Thursday, July 28

The National Debt: a brief history

The US National Debt.

Conservatives and Democrats can at least agree that we have too much debt in this nation.

We will be going deeper in debt as a nation but at this time one would have to come to the conclusion that it is an unavoidable outcome.

what brought us here?

During the global economic depression of the 1930s, an English academic, John Maynard Keynes, came forward with a revolutionary idea that changed the face of political budgetary focus. He suggested that during times of economic trouble, governments should borrow and spend to boost industrial activity. Many governments around the world embraced the idea of borrowing and spending but they seemingly forgot about the second part of the convention. Paying off the debt once the economy started to move again.

Such had been the case with the United States budgetary policy.

When President Clinton took office in 1993, the annual budget deficit in the US stood at $255 Billion. The United States had accumulated a public debt of just over $3 Trillion dollars.

When a debt repayment was due, the government would simply borrow more money to cover running expenses rather than pay the debt down. This credit card roulette was the normal operating procedure for our governmental budget.

In 1998 and 1999 the United States shifted from the depths of budgetary deficit to growing a robust surplus of budgetary dollars.

In August of 1999 the Government had done something that had not been done for a quarter century. It started to reduce it's debt.

It represented a huge shift and transformation in the US budget after struggling with huge deficits for most of the previous 10 years of the United States history. It also was a move against the Republican plans that called for using the budget surplus to fund more tax cuts.

The previous years budgetary surplus was $69.2 billion. The projections at the time suggested trillions of dollars in budget surpluses over the following 15 years which would be boosted by the then strong economy and spending controls which had been put in place.

The Republicans of the time were proposing a $792 Billion tax cut.

President Clinton and the Democrats wanted to add funds to social security and Medicare. But the Clinton administration was also prepared to consider using some of the surplus to reduce the overall government debt.

Alan Greenspan, the then chairman of the US central bank had long been arguing that reducing government debt should take priority over tax cuts, as the move would free funds for private investment and lower government spending.

Once the deficit was returned to zero by means of lowering the interest payments on the debt repeatedly by making the payments on time the taxes could be cut and the governmental programs could receive more budgetary injections of cash.

Eventually allowing the United States to return to Jeffersonian style debt positioning as the third President of the United States said debt would serve only to enrich "the tribe of bank-mongers ... seeking to filch from the public their swindling, and barren gains".

The budgetary surplus continued to grow for the remainder of President Clinton's time in office.

In fact on this day in the year 2000 (July 28th) the national debt was $5.7 Trillion and decreasing and the Federal budget surplus was $188 Billion and growing. While the Federal Tax Revenue was at $1.9 Trillion and growing. The total US Debt was $26.3 Trillion. Don't take my word for it. Take a look for yourself at the National Debt Clock 2000.

On February 22 of 2001 President Bush unveiled his 'fiscally responsible' budget. The budget reduced the Deficit, but did not reduce the national Debt. The fiscal responsibility espoused by his party had apparently not rubbed of on President Bush.

Just 2 years later in February of 2003 the United States hit the national debt ceiling and the Treasury had to take evasive action to overt a financial collapse.

The Bush administration pressed forward with tax cuts believing that cutting the taxes of the American people would bolster the economy and spur on job creation and growth. The GOP opposed the action.

In February of 2004 President Bush sent Congress a $2.4 trillion budget featuring big increases for defense and homeland security but also a record $521 billion deficit.

Democrats immediately attacked the spending proposal for what they viewed as harmful reductions in various government programs and the president's insistence on making his 2001 and 2003 tax cuts permanent at a cost projected in the budget of more than $900 billion over 10 years.

"This administration pledged that its tax cuts and policy choices would not turn record surpluses into record deficits, but this budget shows that's exactly what's happened," said Senate Democratic Leader Tom Daschle of South Dakota.

