We should be sick to death of listening to the Republican Party talk about deficits and debt by now. Seriously, we should demand that they sit down and shut up about it immediately. For some reason, much of the press and the press has chosen to give many Republicans the title of “deficit hawk,” primarily because they talk about it incessantly. The implication, of course, is that somehow, because Democrats don’t talk about it obsessively, they are, therefore “deficit doves,” or some other such nonsense.
Part of the reason Democrats don’t talk about it is because they’re doers. You should always worry about politicians and parties who always talk about something because talkers rarely do anything. That;s one reason it seems silly for people to complain about Obama “not talking about (choose the pet issue).” I would rather he do something about it. And he is. In fact, he’s been doing something all along, and it’s the talky Republicans who are stopping him.
First of all, let’s make a few things clear. President Obama is barely responsible for the current level of debt. In fact, since 1980, when the deficit and debt started to explode, only two presidents have overseen a reduction in deficits; Clinton and Obama. Nearly all of the $17 trillion in debt was put there by Republicans, not Democrats. In fact, a case can be made that even most of the current deficits are the responsibility of George W Bush and Congressional Republicans, not President Obama and Democrats. But you should also be aware that the current level of national debt is not unprecedented and it is not catastrophic. It is actually manageable, as long as we get it under control within the next few years, which is not possible through spending cuts only.
To say President Obama is responsible for the deficits from the moment he was inaugurated is simple-minded and inaccurate. On January 20, 2009, fiscal year 2009 had been underway since October 1, 2008. By then, the bail-outs had already been doled out, and the economy was losing 800,000 taxpayers (jobs) per month. The bail-outs, the big stimulus and several smaller stimuli actually stopped the bleeding much more quickly than otherwise, which means the deficit for FY2009, which was projected to be $2 trillion before Obama took office, ended up being $1.7 trillion. In fact, the deficit for just the first quarter of FY2009, which ended a month before Obama;s inauguration, had already topped $485 billion. (Source)
Put simply, Obama actually worked to reduce the deficit from the moment he took office. But he didn’t discuss it incessantly.
On the other hand, Republicans, who complain about deficits and debt constantly when Democrats are in charge, added a hell of a lot more debt than can be lain at Obama’s doorstep. By the time FY 2009 was over, the national debt was closing in on $12.5 trillion, even though Clinton had left Bush 43 and the Republican Congress with a debt of just over $6 trillion, and surpluses that had the projected debt at 4.5 trillion by 2008. That means Bush added at least $6.5 trillion to the debt in eight years, including $4 trillion even before he crashed the economy. It also means he added $8 trillion, based on projections of surpluses. Isn’t it strange how the party that took credit for the balanced budgets of the late 1990s suddenly blew up the deficit and said things like, “You know, Paul, Reagan proved that deficits don’t matter. We won the mid-term elections, this is our due,” to Treasury Secretary Paul O’Neill. (Source)
The current deficit is actually dropping very quickly, although you would never know it, to hear Republicans talk. The FY2013 deficit dropped to $680 billion or 4.1 percent of GDP. (Source) That constitutes a 37 percent drop from FY 2012. It’s still too high, of course. But one thing to blame is the $415 billion we paid in interest on the national debt that was paid last year. (Source) At least 80% of that amount was paid on debt that was accumulated by Republicans. If you remove the cost of the wars, the cost of the Bush tax cuts and the interest cost on only the debt Republicans added over the past 32 years, the budget would be balanced, and the most you could claim Obama was “responsible” for is perhaps $1 trillion of the $17 trillion debt.
Ironically, it’s Republicans who are responsible for the high deficits right now. The major reason the deficit is dropping right now is increased revenue. See, deficits are not only about spending, they’re also about revenue. Revenue is up, and it could be up more, except that Republicans in Congress refuse to do anything about increasing jobs (taxpayers).
Cheney was wrong, of course. Deficits matter sometimes, and don’t matter others. There is no reason to run a deficit during a good economy; no reason at all. When unemployment is low, you collect tons of taxes, and pay for everything with cash, so that you can borrow when the economy hits a rough patch. If Bush and the GOP hadn’t blown up the debt for seven years before the mortgage meltdown, there’d be less of a problem with the debt now. If he had stuck to the Clinton plan, the debt would have been $4.5 trillion, or less than 30% of GDP when the Great Recession hit, the approach to the stimulus would have been completely different. It is foolish to cut government spending during a recession. That’s like getting laid off at your job and using your savings to buy lottery tickets.
Not passing the first stimulus was irresponsible. Yet every Republican voted against it. Not passing a second and third stimulus was equally as irresponsible, yet Republicans fought every attempt tooth and nail. One of the main purposes of stimulating the economy is to reduce the deficit, not increase it. Every dollar the government spends in the economy, building infrastructure and other projects we need actually circulates through the economy multiple times, and brings in more tax revenue than it costs in government spending.
And look around you. We need roads, public transportation, and a new electrical grid that is far less dependent on oil. We need more police, firefighters and teachers, not just because they provide a public service, but because they spend their earnings in the economy. So far, due to Republican budget cuts, 800,000 public workers (taxpayers) lost their jobs, which adds billions of dollars to the deficit. They also have refused to pass any of the massive jobs bills Obama and Democrats have presented to them, and doing that has probably added another $50-60 billion to the deficit.
We can tackle this debt. Like I said, it’s not unprecedented. It is too high, but it is manageable, at least so far. Look at this chart. At its peak, right after World War II, the debt was 120% of GDP, but by 1980, without running major surpluses, it fell to 31% of GDP. Keep in mind; that was when Saint Reagan was running on a promise (joke) to balance the budget, because he felt Carter’s deficits were out of control. Yet, when Reagan was finished in 1988, the $900 billion debt we had accumulated in the first 193 years of the republic had more than tripled and was about 58% of the national debt. By the time Bush 41 was finished, it was at about 63%, and just shy of $6 trillion. Clinton shamed the GOP, and had us going in the right direction, but Bush 43 and the Republican Congress passed massive tax cuts, mainly for the rich, and started two of the dumbest and most expensive wars in history. The debt exploded again, and soared to 98% of GDP by the time his recession was over.
The debt is still not at World War II levels. There is a template for getting the debt down, because we did it before. For the 25 years following the war, we became the most prosperous nation in the history of the world. We built a model economy during that time; a model that Republicans fail to follow these days. We grew the economy in large part based on government spending, which increased every year from 1947 (the first fiscal year to not include many World War II expenses) until 1972. But instead of wasting money by shipping it to Halliburton, we invested in ourselves.
We spent money to make college free or very cheap, because that’s how you create a better workforce; one with greater skill and earning potential. We invested in public transportation systems because, when it’s easier for folks to get back and forth to work, businesses have a larger pool of workers to choose from. Fewer cars also makes roads last longer. We built a nation. We don’t do that so much anymore, and we haven’t been maintaining what we have lately, either. Unfortunately, Republicans don’t care about the deficit or the debt, no matter how much they whine about it when Democrats are in charge.
It is not possible to balance the budget simply by cutting spending. Austerity is killing every country that engages in it. To balance the budget, you need more tax revenue, and more taxpayers. You don’t get that through cutting, you get that through investing.
Republicans have no interest in the deficit. You can tell that, because they talk about it way too much.