I miss Tricky Dick – Nixon – not Cheney. Nixon was the last Republican President to reduce the national debt as a percentage of Gross Domestic Product (GDP: the total market value of goods and services produced by a country).
Yup, there hasn’t been a Republican President in nearly 40 years who has reduced our debt yet the GOP still manages to snooker voters into believing they’re the party of fiscal prudence. Tricky Dick might have been a crook, but at least he came by it honestly: he was a REAL Republican. The national debt has fallen under every single Democratic Administration since FDR.
The biggest deficit in modern history was immediately after WWII: 117.5% of GDP. Between 1945 and 1953, the Roosevelt and Truman Administrations reduced the debt by 46%. Eisenhower reduced it by another 16% and Nixon reduced it by 3%. How did they do it? They increased revenues. How? Through a combination of taxes and growth. Under Eisenhower and Nixon, top tax rates were 91% and 70% respectively. So did all the high earners lose their will to work and quit their jobs? Not that anyone noticed.
If you’ve been listening to the Republicans, you might not realize that increasing revenues is actually an option for reducing debt. You might think the only way to reduce our debt is to cut programs for the poor, the sick and the elderly.
The other Tricky Dick – Cheney – famously said “Deficits don’t matter.” What he meant was, Deficits don’t matter under a Republican Administration.
Under Ronnie Ray-Guns, national debt increased by 20.6%, under Bush #1 it went up 15% and under Junior Bush, it went up 27.1%. By the time Barack Obama took over, the national debt was 83.4% of GDP. At the end of the Carter Administration it was 32.5%.
So do deficits matter or not? Politicians love to talk about “living within our means” because it sounds so darn responsible. They especially love comparing the federal budget with your family budget. But here’s a little-known truth about capitalism: it requires capital. Leveraging capital creates growth. Sitting on it causes stagnation.
But let’s go with the family budget analogy. Say you earn $50,000 a year and you buy a home for $150,000. If you made a 20% down payment you would have a $120,000 mortgage. If you had no other debt – no car payments, no credit card debt, no student loans – your household Debt to GDP would be 240%. Is that a bad thing? Of course not. You’re investing in the future of your family. If you had to pay cash for your house, hardly anyone would own one. Over the years, if all goes well, you’ll earn more and your mortgage balance will decline. If you hit a bad patch – get sick, lose your job – you might need to borrow some money to tide you over until things get better. The government is doing the same thing you’d do.
The Federal Government is responsible for investing in and caring for our national family: all of us. That means fixing Grandma’s cataracts and bridges over the Mississippi River. It means paying Uncle John the war veteran’s disability and maintaining dependable public transportation so Aunt Sue can get to work. It means providing Johnny and Suzie with a decent education and air they can breathe. Is health, welfare, safety and educational opportunity worth investing in?
If you’re a Republican, the answer is no.