The Great Fake Debate over the National Debt

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The Washington Post has brought to our attention that, once again, the Republicans, who created approximately 80% of all our national debt, have already begun to chant the fantasy about “our huge national debt” leading to, presumably, government bankruptcy. Let’s make one thing totally transparent. The Fascist-Republican Party is, and has been responsible for at least 80% of our $27 trillion national debt. And they have begun to cry wolf again, now that the Democrats are back in office.   

This time the Fascist-Republican crocodile tears won’t work. The disaster known as The Trump Administration, leaving trillions in debt in only four years, has made us wary. A vastly greater number of Americans are becoming numb to the message of the highly paid Right Wing radio and television propagandists. The people listening to the Right Wing crackpots are White Supremacists and the bulk of society’s dregs and deplorables. Numb to reality, they plod on, zombie-like, spouting the Trump nonsense, blinded to the truth or simply choosing deliberately to ignore facts.

The American Enterprise Institute and the Heritage Foundation and the Cato Institute are all ready to tell you that the Democrats—oh yes, only the Democrats–will bankrupt the country. Is the “national debt” merely a political scam by the Fascist-GOP? Trump laid $3 trillion more in debt on us in less than 4 years. You figure it out.

The Democrats have never, not since Franklin D. Roosevelt in World War II, with good reason, treated the national treasury as their personal piggy bank, as have the Fascist-Republicans, and before them, the Neo-Conservative (phony conservatives) Republican Party of the Bush/Cheney era. Of the roughly $27 trillion in national debt, 809%, or over $22 trillion, was created under Republican Presidents or was left to Democratic Presidents in their first year budgets.

  We saw what can happen. A spoiled 73-year-old adolescent, Donald Trump, who somehow conned his way into the Fascist-Republican candidacy and then lied his way into the Presidency, can try feebly to take over the government of the richest nation on earth. Trump found his gang among the other kids in pretend camouflage fatigues and Halloween costumes, who also never grew emotionally and never read newspapers or listened to fact-based national news. The people who must normally hide out in Montana or Idaho or in the dark rural corners of upper Michigan or the Pine Forests of the Southeast were suddenly on display, in all their ugliness on January 6, storming the Capitol of an unsuspecting civilized nation.

The larger group of brain-dead American Trump supporters total in the tens of millions. To the astonishment of the rest of the advanced countries in the Western world, they believe that Trump won the Presidency. They have abdicated their reason and their normal composure. With apparently nothing better to think about, they allow themselves the indulgence of hating people they don’t know and don’t understand. (And the media makes things worse by accusing those of us who ridicule them and identify their enormous failings in reason—at the expense of the rest of us—as hating them, which we do not. We with some relatively good humor, are sorry for their ignorance.)

The Fascist-Republican message to them, coming this winter and this next spring will be very simple. “Unless we can cut Social Security and Medicare and Medicaid, this Nation will go bankrupt.” This is, of course, an outright lie, created by the Billionaire class, who actually don’t hate anyone. Would you, if you had a billion dollars? They just want to keep cutting their taxes. Despite what the billionaire-funded think tanks spout all over the Internet and in squibs in local newspapers, the United States cannot, theoretically, bankrupt itself because it can create wealth any time it wants.

The truth is that all the “entitlements,” that is Social Security and unemployment checks and welfare checks go right back into the economy. And a higher minimum wage is still not going to make anyone rich. It is going to go into rent, and food and gas to get to work. So, all these revenue streams, suddenly to the mass of Americans, rather than the Super-rich will return to an economy that will be creating more jobs. It is, in fact, how the economy works. Tax cuts for billionaires do nothing to improve the economy in the short run. Tax cuts to billionaires—at most–only theoretically help the economy.

