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The Truth About the National Debt

February 2nd, 2010 · No Comments · Economics, Jobs, Politics

Attention: propaganda groups! Neocons to propaganda groups: Come in Please! Attention!

Let’s distract the Helots, the Tea Baggers. Let’s send them to the opposite end of the economic spectrum, from the recovery and the need for jobs to the huge deficit so that they will not really understand what is happening in this country and what has been happening for the last 29 years. Use the word “Deficit” as often and in as frightening a way as possible. Get them to write out the word “deficit” on their signs. Make sure that they spell it correctly this time. Drop “Nazi” and “Commie” for a while and use the word “Deficit.”

If you don’t, they are going to stop at some point and ask…”what does this obstruction have to do with a job? I need, or my brother needs, or my son or my niece or my neighbor needs….a job!”

Well, OK. Maybe…just maybe…we Populists could distract those idiots in the “tea party” mobs ourselves for a minute. What a pathetic lot they are. Maybe we could entice them with a photo of Sara Palin to sit down on a curbstone for a minute or even for five times their maximum attention span…five minutes…and learn some facts about the economy and deficits.

It is history. And as boring as that is for drop-outs, it is necessary if even a single one of them is interested in truly changing the way we do things in Congress and in the country. Actually, that’s doubtful. 75% of them are probably your basic, simple racists. But here goes anyway.

In the early 1980s, Ronald Reagan cut taxes. He and his wife and General Electric and the out-of-power Republicans wanted to cut taxes as a way to get into the White House. Cutting taxes always works. But GE also wanted to develop a big military contracting industry. The former because that is what GE does as a business, cut costs and increase margins. The latter they wanted to do because that is also what GE does. It makes military hardware, including the key component of a jet fighter or bomber…the engine.

Ronnie and GE decided that the thing to do was to renew the war on the Communists. Scare the shit out of the people by shouting, falsely: The Russians Are Coming! Of course, in reality, the Soviets had long since been dead broke. We knew it, Intelligence told us as early as the mid-70s but if we told you, then you would want to cut military spending.

So Ronnie cut taxes from 74% at the top, down to 28%. He cut taxes in half, basically for a big hunk of Americans but for a guy paying $74,000, he would now pay $28,000. Is that Ronnie Reagan a great guy or what? Is this a great (bankrupt) country or what? We had a slight annual deficit in those days anyway, so cutting taxes basically in half raised the deficit big time. The U.S. Budget? Imagine you were already over spending and you cut your pay in half and bought a luxury Jeep. That was Reaganomics.

Cutting government income wasn’t enough for Ronnie. He decided to make an aggressive posture towards the Russkies seem legitimate (even thought it was only posturing.) He would legitimately enrich GE and other big benefactors at the same time. He would QUADRUPLE the defense budget, which he did, claiming that the Russian Bear was at the door. In reality, the Russian Bear was in hibernation, hungry and cold.

Gorbachev, we now know, was anxiously waiting to meet with Reagan to reduce military spending because Russian society was beginning to disintegrate, even under the minimal amounts that they could spend on their military. And the satellite military…Poland, Czechoslovakia, and the other Eastern Bloc countries…were not interested in going to war with anyone. They wanted dishwashers and an automobile that would run.

So…maybe an interesting story…but what happened? In the end, we were handed a bill that was much more than we had in the bank. In 1980 we had an accumulated debt, since 1789 through World War II…Korea…Viet Nam…inflation because of Arab oil embargos…ongoing basic military expenditures…of about $900 billion. That is close to the amount that Bush II gave the banks to bail them out. Reagan took that debt and he increased it almost 3x in 8 years to $2.8 trillion. So it went from 80 bucks to 214 bucks and we got absolutely nothing for it.

Then Bush I came into office–a former daring World War II pilot, a hero of the war, a physically courageous man, smart and educated and as experienced in world affairs as you can get. He called Reaganomics…”voodoo economics.” Which it was, and it would prove to be to his detriment and that of the country. Just as World War II had taken him from Yale, voodoo economics would now bring him another unpleasant surprise.

