Go Home

debtgnp_80ba7.gif

To the displeasure of many on both sides of aisle, President Obama on today is hosting the so-called Fiscal Responsibility Summit at the White House. While some Democrats question the timing of Obama's expenditure of political capital on Social Security, Medicare and other entitlement reform, obstructionist Republicans are ridiculing the event even as they hype the myth of Republican fiscal discipline.

And a myth it surely is. Far from the deficit hawks of Republican legend, the modern Republican Party from Reagan forward devastated the U.S. treasury, leaving mounting debt and hemorrhaging red ink for as far as the eye can see.

Of course, you'd never know it listening to the grousing from some of President Obama's Republican guests. On Sunday, Senate Minority Leader Mitch McConnell (R-KY) declared the summit "sobering up here and beginning to rethink the kind of debt that we're laying on future generations." And New Hampshire Senator and aborted Commerce Secretary Judd Gregg turned on his would-have-been boss, sneering:

''It can either be a nice press event. Or it can be a substantive event. History tells us it will be the first. We've had these meetings before. There's always a lot of people willing to point out the problem."

As the history of the past 30 years shows, those people "willing to point out the problem" are called Republicans. The ones doing something about it are called Democrats.

As the chart above shows, the national debt under president Reagan, Bush 41 and Bush 43 exploded as a percentage of GDP, interrupted only by the all-too-brief fiscal sanity of the Clinton years. And to be sure, the budget surpluses of the late 1990's seem like a distant memory.

That didn't prevent the AP's Liz Sidoti, who famously presented John McCain with a box of doughnuts during a 2008 AP campaign forum, from faithfully regurgitating last week Republicans' talking points about a return to their tall tale of the GOP as heroic guardians of the national purse:

"The GOP's strategy of emphasizing its so-called bedrock principles - restrained spending, limited government and deep tax cuts - comes as the party works to rehabilitate itself after eight years of Bush's leadership and rebound from back-to-back elections that saw Republicans lose their grip on Congress and the White House."

Unfortunately, the Republicans' fiscal rot didn't begin with George W. Bush, but with Ronald Reagan. It was the legendary Gipper whose financial recklessness and tax-cutting fetish came to define the modern GOP.

The numbers tell the story. As predicted, Reagan's massive $749 billion supply-side tax cuts in 1981 quickly produced even more massive annual budget deficits. Combined with his rapid increase in defense spending, Reagan delivered not the balanced budgets he promised, but record-settings deficits. Even his OMB alchemist David Stockman could not obscure the disaster with his famous "rosy scenarios."

Forced to raise taxes twice to avert financial catastrophe (a fact conveniently forgotten in the conservative hagiography of Reagan), the Gipper nonetheless presided over a doubling of the American national debt. By the time he left office in 1989, Ronald Reagan equaled the entire debt burden produced by the previous 200 years of American history.

For his part, George H.W. Bush hardly stemmed the flow of red ink. And when Bush the Elder broke his "read my lips, no new taxes" pledge to address the cascading budget shortfalls, his own Republican Party turned on him. While Bush's apostasy helped ensure his defeat by Bill Clinton, it was Clinton's 1993 deficit-cutting package (passed without a single GOP vote in either house of Congress) which helped usher in the surpluses of the late 1990's.

Alas, they were to be short-lived. Inheriting a federal budget in the black and CBO forecast for a $5.6 trillion surplus over 10 years, President George W. Bush quickly set about dismantling the progress made under Clinton. Bush's $1.4 trillion tax cut in 2001, followed by a second round in 2003, accounted for the bulk of the yawning budget deficits he produced.

Like Reagan and Stockman before him, Bush resorted to the rosy scenario to claim he would halve the budget deficit by 2009. Before the financial system meltdown last fall, Bush's deficit already reached $490 billion. (And even before the passage of the Wall Street bailout, Bush had presided over a $4 trillion increase in the national debt, a staggering 71% jump.) By this January, the mind-numbing deficit figure reached $1.2 trillion, forcing President Bush to raise the debt ceiling to $11.3 trillion.

