This topic is going to come up: the national debt. It seems that every election cycle and
campaign dedicate at least some interest to the question (or the problem) of
the national debt. Big numbers are
involved and, as such, can easily be manipulated and the average citizen can be
left mystified as to the seriousness and effect the debt can have on their
individual lives. The party that cries
the most about the debt is the Republican one as it tries to paint the
Democrats as irresponsible spendthrifts.
In the eyes of most voters, this view is enhanced with the image of the
Dems as being the party that favors welfare, bureaucracy, and foreign aid. These citizens, listening to this campaign rhetoric,
seem to have little understanding of what the government spends and many see
such budget items as foreign aid gobbling up much more money – in absolute as
well as percentage terms – than is actually the case. And yet when one actually does see the
numbers, those pertaining to who is responsible for the increases in the
national debt, one gets a very different picture.
In this posting, I want to review the record of the last five
administrations. But before I share
these numbers, let me point out one important fact. The increase in the debt is not just a
product of the government spending more or even of tax rates going up or
down. Yes, of course, these are definite
factors. But another important factor
has to do with how well the economy is doing.
Why? Because, if the economy
takes a nose dive as it did in 2008, businesses make less profit and workers
lose their jobs. As a consequence of
less profit and wages, tax revenues plummet and the government takes in less
money – a lot less money. But it is
precisely at those times that governmental support services and other welfare
demands increase. Of course, this means
more money going out of government and less coming in. Consequently, deficits increase and the
overall debt goes up. Again, tax rate
policy, such as the Bush tax cuts, and government spending such as the military
buildup under Reagan, take their tolls as the numbers below demonstrate. But one should not forget other sources of
debt when one considers what the appropriate levels of spending and taxing should
be.
Here are the numbers for the last five presidents:
Ronald Reagan (R) – January, 1981 to January, 1989 –
inherited a total federal debt of $848 billion and left office with a total
federal debt of $2,698 billion, an increase of 218%.
George H. W. Bush (R) – January, 1989 to January, 1993 –
inherited a total federal debt of $2,698 billion and left office with a total
federal debt of $4,188 billion, an increase of 55%.
Bill Clinton (D) – January, 1993 to January, 2001 – inherited
a total federal debt of $4,188 billion and left office with a total federal
debt of $5,728 billion, an increase of 37%.
George W. Bush – January, 2001 to January, 2009 – inherited a
total federal debt of $5,728 billion and left office with a total federal debt
of $10,627 billion, an increase of 86%.
Barack Obama – January, 2009 to a scheduled departure in
January, 2017 – inherited a total federal debt of $10,627 billion and is
currently presiding over a debt of just over $16,000 billion, an estimated
increase of 60%.[1]
What can a civics teacher do with these numbers? Well, one thing a teacher can do is test the
popular hypothesis of which party is more responsible for the debt. This would need more information. For example, which party controlled Congress
during the different administrations?
It’s Congress that sets up the final budget and votes it into law. Another question I think is very important is
how able we Americans are to handle increased debt. So, for example, what was the GDP (gross domestic
product, the total dollar value of goods and services produced in a given year)
in a particular year as opposed to another year? I use this figure because it is used most
often to measure the health of the economy.
For example, in 1980, the year before Reagan took office, the GDP was
$5,934 billion or about five times the amount of the debt. Today, the debt is just over the GDP number
or about one to two trillion dollars over the GDP. Many find this ratio alarming. But we have seen these rates before. After World War II, we had a debt level quite
a bit higher than the GDP level. These
kinds of comparisons are useful. Another
investigation that students can do – more of a math problem – is to see during
which administration the debt, on average, increased on a monthly basis or the
increase between the times that the two parties held the White House. This latter concern can be answered in terms
of a percentage basis or actual money amount basis or both. So, in the figures above, the Republicans
controlled the White House for 240 months.
Using the easier numbers for illustration purposes, during the
Republican years, the total percentage increase was just under 1.5% per month,
while for the Democrats, it was an increase of .5% per month over the 192
months they held the presidency (which will be the number of months – Clinton
plus Obama – when Obama leaves office).
Perhaps these numbers are easier to understand.
I have previously in this blog written about comparing debt
to wealth. My message in that posting was
that we can afford our debt as it is currently constituted. Having stated that, I do want to make it clear
that the debt can be a problem, especially when the servicing of debt – how
much we pay in interest payments – becomes too large a number in our yearly
budget. So, all other things being
equal, we should find a way to lower the debt and that means lowering our
deficit rate – the amount by which the debt increases every year. Here is where a citizen’s values come into
play. We can lower the deficit by the
government spending less or we can raise revenues – a nice way of saying raise
taxes. There are portions of our
citizenry that are not paying enough and some that are paying too much. That’s my opinion reflecting my values. You might have another view, but whatever,
the question should be asked and answered:
how do we make sure we can continue to afford our debt?
[1] Mikkelson, D. (2012) Who increased the debt? Snopes, retrieved from http://www.snopes.com/politics/politicians/nationaldebt.asp .
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