Because billionaires own the corporations, which is why they are billionaires, they should theoretically invest the added income from their tax cuts into more industry, thus creating—theoretically—more good jobs. What they have often done is the opposite. They send jobs overseas, to China, Taiwan, Viet Nam, and South Korea, not to mention Mexico. The result is lower manpower costs, leading to higher profits and more money into the pockets of the Super-Rich. Therefore, in the context of 320 million Americans, most of the earned income goes to a few hundred families. The revenue from tax cuts never gets back to the government. Trump’s tax cuts cost Americans trillions of dollars, which, if we do not recover those higher tax rates on billionaires, in the long run will indeed cause severe hardship on the average American family.  

The top 1% of Americans have today a  net worth of about $100 trillion. (In fact, it may be much more than that.)  So, let’s just say that we taxed billionaires ten percent of their net worth.  In three years we could balance the budget, with money left over. Of course, no one suggests that as a real remedy. But it is meant to show, that if we distributed income only a little more equitably, we could end all discussions about “national debt.” We don’t need to tax or deprive average Americans to do it. We can do it with the help of major corporations and the billionaire class that owns them. Or top financiers who create nothing of value, and produce a handful of jobs while pocketing literally hundreds of millions of dollars.

Social Security receives a huge amount of money each year about a trillion dollars from payroll deductions. Then it pays out about 900 billion to retirees. But lately, in the last few years, it has been paying out just slightly more than it takes in. Baby Boomers are retiring. But, that is a temporary situation in the long view of the history of Social Security and its future. The next generations coming will be larger than the retiring Baby Boomers, so the fund will eventually build up a surplus again.

Remember, the government owes the Social Security trust fund trillions of dollars. When Dick Cheney cut taxes on himself and the Bush family and his oil field buddies, while running two wars, the nation had to borrow money to pay the bills. Where do you think it got that money? It borrowed from the surplus in Social Security funds that you paid in. It borrowed several trillion dollars that it has never paid back. Today, the Social Security funds need money because there are more Baby Boomers retiring than, Millennials paying in. And we have new, higher deficits caused by Trump’s tax cuts. So, naturally, the Fascist-Republicans want to cut Social Security and other “entitlements.” It is the typical, endless, Right Wing Billionaire scam, which involves the rich paying the Fascist-Republican politicians to both cry crocodile tears over the debt and, in turn, blame American citizens for the debt. Then they vote to cut more taxes on the incomes of the Super-Rich.    

So what’s the situation? We have more money than we need. But that $100 trillion in assets is locked up in private vaults belonging to citizens who are billionaires.  We’re not going bankrupt or anything close to it, no matter how many Right Wing, paid economists spin it for the Super-rich.  For the billionaires it is not as sexy to pay their fair share of taxes as it is to spend $50 million out of petty cash and get your name put on the side of a building like a library or hospital wing. Or spend the same $50 million to buy one more residence, four stories high in a new skyscraper in downtown Chicago or New York.  

Economists like Laurence Kotlikoff, politicians like Lindsay Graham and pundits like George Will now raise the issue of the “financial crisis,” that is, the relationship between our large debt and the continued precarious position of Social Security.  The various “think tanks,” the Right Wing political and pseudo-economic groups made up of former academics, will tell us all that the country is in “grave danger” of going broke. It is a lie, a Big Lie.

The fact is that billionaires and multi-millionaires pay less in taxes than they have in over a century, since about 1917. Four men recently paid $55 million to go on a space flight. $55 million! That’s $220 million for a space flight to nowhere. The soothsayers of the rich will say that lazy people only use money to buy cigarettes and booze while hard working billionaires (half of whom inherited their wealth) have their income confiscated. But there are alternative views.

For example, food deprived children in the U.S. risk death or serious health problems. In countries in Africa or places like Yemen, children are starving to death.  Lives are ruined while four men who could have made a difference (and probably do make a difference in other ways) rocket off to blank space on a whim. We don’t envy them their earned pastimes. But let’s not say that people who earn a living and pay taxes and are hurting in a bad economy should suffer while they pay so little in taxes that they can spend money to literally fly off into space.

Billionaires and those of lesser financial weight have paid a substantial amount in taxes and yet so many of them have also spent tens of millions on foolish causes or already funded institutions or simply to pad their egotistical images of themselves. It seems clearly rational for any of us who are average citizens to say to these four men, and others like them, please be more rational.