And so it goes. The Republican Party of No decries President Obama's deficit spending urgently needed to rescue the country from the economic cataclysm over which they presided. While relatively minor adjustments to the 1980's grand compromise are needed to assure the long-term solvency of Social Security, the GOP will no doubt balk at the serious health care reforms required to avoid the looming Medicare train wreck.

Regardless, the Republicans will continue to point the finger of blame for the endless sea of red ink they themselves produced. As Vice President Dick Cheney famously said in 2002, "Reagan proved deficits don't matter."

(This post also appears at Perrspectives.)

Share This Post

Link To This Post


38 Comments
constituent's picture

the (R) party are trying to find their way. many of them have been quick to criticize/oppose the "stimulus'
plan but NOW are faced with the reality of their constituents. they've had NO real position from which to oppose high and wasteful spending having backed EIGHT years of it without voicing a peep. i can't take these people very serious. trying to deceive the public with their propaganda "spending bill" trying to gain
political capital for upcoming elections. personally, i hope their calculated risk taking falls flat on their face(s).

MinuteMan's picture

... Red ink

Q's picture

Facts? Aw, damnit. You know the GOPigs hate it when you use things like facts; they get in the way of the "truth"!

Real Citizen's picture

PSSSST.

Remember the Great Depression? ===>caused by the GOP's fucked up economic policies of the 20s.

Why is our national memory so short?

The GOP is bankrupt of ideas and has been since the turn of the century!

All the rephucklicans who voted "no" on the stimulus package should NOT be entitled to any of the stimulus package monies for thier constituents. Then we'll see democracy in action!

VegasRage's picture

Both parties have much to answer for, we can't trust the statistics on may things including the CPI and the even the GDP, all have been tainted to paint a rosier picture than they should.

The GDP started out as the GNP (gross national product) during World War II, when it was used to measure wartime production capacity. It was never intended to be used as a measure of the country’s economic well-being, and its shortcomings are laughably numerous.

By definition, the GDP is the sum total of the monetary value of all final goods and services bought and sold within U.S. borders in a given year. The distinction between GDP and GNP, incidentally, is that GDP doesn’t care about the nationality of the producer. It includes everything transacted within our borders, even BMWs manufactured in North Carolina. (GNP, which is almost never used, would exclude foreign manufacturers in the United States and include goods and services produced by U.S. firms operating abroad.) GDP thus includes the totality of consumer, investment, and government spending, plus the value of exports, minus the value of imports.

One big problem with GDP, although represented as a measure of economic health, is that it makes no effort to distinguish between transactions that benefit the nation’s health and those that subtract from it. Destructive activities are included as well as productive activities. The GDP may not have been designed to measure economic well-being, but since it is used for that purpose, everything it includes—every monetary transaction that takes place anywhere and anytime within its time frame is, by definition, progress and a contribution to the nation’s economic health. Thus Hurricane Katrina added to the GDP despite tragic losses to the populace, as do other negative expenses, such as crime prevention costs, expenses incurred in divorces, medical costs, and national defense expenditures.

Peter Schiff - P42 Crash Proof


Goodnight, Frau Blücher

I do look forward to finding your posts VegasRage. This is a good find.

The major problem with Fiat Currency is finding and establishing a common denominator by which to value economic assets. At this point, I don’t think it yet exists, and as this article states, GNP/GDP doesn’t help much.

That isn’t to say that the proper valuation couldn’t be found. But if it ever is, it must remain consistent and resistant to artificial manipulation.

As Obama said at the WH today, for too long the nation’s debt has been an exercise in deception. We’ve budgeted 0 for natural disasters, 0 for Iraq, took one time expense hits for expenses that lasts years, and underestimated overpriced expenditures. We did those so we could pay for fluf, and finance the fat. A reckoning is in order.

To fix this, we must first have a new honest accounting of how bad a situation we’re in. We must look at the deficit in full light, and place all Federal Expenses ON THE BOOKS.

It’s an intervention – hopefully we can get off the junk.

Way to go Barry.

Republicans are pretending to have their financial come to Jesus moment. They are like rabid dogs, they will attack in every direction even if there is nothing there. If they weren't so mean, they would be pathetic.


Say what you mean. Mean what you say. But don't say it mean.

People think Republicans are the party of "fiscal responsibility" because Republicans refer to themselves as "conservative," appropriating for themselves that adjective's meaning of wise and cautious.

