Editorial: National debt: cause and effect
The bad news is the national debt was $15.1 trillion as of the end of 2011 and growing at a clip of about 8 percent. The good news is that rate of growth in the debt is half what it was when President Obama took office.
It’s an important point for Americans to understand because underlying policies set by the president and Congress — from spending on defense and homeland security, to tax cuts and welfare subsidies — play the major role in that debt accumulation. If we are going to reduce the national debt, we have to be honest about what drives it.
A quick review of the rate of growth in the national debt is insightful. President Jimmy Carter began office in 1977 with a national debt of $781.9 billion and left office in 1980 with the debt at $930.2 billion, a growth rate of 10.6 percent. President Ronald Reagan fared worse. By the end of his presidency (1980-88), the debt had grown to $2.684 trillion, growing at average annual rate of 23.6 percent — the highest of any modern president.
The debt grew at more modest rates during the first Bush presidency, averaging 13.9 percent, ending at $4.177 trillion. When President Bill Clinton came to office, the debt grew at just 9 percent that first year (the first time it was under double-digits since Carter’s 7 percent growth in 1979), and then it did a remarkable thing: it stayed near inflation and even saw one year of decline — posting annual growth rates of 9, 6, 4, 7, 3, 2, 3, and -2 percent, respectively, from 1992 through 2000, ending with an average growth rate during Clinton’s two terms of just 4.4 percent and a national debt of $5.66 trillion.
President George W. Bush, however, reset the debt trigger to overflowing when he implemented two phases of tax cuts early in his presidency and launched two wars without raising taxes to pay for it. Consequently, the national debt shot up higher and higher, from $5.94 trillion to $10.7 trillion, almost doubling in eight years with an average growth rate of 11.1 percent and reaching 16 percent rate of growth in his last year in office.
President Obama inherited Bush’s disastrous fiscal policies — along with the Great Recession, failed banks, a burst housing bubble, auto industry collapse, etc. — which has proved to be a difficult trend line to reverse. Nevertheless, while the annual rate of growth in the national debt finished at 16 percent under Bush, it edged down to 15 percent in 2009, 14 percent in 2010, and just 8 percent by the end of 2011 — but still growing from $12.3 trillion in 2009 to $15.1 trillion in 20011.
Looking at the spikes in growth under Presidents Reagan and George W. Bush, two facts are common: both spent lavishly on defense while cutting the rate of income taxes. The result, contrary to the rhetoric that tax cuts would spur growth and reduce the debt, was deficit spending and an enormous spike in the national debt.
Defense spending, in particular, grew excessively under President George W. Bush. In 2000, when Bush took office, the nation spent $294 billion on defense. Today, defense spending is pegged at $716 billion, a growth of more than double under the Bush years and not slowing that much during Obama’s first four years — ending with a 150 percent growth in defense spending that decade.
Shockingly, spending on defense during the post-9/11 build-up in inflation-adjusted dollars was more than the buildups for the Korean War, the Vietnam War and the Cold War, according to a recent report in USA Today. And all three conflicts were followed by spending reductions that averaged about 37 percent.
Today, the plan calls for reductions in defense spending of just 8 percent over 10 years — even though we are have pulled most troops out of Iraq and will be pulling many more out of Afghanistan in the coming year. When added to other provisions in place, the cutback amounts to 17 percent in the next decade — unless the hue and cry of conservatives and Tea Partiers prevent those reductions in the name of national security, or preserving jobs, or draping the whole defense budget in the flag, motherhood and apple pie and arguing that such spending should continue unabated.
If Americans are ever to get the national debt under control again, reining in defense spending and restoring the pre-tax rates in place before Bush took office (on the wealthy first, and then on the middle class once the economy recovers) are essential first steps. Following that, one goal should be to bring the rate of growth in the national debt to that of the Clinton years — at inflation, or just slightly over. With the right policies in place, it’s doable; but when the wrong policies are championed, double-digit rates of growth in the national debt are the result — a tact that pushes the national debt into dangerous territory.
MIDDLEBURY — Bernard D. Kimball, 76, passed away in Bennington Hospital on Jan. 10, 2023. … (read more)
The Fresh Air Fund, initiated in 1877 to give kids from New York City the opportunity to e … (read more)