”Go out and play golf every day. Even build your own course or travel the world playing different ones; or buy a boat and go fishing, any large boat, or a speedboat and go on it every day; or build a tennis court or an Olympic sized pool and swim with dolphins or models, all-day every day. But at the end of the year spend $5 million completely and solely on your personal gratification of whatever and let the government use $50 million to feed poor children and give a few more bucks each month to aged impoverished women.”

To these symbolic billionaires we say: Stay home—stay out of space.  Spend several million on your own personal whims. Even that seems extravagant to the average man or woman. Most of us would sugget it is better to give the rest of that excess, disposable, almost throw-away money, to the government to feed the poor and attend to the feeble and the elderly.

“Conservative” economists cry that generational economics will force the disruption or perhaps bankruptcy of the federal system. They caution that post-retirement income will deplete; Medicare will fail. And even Medicaid will fall short, from stress to the overall financial system. The problem is this: the essential fact is that money has been drawn from the Social Security system for 30 years to pay for other things. The ratio between the amount put into Social Security and the amount drawn down on the federal treasury to pay for tax cuts and deficit spending has widened.  

Beginning with Bush/Cheney in 2001, Republicans began to make a conscious effort to pay for increased spending through debt. And some of that borrowing came from Social Security surpluses. No effort was made to build a bridge across the period from 2011 to 2029, which would have enabled the treasury to increase revenues and maintain the long range viability of the Social Security system. Even so, and despite the best efforts of the Fascist-Republicans, the system will not fail on its own. We do have unfunded liability for all kinds of things. It sounds scary if you don’t understand what it is. It’s the difference between our current obligations to citizens– $176 trillion—and the money we will need to pay it. Here’s a simple unfunded liability. I buy a car. I owe $20,000. That’s an unfunded liability. It is a bill that I must pay off and I must find the money to do so. But there are a variety of ways to do it that are not scary.  Fascist-Republicans have been told by their Billionaire-funders to constantly repeat “unfunded liability.” It intimidates the kinds of people they try to reach.

But we have the money to pay it, just as we do now, because we have tax revenues.  We have income taxes, and corporate income taxes, and taxes on imports, and different taxes at the state and local levels that help run our society and cover our daily needs so that federal revenues can pay for that schedule of “unfunded liabilities.”  We pay them now, through payroll deductions and other sources. If we see that we will fall short, we raise the levels of taxation and the funds fill up, we may have surpluses, as we have had before. But the goal, and it is not difficult, is to maintain a level of taxation—an equitable level—that maintains payment on all our federal liabilities.

 There are many choices on how to do this. But you might simply raise the level of income at which payroll deductions are taken from the system. In that case, could easily be solved until at least the end of the 21st Century.  So, “entitlements” are not the problem. In fact, as soon as the baby boomers work their way through the system, the problem will have solved itself.

Our current problems are that there are many more baby boomers than there are Depression-era retirees. That situation will reverse in a few years. The Baby Boomers will have passed on in a decade or two and the post Baby Boom Generations will be larger than the Baby Boomers. So the problem is going to even out. Surpluses will be should once again be the common experience.The problem with discussing Social Security is that it is a decades-long situation. It is insurance actuarial tables. Unless your eyes are already crossed, it is not a subject for casual conversation. On the other hand, we do have people whose eyes are already crossed who are working in government for you.  

Large government spending and huge deficits are situations that have happened largely happened under Republicans. You see, for all the complaining and haranguing by Republicans and the billionaires who fund them, like the Koch brothers and Blackstone Group, Steve Schwarzman, the fact is that 80-90% of the entire national debt has come from Republicans. It is not an accident. It is deliberate. It started with Ronald Reagan.

