Good Afternoon/Evening Papamoka Bloggers! The national debt is a Democratic wake up call, but not the way the Republicans think. I want to answer their criticism about government spending in a more logical way. It all comes down to priorities. Not theirs, but ours.
We all got depressed this week when the White House and the CBO revised debt projections upwards showing that unless things change (more growth and revenues) we could be looking at huge increases in the percentage of the debt compared to the GDP - from 40% today to as high as 68% by 2019.
To put that into perspective, federal debt hit 109% of GDP at the end of World War II, and hit a second peak of 49% at the end of the Reagan-Bush years. Another way to look at it is that most European countries, and the majority of developing countries, have hit substantially higher debt levels without a crisis. So don't get too depressed by the news. We will survive.
On a side note, it's important to point out that most of the damage was done by the Bush Administration and the GOP, but instead of recriminations this article is about priorities.
What Are Our Priorities?
It's true, it all comes down to spending priorities. There is enough money to do everything we need to do, if we're brave enough to make the right spending decisions. One good example, we have to decide to tell the Republicans they can't have all the money they want for defense. Other countries need to share some of that burden. We spend more on defense than almost every other major military power combined. It's too high a price considering the debt.
I would also like to point out to our Republican friends - screaming bloody murder at town halls about how we can't afford anything - that health care reform is just as important to us as military spending is to you. I know Republicans don't always seem to understand the principle, but we need to find a compromise. Politics should be give and take, not a win-win for the GOP.
We have a right to care about and spend money on health care. We have a right to talk about spending money on clean energy and better infrastructure. We cannot allow the Republicans to use the debt like a sledge hammer, smashing our desires for a better world. They will tear us apart if we allow them. We must stand up against their intimidation.
We have a right to talk about helping ourselves and our children for a change. We have a right to say NO! to wasteful war and corporate welfare. We Democrats represent more of the electorate, and the only reason that high debt should concern us is that we now have to make some important decisions - like a family - about where to spend our money.
Being fiscally responsible is important, but priorities are even more important. We have to decide what kind of a society we want to live in. We also have to answer now before it's too late. That's what we need to discuss here today.
Exposing the Republican Debt Scam
First of all let's talk turkey before we talk priorities. Let's debunk the popular myth that the Republicans are the "fiscally responsible party." Aside from their passion for personal wealth their actions while in government do not match their words. History proves it. They are the original "smoke and mirrors" party.
In terms of "political economics," after World War II the overwhelming majority (over 90%) of the overall federal debt (all money owed) was created by a Reagan or a Bush. Bush Jr. is also responsible for a large percentage of today's annual deficit (overspending within a fiscal year) that President Obama now shares.
Most important, all the debt spending Obama is forced to do today is a direct result of Bush and/or GOP economic leadership and incompetence.
I don't understand why my Republican friends can't do their homework and figure that out. It's pretty cut and dry. The history of annual spending (and who spent it) is available from multiple sources, but I recommend the easy-to-read gross national debt section on zFact.com.
Gross National Debt Chart
So, do the homework and figure it out! At least look at the chart (source: Government Statistics). It's clear the Democrats do not deserve a bad fiscal reputation. The Democrats under Clinton even reduced the overall federal debt (not just the annual deficit) for the first time since Carter. If you don't believe me, look it all up yourself.
The real irony is that Reagan ran in 1979 on a platform to lower the debt. Incredibly, the debt was less than $800 billion at the time. Reagan, of course, exploded the debt. Sadly, later Republicans like George W. took it much further.
What Party is Better for Our Future?
Once again, it's all about priorities. WE THE PEOPLE have to decide what kind of future we want using the ballot box. Democrats historically spend on domestic and "social" programs, while the Republicans are known more for their love of military spending - for the record, that love of military spending doesn't include money for veterans.
Democrats focus on regulating markets and creating jobs, while Republicans push for so-called "free market" wealth creation and quick gains. Unfortunately for the GOP, only one way is the right way.
The consequences wrought by Republicans and their reckless economic experiments are now famous. The entire world has paid a high price for their adventures, especially in 1929 and 2008. Both crashes were disastrous, and sadly could have been avoided.
The way Republicans spend while cutting taxes, coupled with their inability to cut federal "social" programs for their own political reasons (they would lose elections), is why we are in debt today. Simply put, they pass all of today's costs to tomorrow's children.
Republicans are also famous for getting the government to pay large sums (billions or trillions) when large financial banks and corporations go bust. The Democrats are also responsible, since neither party is big on anti-trust, they have to pay up. Unfortunately, the term "too big to fail" is now part of our modern day lexicon.
Other new expressions include "welfare for the wealthy," and "privatizing the profits, socializing the losses." No matter how you spin it, it's government socialism, or give-aways. It's certainly not a free market.
It's clear to most of us now - after the Bush crash - the GOP lacks understanding when it comes to the role of government. They only want it involved if things go wrong. They don't want it anywhere around when they're making money - in their so-called free market.
