For more than thirty-six years from the end of WW II until the administration of Ronald Reagan, the national debt, adjusted for inflation, was remarkably stable. 1 . On January 20, 1981, during his first inaugural address, Reagan said,
"For decades, we have piled deficit upon deficit, mortgaging our future and our children's future for the temporary convenience of the present. To continue this long trend is to guarantee tremendous social, cultural, political, and economic upheavals."
Reagan cut taxes because he believed in "supply-side" economics, a theory that tax cuts would lead to increased government revenue and would not increase the national debt. He was wrong. According to Jill Lepore, professor of history at Harvard,
"During the Reagan Revolution, the top income-tax rate, which had been above ninety per cent in the nineteen-forties and fifties, fell from seventy per cent to twenty-eight per cent. When Reagan took office, the national debt was nine hundred and thirty billion dollars; when he left, it was $2.6 trillion." 2
During Reagan's presidency, the economy was adversely affected in other ways. According to economist Nouriel Roubini 3
"The public debt to GDP ratio increased from 26.1% in 1979 to 41.2% in 1986."
"1973-1980, private saving averaged 7.8 percent of the economy, and dropped to ... 4.8% in 1989."
During the administrations of Ronald Reagan and George H.W. Bush, the national debt as a percentage of GDP soared as it had not since the end of WW II. According to the Congressional Budget Office, Reagan and George H.W. Bush increased the national debt every year they were in office. 4
When Bill Clinton took office, he reversed Reagan's tax cuts for the highest income brackets. Republicans predicted economic disaster. Once again, they were wrong and could hardly have been more wrong. 5
Clinton's policies turned the economy around in spectacular fashion, leading to unprecedented economic improvement and prosperity across the board. According to the figures of the Congressional Budget Office, Clinton left office after three straight years of budget surpluses. 6
In 2001, George W. Bush brought his blind faith in failed Republican supply-side economics to the White House. His tax cuts and negligence regarding financial-industry malfeasance resulted in seven straight years of budget deficits. During the six years of his Presidency when Republicans controlled all three branches of the federal government, Bush did not veto a single spending bill. These are some of the consequences of the policies of Bush and his Republican allies in congress:
Five biggest deficits in American history 7
"Foreign-owned government debt more than doubled" 8
Worst jobs record since Herbert Hoover 9
More than $4 trillion dollars added to the national debt 10
The Real Median Household Income fell, the first time in recent history. 11
"Under Clinton, the median income increased 14 per cent. Under George W. Bush it declined 4.2 per cent." 12
"Under Clinton the total number of Americans in poverty declined 16.9 per cent; under George W. Bush it increased 26.1 per cent." 13
"Under Clinton the number of children in poverty declined 24.2 per cent; under George W. Bush it increased by 21.4 per cent." 14
"Under Clinton, the number of Americans without health insurance [was] down six-tenths of one per cent; under George W. Bush it increased by 20.6 per cent." 15
By the summer of 2008, the economy was collapsing. The housing and auto industries were in peril. Republicans, including their presidential candidate, Senator John McCain, just didn't get it. McCain's chief financial advisor was former Senator Phil Gramm. Gramm was one of the strongest proponents of bank deregulation, a policy that turned out to have predictably disastrous consequences. 16 He had also been instrumental in passing legislation beneficial to Enron, a company which had rewarded him and his wife handsomely. 17 During the summer of 2008, he was a Vice-President of UBS, a Swiss bank, one of those that caused the mortgage crisis. Gramm told the Washington Times that we were in a "mental recession." 18 He certainly was. On Aug. 20th, McCain said, "I still believe the fundamentals of our economy are strong." 19 In September, he said it again. 20 In addition, the Department of Justice discovered that UBS was engaged in business practices designed to "justify evading its reporting obligations and helped United States taxpayers to continue to conceal their identities and assets from the IRS." 21 On Feb. 18, 2009, the Department of Justice announced, "As part of the deferred prosecution agreement, UBS has further agreed to pay $780 million in fines, penalties, interest and restitution." 22 The advice that Phil Gramm gave McCain was bought and paid for by UBS.
When Barack Obama became president in Jan. 2009, the country was in the worst economic condition since the great depression that started eighty years before after years of Republican rule. Obama inherited the unprecedented increases in the national debt incurred by three Republican presidents who had been in office for twenty of the previous twenty-eight years. George W. Bush had left him with economic crises across the spectrum, including in the banking, mortgage, and auto industries. Millions of Americans were losing their jobs and homes. When Bush left office, the national debt stood at more than $10 trillion. 23 The projected budget deficit for fiscal year 2009 was more than $1 trillion. 24 In addition, Obama inherited two wars, one of which George W. Bush started against a country that had done us no harm and posed us no danger. Not only had Bush lied to get us into the war and wildly underestimated the difficulty, his budgets routinely omitted funding for the war.
Since then, the Republicans have fought every remedy proposed by Obama and the Democrats. Like arsonists who start a fire and then shoot the firemen who try to extinguish it, the Republicans criticize Obama for not fixing the damage they caused at the same time they are obstructing his every attempt to do so. Very few Republican voters have expressed a willingness to end Medicare or Social Security. They want the government to provide a strong military, good border security, good roads, good schools, good fire and police departments, a court system, and adequate prisons. They want the government to ensure that food, pharmaceuticals, air travel, autos, and other products, are safe. They just don't want to pay for any of it. If that isn't hypocrisy, then what is it? Republicans insist that we follow the same policies that failed for twenty years and which caused all the damage. If that isn't proof of stupidity, then what is it?
Since President Obama took office, Republicans have been braying about redistribution of wealth. Let's look at the facts:
When Ronald Reagan took office, average CEO pay was 30 to 40 times as high as that of the average worker. In 2007, under George W. Bush, the ratio reached 344. 25
When Ronald Reagan took office in 1981, the share of wealth held by the top 1% in the United States was 24.8% When George H.W. Bush left office twelve years later; it was more than 37%. 26
In 2007, the 400 highest incomes in the U.S. averaged $344.8 million. 27 The average tax rate on those incomes was 16.62%, the lowest rate for such incomes in American history. 28 That's a lower rate than that paid by many middle-class Americans.
By 2008, the gap between the richest and poorest Americans was the largest since America had an income tax. 29
During the past thirty years, Republican administrations caused most of increase in debt and the egregious redistribution of wealth in favor of the wealthiest Americans.. There are many sources that give different numbers but none of them dispute the trend. Current complaints by Republican politicians about redistribution of wealth and the enormous debt are evidence of their dishonesty. They caused most of the problem.
Supreme Court Justice Oliver Wendell Holmes said, "Taxes are what we pay for civilized society." 30 Jill Lepore elaborated,
Taxes are what we pay for civilized society, for modernity, and for prosperity. The wealthy pay more because they have benefitted [sic] more. Taxes, well laid and well spent, insure domestic tranquility, provide for the common defense, and promote the general welfare. Taxes protect property and the environment; taxes make business possible. Taxes pay for roads and schools and bridges and police and teachers. Taxes pay for doctors and nursing homes and medicine. During an emergency, like an earthquake or a hurricane, taxes pay for rescue workers, shelters, and services. For people whose lives are devastated by other kinds of disaster, like the disaster of poverty, taxes pay, even, for food. 2
During my late-night research, I might have copied text from another author and inadvertently forgotten to give credit. Please let me know if you find instances of such negligence and I will correct it promptly. I welcome all corrections of facts, spellings, grammar and broken links.