As you say, though, since Reagan, Republicans have been more devoted to making the government unworkable by building up huge deficits than to being fiscally prudent. The best examination of this I've read is Thomas Frank's "The Wrecking Crew: How Conservatives Rule", though anyone who's had their eyes open for the past three decades can surely see it.

Since this has been going on for nearly 30 years, it's frustrating that people are still fooled by the fact that they refer to themselves as conservative. The word is meaningless when applied to their policies, amounting to nothing more than a misleading advertising label.

John F A's picture

This has been going on since the Robber Barons and their cronies hid themselves behind the slogan "The Party of Lincoln" when any thinking person would realize that Lincoln would have personally kicked these scumbags' lying asses on the White House lawn.

robota's picture

Thanks for the excellent post. I really appreciate the chart. It will be useful in discussing the debt issue with my right wing friends.

Sincerely,

joeedugan's picture

They'll just tell you Reagan's deficits were the fault of the Democrats in Congress and Clinton's success was all due to the Republican controlled congress. And then Clinton left Bush with a recession, then 9/11 happened and then in 2006 the Democrats took over congress and things really went to hell...

They've already been told all the crazy answers, so they don't have to think for themselves. Conservatism is a Cult: you might as well try to reason with a Moonie or Tom Cruise.

Amitola's picture

I never knew about that site zFacts - they have some other interesting charts/facts which will be very useful in as you say "discussing", I say 'sticking-it-to' my Repug friends and, sad to say, even some family.


"Egotism is the anesthetic that dulls the pain of Stupidity" - Frank Leahy

pPWJgd's picture

"Republicans" versus "Democrats" will not work any longer. But keep trying.

Milquetoast's picture

Gambino's vs Genovese?

Cryp's-n-bloods?

cat shit verus dog shit?

suicide with a gun or jump off a cliff?

damned if you do...damned if you dont?


audit-prosecute-incarcerate

joeedugan's picture

If I were you, spelling as you do, I'd stay outta tha LBC...

Milquetoast's picture

Lebanese broadcasting group?

Lancaster bible college?

Libertarians from British Columbia?

Louisiana Baptist Choir?

crips-n-bloods are two rival gangs...in L.A...vying for control of the city,...I think...


audit-prosecute-incarcerate

ysbaddaden's picture
)O(

Loose Bowel Condition?


Diabolus est Deus Inversus

joeedugan's picture

'Amy, Amy Grant,
Barry, Barry, White.'

I think you two guys are coming from that same place.

The Bloods and Crips are two loose alliances of hundreds of different street gangs. Once exclusively in L.A., now they're all over the country. A famous Crip stronghold in Southern California is Long Beach, California, also known as Long Beach City or the LBC, or even as 'tha LBC.'

Snoop Dogg wrote in 'Gin and Juice' that...

'With so much drama in L- B- C- ,
It's kinda hard bein Snoop D- O- Double G.'

Anyhow, I hope we've all learned something. Now you are ready to go out into your own neighborhood and start YOUR chapter of the Crips. Just remember not to wear red, and to hang your blue bandanna from your LEFT back pocket. Why? Coz that's tha Crip side...

Roket's picture

You can’t believe a word they say and you can’t take your eyes off of them for a second.

Is it any surprise? Reagan said "deficits don't matter." That means open the spigot, drain the treasury, borrow up to your eye balls.


far left loon >.<

John F A's picture

When Repugs say it it means "deficits don't matter--to us."

Milquetoast's picture

Reagan borrowed shitloads of money for the same exact sort of shit...

star wars program (wasteful military) and the savings and loan debacle. (scandalous unregulated banks)

Deja vue.


audit-prosecute-incarcerate

Orangutan.'s picture
Evet's picture

American Insurance Group, the insurance giant that is 80-percent owned by the US government, is in discussions with the government to secure additional funds so it can keep operating after next Monday, when it will report the largest loss in U.S. corporate history, CNBC has learned.

AIG has been already been given $210 BILLION. This is total insanity.

Evet's picture

spa treatments, banquets, and golf outings.

joeedugan's picture

Unless liberals go after the myth of Ronald Reagan and expose the man for what he was. The most fiscally irresponsible President we ever had. The man who gave Osama and the Taliban their starts. Far from universally loved, lots of people saw right through him.