A journalist and Republican strategist, Jude Wanniski, persuaded a couple of guys named Cheney and Rumsfeld, who were then aides to President Ford that Democrats had been holding the high ground too long and that he had the way to fix it. The Democrats were the party of giving things away, Social Security, Medicare, Medicaid. Wanniski wanted to change the game. He introduced Republicans to Dr. Arthur Laffer, who eventually persuaded Ronald Reagan that taxes could be dramatically lowered to a point where government revenues and government expenditures could be evened out. The government could still work quite well and not lose money. Reagan cut taxes, dramatically. But he cut them too much, and deficits soared. But Reagan simply pretended that nothing was wrong. And being the charismatic actor, he continued to act as if nothing were wrong. And the American people believed him. The rest is history.

Since 1981, the Republicans became the party of cutting taxes for the super-rich and lying to the American people that it makes no difference. Since that time, Republicans have raised tens of billions of dollars in campaign funds from the super-rich, and elected more and more Neo-Fascist House and Senate members, beholden only to the large industrialists, forsaking and lying to their constituents. The Fascist-Republican Party has moved so far to the Right that it supports insurrectionists, blatant racists  and murderers. With all that money, they have been able to pretend that Social Security, not the trillions in tax cuts for the Super-rich, is the problem with the national debt. Greedy little old ladies who, even with Social Security, need to cut their pills in half in order to afford tuna and  chicken consume in order to survive—they, not the men flying to outer space for $55 million per round trip—are supposedly the problem.   

So, all these guys persuaded economics-challenged Ronald Reagan to initiate and pass legislation that would cut taxes very dramatically. He did, and despite screams and yells from Democrats that there would be deficits for as far as the eye could see, taxes were cut and the national debt did indeed triple in 8 years. And in the following term of George H. W. Bush, the father of George W. Bush, it went up again.   

From Reagan to Bush the First, we now know that the national debt went from slightly less than $1trillion to $2.8 trillion and continued under Bush I, to $4.4 trillion. By then, the annual U.S. Budgets were bleeding red ink in greater numbers than any time other than the period of WWII. Only this time, there was no war and no recovery from a Depression.  The Republicans had cut revenues in half. Even with cuts to almost every department except the military, we incurred enormous annual deficits.  

After Bill Clinton defeated George H.W. Bush and Ross Perot for the Presidency in 1992, he took office vowing to reduce the national debt. He raised taxes on the wealthiest Americans by about 4%.  At first, even with these increased revenues, he could not stem the growth of the national debt altogether. But gradually things changed.

The Bill Clinton presidency was very important. Not only did Clinton raise taxes slightly on the very rich, but he held deficit growth to $1.2 trillion over the next 8 years. More importantly, he proved that with an income tax rate of 39.6%, but only on the very top tier of income, he could balance the U.S. budget, which he did in the late 1990s. In fact, the Congressional Budget Office, the bi-partisan group that measures our economy on an annual basis, said that, had the Clinton policies remained, the national debt would have been paid off by 2011.

Clinton’s policies had gradually reduced annual deficits, eventually balancing the budget and creating a surplus by the year 1998. He created surpluses, which he used to return millions of dollars to the national treasury and money that had been withdrawn from Social Security to pay for tax cuts. If the CBO was correct, and they are, after all, the authority of last resort on government spending,  then this kind of fiscal responsibility should have continued.  It didn’t happen.

George W. Bush was elected in 2000, by the tiniest of margins. As soon as Dick Cheney and George W. Bush took office, they cut taxes again, and again. Even after 9/11, and after a retaliatory and enormously expensive war in Afghanistan, and after a purely discretionary war against Iraq, perhaps the most wasteful war in American history, they cut taxes relentlessly. As a result of these reckless tax cuts and negligence and gross mismanagement, including two wars—never paid for the usual way—with tax increases–the nation went further into debt. Only this time, it was debt on a scale that no one had seen since World War II.

From an initial $5.6 trillion dollar debt left by President Clinton, and a balanced budget, actually a surplus of about $114 billion, Bush and Cheney initiated yet another immediate tax cut for the rich. Despite a tremendous hit to the economy by the 9/11 attacks (about which they were warned in advance by the Office of National Security and William Clarke but did nothing,) they continued with tax cuts. At the end of 2001, they had spent enough to wipe out the budget surplus Clinton had left and ran the government into debt again by $133 billion. So, the Bush-Cheney policies, absorbed the Clinton surpluses and then again began to operate in negative territory. But the worst was yet to come.  