Sen. Ted Kennedy called on Congress to reject President Bush's spending plan stating that it was the "most anti-family, anti-worker, anti-health-care, anti-education budget in modern times."

In 2004 on this day the National Debt was at $7.3 Trillion and growing. The Federal Budget Surplus was gone and in it's place was a Federal Budget Deficit of $398 Billion. While the Federal Tax Revenue was nearly the same at $1.8 Trillion. The total US Debt was $36.4 Trillion. Again, don't take my word for it. Take a look for yourself at the National Debt Clock 2004.

On Friday, November 19 2004, President Bush signed an $800 Billion Dollar Debt-limit hike taking the US Debt limit Ceiling to $8.18 Trillion. The move allowed Congress to send the President a $388 billion spending bill to finance most federal agencies.

The new Debt Ceiling was 70 percent the size of the entire U.S. economy of the day. It was more than $2.4 trillion higher than the debt President Bush inherited upon taking office in 2001.

As it is this time around it was then. The House approved the debt-limit measure the day before by a near party line 208-204 vote. The alternative to the bills passage was a federal default. The whole fiasco was a battlefield for partisan finger pointing.

Democrats said GOP tax cuts were the problem and that the measure should have been accompanied by a revival of a requirement that the budget be cut to pay for any tax cuts or spending increases.

Republicans said Democratic cries for fiscal responsibility contrasted with their frequent calls for higher spending. "There's nothing like a reformed lady of the evening," said Rep. Dan Burton, R-Ind.

In contrast this time around Rep. Dan Burton has pledged to support only a conservative “cut, cap and balance” plan to raise the debt limit.

In March of 2006 the United States was Faced once again with a potential government shutdown. The Senate voted to raise the nation's debt limit for the fourth time in five years. The bill which was passed by a 52-48 vote. The new Debt Ceiling was now at $9 trillion.

In the five years of President Bush's administration the National Debt had increased by nearly 50%.

on July 30, 2008 President Bush signed the Housing and Economic Recovery Act, which contained a provision raising the National Debt ceiling to $10.6 Trillion. This was not the end.

On September 30 2008 the National Debt broke $10 Trillion and growing continued growing. Rapidly. Over $4 Trillion more than when President Bush took office and he started with a surplus and a falling National Debt.

The Federal Budget Deficit in 2008 was near $400 Billion.

The Federal Tax Revenue was at $2.5 Trillion and falling rapidly.

The total US Debt in 2008 was over $50 Trillion.
Nearly $24 Trillion more in National Debt than President Bush took office. Almost double.

On September 30 2008 the National Debt exceeded $10 Trillion.

In the last 50 years, the United States has raised its debt ceiling more than 70 times.

70 times.

Up until recently with the advancements in communications and internet platforms such as Twitter lawmakers had been experts at delaying or disguising this politically perilous task. Now they are almost certain to be embroiled in a political firefight which if it falls in or near an election year can cost them dearly.

The National Debt has grown enormous over the past 10 years.

We can not continue to dump truck loads of money in the manner that we are currently but until the two parties can start working together as a Government for the people we will never see the Debt reduced.

Sources of information:

US in the black September 30 1998

US budget surplus beckons February 1 1999

Exorcising the US national debt June 30 1999

US to buy back Debt August 4, 1999

Bush Sends $2.4T Budget To Hill March 12, 2004

Bush Signs Debt-Limit Hike November 20, 2004

Congress Sets New Federal Debt Limit: $9 Trillion March 16, 2006

Bush Administration Adds $4 Trillion To National Debt

National Debt Passes $10 Trillion, No One Notices

U.S. budget deficit hits record $438 billion for year October 7, 2008

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1 comment:

  1. Anonymous9:39 PM EDT

    “The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Increasing America’s debt weakens us domestically and internationally. Leadership means that “the buck stops here.” Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.”
    From Sen. Obama’s Floor Speech, March 20, 2006!
    Whose "failure of leadership" is it NOW?!


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