Debt and Taxes Part III
By Raymond Freeman 02/06/2014
The Center on Budget and Policy Priorities produced this chart of national debt from official data (cbpp.org/cms/index.cfm). This red ink didn’t just fall out of the sky as Republicans now pretend.
Vice President Dick Cheney said, “Ronald Reagan proved that deficits don’t matter.” Translation: “We can run up as much red ink as we want because nobody will notice.” Admit it: you didn’t notice. President Clinton’s budget surpluses vanished when Cheney and President Bush Junior took over in 2001. Observe the dramatic effect of the Bush tax cuts (top portion) and the reckless Bush/Cheney wars (second portion).
The next three blue portions are the legacy of Republicans’ economic policies. They show the result of legislation sneaked into a must-pass finance bill in December 2000 by Texas Republican Sen. Phil Gramm. Clinton absolutely had to sign it under Washington’s insane system. This allowed Wall Street to run wild with financial derivatives. These “instruments of mass financial destruction” (Warren Buffett) led straight to the Crash of 2008. This didn’t just fall out of the sky as Republicans now pretend.
The third portion from the top is for Economic Downturn shows the effect of the Great Recession on tax collections. These dropped, so more had to be borrowed.
The fourth portion, shown as a dark gray line, is for Bush’s 2008 Troubled Asset Relief Program (TARP), which helped the car industry and bailed out banks and secondary market giants Fannie Mae and Freddie Mac. They’d loaded up on derivatives. Swiss bank U.B.S. did so, too, as Gramm was a director. It went bankrupt. (Gramm’s quiet these days.)
The fifth portion is for Recovery Measures, including President Obama’s “stimulus.” These rescued the economy from the 2008 Crash, as The Economist and the Financial Times have made perfectly clear. (It wasn’t big enough, but that’s another story.)
And the bottom is the rest of the debt, about 20 percent by 2019. It shows better in color (cbpp.org/cms/index.cfm) though you can see it’s the portion that Bush took over in 2001. But shouldn’t this portion be rising fast? Won’t those scary “entitlements” Kill Us All In Our Beds? You’ve been fooled. Medicare’s not even a blip on this graph and Social Security’s off it completely. “Social Security has nothing to do with balancing the budget or lowering the deficit” (Ronald Reagan, himself). Fooling Americans is easy. The GOP has a superb Noise Machine, the mainstream media don’t point out their lies, and Democrats are useless at “messaging.”
Where did this bottom part come from? About half of it came from Reagan and Bush Senior. They more than doubled debt-to-GDP, remember, so half the amount in 2001 is from them. Let’s be charitable and say the Reagan/Bush years will account for 11 percent of debt in 2019.
Overall, around 50 percent of national debt in 2019 will be due to “Bush-Era Tax Cuts” (yellow) and “Wars in Iraq and Afghanistan” (red). Next, add Gramm’s fine work giving us Economic Downturn, TARP, Freddie and Fannie, and Recovery Measures (blue), and we get to 77 percent. Finally, add 11 percent for Reagan/Bush (half the gray) and we get to 88 percent.
What do we have to show for all this whopping debt? A more efficient private sector? More jobs? Better roads, infrastructure, schools? A grateful Iraq? Heavens, no. But we have happy billionaires and happy shareholders of defense contractors. (Bush is quiet these days.)
CONCLUSION: Around 88 percent of America’s national debt in 2019 will have come from Republicans taking care of their pals, giving Wall Street a license to steal, and spending like drunken sailors on neocolonial wars. Voting Republican is like a drug habit: it’s ruinous in the end. Now you know why Mitt Romney didn’t have Bush, Cheney and Gramm on his campaign, promoting successful Republican policies. There aren’t any.