generate approximately $157 billion in new revenue.
And
like that, we have gone from a budget deficit of $440 billion to a surplus of
$26 billion and we no longer need to kick grandma out of the nursing home.
Simple Social Security Solution
This
is too easy.
Step 1
– Raise the Social Security payroll tax by 2 points over 10 years.
Step 2 – End the Cap. Currently incomes above
$127,200 are exempt from paying social security tax. Make all incomes taxable.
And
like that, we don’t have to talk about Social Security for the rest of the century
and not only that. With responsible budgeting and taxation we can build a more equitable economy
that works for all, a healthcare system that covers everyone and an education system that guarantees everyone can go to college.
Thank
you for reading. Share your thoughts below or contact me at ProgressOfAKind@gmail.com
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