George W. Bush followed Reagan's policies exactly, from the cowboy foreign policy to voodoo economics. During the Cold War, things were tense enough that Reagan's foreign policy cowboys could only get the country into a limited amount of trouble, not like today. And Reagan got away with the deficits because the country wasn't already suffocating under a mountain of debt, as Bush's situation would be.

To his credit, Reagan surrounded himself with reasonably talented and competent people, while Georg W. Bush surrounded himself with the biggest collection of ass-kissing incompetents the world has ever known.

I hope we see more of Obama's moments away from the constant 'cable chatter'.
It's become the chattering that fills the hours, that pays the bills, and it's the chattering that the republicans are relying on now. When there's nothing left to chatter about they make something up. Well there's still lots of bushco crimes to chatter about. TV has lots of important things to fill the hours with other than party politics - making me sick - make it stop. plees,plees, please!


"Government by organized money is just as dangerous as Government by organized mob"
-= Franklin Delano Roosevelt =-

VegasRage's picture

would dare think the Republicans are more fiscally responsible than the Democrats. I may not be for the stimulus, but ONLY people who had the memory portion of their brain removed would fail to recall Bush spent like a Democrat on steroids to a rubber-stamp supporting GOP.

We doubled the national debt under Bush, oh but now the GOP is responsible. @#$^%&(!##!


Goodnight, Frau Blücher

Rather, it's an oxymoron.

bmw 528's picture

willing to point out the problem." No shit, Judd. Like you for instance. Hope being with the party of no suits you---no ideas, no cooperation, no clue.

And no balls as well---when it came time to actually do something constructive, people like you turn yellow and quit, preferring to do the partisan bidding of your ideologically bankrupt party instead of courageously serving the public interest. Any fool can be a critic, and that's you. Do us a favor and quit now and spare us the pleasure of running you out of office next year.


"We will find fulfillment not in the goods that we have, but in the good we can do for each other."

Robert F. Kennedy

FrancoisT's picture

"Deficits only seem to irritate the Republicans when they're not the ones spending the cash."

--Chris Matthews

Radically Moderate ad infinitum's picture

Repug supporters should regard their party as the permanent minority in American politics.
It is obvious that they are better suited to being on the outside shreaking about "fiscal responsibility", rather than destroying the American future through archaic economic dogma that sounds better in theory than practice.


'Talk to the hand'

flbikerchick's picture

...how the GOP is suddenly concerned about the burden being placed on future generations. They really still believe that they are smarter than everyone else and can get away with spinning and lying, and that the American public is not smart enough to see what they're doing. Here's a suggestion, GOP: find someone in your ranks who knows what the internet is and how to use a search engine, and have them show you how easy it is to check the facts, rather than just swallow your version of them.

Right Wing Hater's picture

The Republican party died with Eisenhower...

Nixon began the age of the corporatists running the GOP, starting with the HMOs, privatized war, and all the forebearer goodies this nation suffered from under the latest Bush crime family outfit...


We don't inherit the Earth from our ancestors, we borrow it from our children - Native American proverb
If being cold means there's no such thing as global warming, does being full mean there's no such thing as world hunger?

sofla's picture

The Republicans only like spending when it's a Republican doing it. They actually think Reagan was fiscally responsible... bwaahahahhahahahahhahaha.... I guess borrowing truckloads of money, spending it on the military and cutting taxes is fiscal responsibility.

Then they have the chutzpah to accuse Democrats of being "tax and spend" when they try to pay off the credit card the Republicans ran up.

The sad part is that a lot of our fellow 'citizens' buy into that bullshit.

coltergeist's picture

For talking to Republicans in the future, please memorize the following (as calculated by this graph, source Whitehouse.gov):

As a percentage of Gross Domestic Product:

Since WWII the Republicans have ballooned the deficit 20% during their tenure. (were it not for Ike, it would have been 35%).

Since WWII the Democratic administrations have reduced the deficit 48%. That is a difference of 68%!!!

Conclusion: Republicans are 68% more fiscally irresponsible than Democrats and the numbers back it up. Or you could say 68% less fiscally responsible.

Comments are closed on this entry