Paul Krugman's recent column on the Greek economic mess contained a detail that I'd either never realized or had forgotten. In discussing the extent of Greece's national debt, Krugman notes that the U.S. "in 1946 ... had a federal debt equal to 122 percent of G.D.P." That high level of debt, he notes, did not doom the American economy. Due to steady economic growth, the debt "as a percentage of G.D.P. continued to fall in the decades that followed, hitting a low of 33 percent in 1981."
That latter date struck me--the post-World War II historic low of the American national debt was reached in the first year of the Reagan administration. Over the next decade, it would rise to 55.9 percent, and reached a height around 70 percent in the middle of the Clinton administration, before declining in the final Clinton years as the budget ran a yearly surplus and debt was retired.
Why is this significant? Because it puts today's ostensible outrage over the national debt into some historical perspective. While conservative Tea Party supporters would have us believe that liberalism is the problem, the debt numbers give the lie to that claim. The national debt went down throughout the post war period, during the years when the New Deal coalition still dominated American politics--despite the continuation and expansion of the New Deal, despite JFK's New Frontier and LBJ's Great Society (which significantly increased the role of the federal government), despite almost uninterrupted Democratic control of Congress. Through all of that, the national debt went down as a percentage of G.D.P. It only increased with the advent of the Age of Reagan. Since Reagan, every president has overseen an increase in the national debt as a percentage of G.D.P., with one exception--Bill Clinton. Yes, that's right right. The only Democratic president of the Age of Reagan is also the only president who oversaw the reduction of the national debt.
That might be something to keep in mind, as today's G.O.P. continues to peddle the idea that tax cuts will solve all of our problems.
I heard John Dickerson quote the chief of the Congressional Budget Office this weekend - on Slate's Political Gabfest - that if you add together total federal spending on defense, social security, Medicare, Medicaid, and interest on the national debt, you're already spending more than total tax revenue. So you could basically cut out every other dime of federal spending and you'd still be in the hole. I thought that was an interesting and somewhat frightening statistic.ReplyDelete