Bush I was facing a huge debt because revenues could not come close to matching expenses. So he tried to raise taxes just a little, to keep the debt from going totally out of control and to keep the country from going over a cliff. His own Party, now the Right Wing Nut Party, went against him, ridiculed him for saying, “Read My Lips; No New Taxes.” The ideologues, the hack politicians, the TV evangelists, the corporate types, the lobbyists….they all attacked him. He had to leave office. But not before he was unable to prevent an additional debt increase to $4.0 trillion by 1992.

The annual deficit by the time Clinton walked through the door was projected to be $290 billion. For one year. The system, as Bush I knew, was out of control. But under Clinton (and the Republican Congress for the most part, who didn’t want Democrats getting all that money to spend) the deficit was reduced every year, resulting in a $22 billion deficit in 1997 and a $69.3 billion surplus in 1998.

In 2001, when George W Bush, Little Bush, came into office, the structural deficit was over. Under Clinton the annual revenues versus expenditures had gone from a minus 4.7% to a plus 2.4%. In other words, the economy was back on an even keel. But there had been more losses in the early years of the Clinton Administration, and so the national debt passed on to Bush the Second was $5.6 trillion.

So what did Bush and the Neocons do? They stupidly cut taxes. In 2001, before the tax cuts went into effect, there was still…even with the effects of the terrorist attacks of 9/11…a surplus of $128 billion. But the same kinds of idiotic tax cuts that Bush II’s hero, Reagan, had carried out threw the country into deficit again, $159 billion loss, in 2002. The tax cuts (which were over a trillion dollars over ten years) plus the recession, plus entry into an unprompted war in Iraq pushed the deficits higher, reaching $413 in 2004 alone.

At the end of Clinton’s term, the national debt had been $5.6 trillion. He had been handed a national debt of $4 trillion and had slowed, then stopped the deterioration. George W. Bush, through mismanagement, stupidity, greed, two sets of income tax breaks for his rich friends and for corporations, and a completely discretionary war on top of a war already being fought, sent the national debt, by the end of 2008 to more than $10.4 trillion. Doubled it.

And now what do the Republicans want to do? Paul Ryan wants to cut taxes again. That is the center piece of the Republican recovery plan. That is the solution of a man who simply does not get it. We have never gained revenues by cutting taxes. But the Republicans have a plan. They will cut spending…on Social Security (as Jeb Hensjarling said yesterday) and on everything but wars. Wars, wars and more wars.

We have never succeeded with tax cuts under either Reagan and not under Bush II. Under Bush I, we raised taxes and staved off disaster. Under Clinton we raised taxes, used some of the money to encourage business development, helped companies into the age of technology and had the longest sustained period of prosperity in the history of the United States. The result of which was to balance the budget.

So the same Republicans who have made their mark by using the Neoconservative media…Rush Limbaugh, Ann Coulter, Sean Hannity and Crazy Glenn Beck…to spout their lies about how great things were while the country was going to hell in a hand basket, are now telling us we should somehow CUT taxes again to somehow GROW the economy. The same guys who took the budget deficit from $5.6 trillion and doubled it in 8 years to $10.4 trillion and gave us a Great Recession and the loss of 7 million jobs and a ten percent unemployment rate.

Let’s be honest, shall we? If you believe this crap by Obstructionist Republicans who work for the lobbyists for big corporations, you’re a moron. Do you know why you don’t have a simple, direct, inexpensive, cost cutting health care reform bill? Because the health care industry lobbyists spent literally $600 million to defeat it. If they spent that much to buy off all the Republicans…every single one in the House and the Senate…think of that…ALL the Republicans…and a handful of critical Democratic Senators, then how much do you think they are going to take from you in excess billings and cancellations of policies and non payment of big bills?

That’s right. You have to be a moron to let these Obstructionist, corporate lobbyists lead you around by the nose.

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