Bush and Cheney responded to their inattention to national security by responding to the attacks on the World Trade Center with a war against Al Quaeda in Afghanistan. Cheney saw profit for his old firm Halliburtion in Iraq. So he created a phony excuse to attack Iraq, thus, by 2003, creating another war while once again cutting taxes on the rich! (Bush couldn’t be bothered worrying about attacks from Muslims. While intelligence officials were climbing the walls trying to get his attention, he was busy playing golf in Texas. A week later, Muslims struck New York.)

 While this was going on, Bush and Cheney, unable to chew gum and run an economy at the same time, and having cut revenues to the bone, were advised that the Fed should raise interest rates to cool off a rapidly growing housing market. Contrary to economic advice, their Federal reserve was keeping housing prices low. Meanwhile players in the Stock Market were speculating with a new system of investing in home mortgages. Apparently, to Bush and Cheney, one bad mortgage crisis in the 1980s was not enough. This time the housing market/housing financial scam, crashed.

 Cheney and Bush and their SEC Chairman had decided to encourage real estate speculation, a system of selling off your mortgage to other people—not as had been done before but selling pieces of it to different speculators. In the end, all these phony securities were deemed to be basically worthless. Americans lost $7.5 trillion in assets—homes, cash in bank accounts, credit card balances, mortgages, auto loans—everything of value, including, at one point, about 16 million jobs. The U.S. Treasury was force to loan U.S. banking institutions about $750 billion in order to guarantee that they would not fail.   

The Stock Market went from 14,000 down to less than 7,000. When Obama took over in 2009, one out of ten people was out of work and there was a national deficit of over a trillion dollars. Obama was left with a deficit of over $1 trillion in 2010, and again in 2011, and again in 2012, before monetary policies could take effect. President Obama and his Fed Director, Ben Bernanke, an expert on the Great Depression, were able to increase productivity and reduce unemployment, even though obstructed by the Republicans in the Senate, led by Mitch McConnell  The Obama administration policies led to reduced deficits and increased productivity every single month through the end of  2016.

With no help at all from Republicans, Obama and Bernanke set upon a plan of “quantitative easing” of debt financing that was gradually able to reduce deficits to levels lower than those by Bush and Cheney at the beginning of their term. But, by then, the Bush/Cheney “Great Recession” had increased the national debt to over $21 trillion. In all, Obama and Biden, his Vice President, enacted policies that grew the economy every month for 80 straight months, and left office with an unemployment figure of less than 4.7%.  

Then came Trump and huge, disastrous, tax cuts again. The result was a greater deficit, this time over a trillion dollars, a year, every year, in the midst of an excellent, growing economy! These trillion-dollar deficits were happening, not in a Great Recession, or its aftermath. It was happening in a growing economy. When Trump took over he had 4% unemployment and a Stock Market that had climbed up to over 19,900 points as of the end of December 2016 from less than 7,000 at the bottom of the Great Recession when Obama walked through the door of the White House.

Finally came the pandemic and Trump was caught totally asleep at the switch. Then he became defensive instead of politically active and controlling events. Instead of publicly and aggressively taking over management of the pandemic, he punted and let the states handle the crisis while publicly denying at first that there even was a pandemic. That delay and obfuscation cost the nation about $3 trillion in just one year. So, in addition to the ghastly death toll, we carry an additional burden of debt from inaction and inattention. It is not over yet.

If we leave the same tax rates on the Super Rich as they haed in the year 2021, the average citizens of this country will end up carrying more debt than they every could have imagined, while pulling themselves slowly out of a morass that never should have been as bad as it became. The Super-Rich, with basically the lowest taxes since before World War I, in 1917, will still cry poverty and unjust removal of their hard-earned incomes. But we must increase taxes on the wealthiest or we will not survive without enormous pain on all other U.S. citizens.