So, you can now see that Republicans have tried to play the "Great American Santa" leaving us our "social" programs (despite their majorities) while at the same time cutting our taxes. The bill has now been left to future generations to pay. It's now obvious they never really had the courage of their convictions, or their so-called "conservative" principles.
It's Time to Rediscover Our Democratic Roots
It's Time to Believe in Ourselves Again
You see, we Democrats have always been true fiscal conservatives. We were in power for decades after World War II and did a great job of growing the economy while paying down the massive debt left after the war. Don't let the Republicans cast us as the bad guys. History shows us they are the bad guys.
I was a big supporter of Clinton when he lowered the debt and created more jobs than ever before in the history of the nation. That is something we should be proud of. Let's stop allowing the Republicans to question our credentials. Just look hard, we have excellent credentials.
So, let's use our great experience and record of success to make the right decisions again. Let's work on reforming what is broken, and cut back where we think we're spending too much money. Let's do it together like one big American family.
What Should We Do Next?
First of all, it's time to hold a funeral for "Reaganomics." It's time WE THE PEOPLE (Republicans too) admit that growth does not trickle-down to average working Americans, no matter how hard you would like it to.
That means we need to stop talking about lowering taxes on the rich. For one thing the debt is too high; it would be insane. It's true well-heeled members of the GOP supported by most in our corporate media constantly argue for their taxes to be lowered, and I truly believe most of them somehow convince themselves it will help, but unfortunately all credible evidence shows the opposite is true.
If anything, like Obama says taxes must be increased on the rich. The top tax rate in the recent past - until Reagan - was between 60 - 90%. There is plenty of room for increases.
The rich tend to hoard, or create wealth without creating jobs. The stock market and real estate is great, but it's not enough to employ the millions of low-income Americans who are suffering today. Real investment is when people invest to create jobs and recurring wealth. It's not about a fast buck or a get rich quick scam. Lending must be encouraged to create jobs. We need to focus once again on steady growth, and leave the high flying GOP experiments behind us. It's what we're best at.
Second, the Republicans must be held to account. In other words, they can no longer be allowed to play the role of the "Great American Santa." If you the electorate vote them back into power, then you must force them to cut our federal "social" programs or don't bother to vote them back at all. Allowing them to spend while cutting taxes, and not our expensive "social" programs, is both irresponsible and cruel to future generations. It's time the Republicans practice what they preach.
The way I see it, you have a choice between the GOP, low taxes and no social programs, or the Democrats and a more moral, civilized society.
Let me be clear, if the majority of Americans choose to vote away Social Security, Medicare, the Veterans Administration, Medicaid and other federal programs, then I will live with it. I won't like to see Americans die in a world where they don't have to (remember, it's all about spending priorities), but I agree to live with those choices. At least the Republicans will be honest for a change.
I could go on and on, but I won't. Just remember, both parties spend, but which party has been more responsible? The answer is clearly the Democrats. Sharing military responsibilities with the world, while spending on programs like health care and social security to help average Americans live with dignity, coupled with reasonable taxation to keeps future generations solvent, is the way to go. Those are good spending priorities for the future.
We cannot continue to spend so much. Republicans want America strong, but at too high a price. We need to change direction, and it requires decisive action at the ballot box.
I wish I could convince my Republican friends of all these truths, but they never seem to listen long enough to hear anything. I only wish they knew the truth. In the end it's everybody's responsibility to learn the truth. Ignorance is not bliss. It could mean bankruptcy, and a bleak American future.
Papamoka's Left Coast Contributor
from Our Rants & Raves Blog
Michael's Economics 101
Even though it's more complicated, just remember the two main opposition theories. Supply-side or "Reaganomics" (incentives to individuals to produce goods and services without limits basically) and the the more traditional Keynesian or "Obamanomics" (government can help create/regulate markets and spur growth, especially job growth). Those two sum up most of the debate.
Remember, the worst human influence on modern economic theory was Milton Friedman. He influenced every Republican alive today. His free theories about minimal regulation, low taxes and privatization thrilled Ronald Reagan and George Bush and have led to chaos in the marketplace today. Incredibly, Republicans still don't see the era of his ways, despite all the turmoil.
President Obama appreciates the more traditional "Institutional Economics" made famous by great thinkers like John Kenneth Galbraith. It was in vogue during the time of Franklin Roosevelt and the New Deal. Just like Democrats today, they acknowledged the positive role institutions and government can play in shaping economic behavior and success.
Last but not least, it's important to remember that - at least in academic circles - recent Republican-led experiments in supply-side economics by Reagan and Bush were a complete disaster. From what I read, most educators don't even teach the theories as practical applications in the real world anymore. They are completely discredited except in a few radical right-wing circles and institutions.
Just remember, we the voters need to end the Republican "School of Economic Chaos." We all need to reject the next great Republican rip-off.