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  • Wake Up America, One US Until National Debt Tears Us Apart

Wake Up America, One US Until National Debt Tears Us Apart

William L. Kovacs

May 2021

Wake Up America, One US Until National Debt Tears Us Apart

There is no polite way to say this – “Wake Up America,” a federal default on the national debt will directly hurt anyone who has or expects some form of retirement income. Don’t expect government to look out for you. Government will do what is best for it, citizens be damned. Citizens are mere commodities that send money, in the form of taxes, to the government for its discretionary use.

To remain in power the government will do whatever it takes to retain power, including incurring more debt, printing as much money as needed, notwithstanding its value, devaluing its currency, or even defaulting on its debt. If debt reaches astronomical proportions and the federal government is forced to take action, it will take the easiest path which is to default on the debt owed to the general public, which is most likely, you the reader.

Part I of this series uses a chart to illustrate that the National Debt is bipartisan, both parties engage in massive spending without any known way to pay for it. Part II discusses the underlying assumption of the Progressives Modern Monetary Theory, i.e., massive debt is irrelevant if it is in the currency of the sovereign. The sovereign merely needs to print money from “thin air” to pay it off. This Part III identifies who will be directly impacted by a default.

Identifying who is impacted by a federal default is a critical piece of information that should be given directly to citizens.  Unless our government addresses the issue, the national debt will continue to increase. The Congressional Budget Office estimates the debt will be double the nation’s GDP by 2051, or $ 42 trillion or more.

Interest payments in 2020 were $ 325 billion. They are estimated to rise to $928 billion by 2029. If the Fed raises rates only 1%, that will increase add another $19 trillion over ten years to the national debt.

Our elected representatives are doing nothing to address the national debt, not even bloviating about it. Even the Modern Monetary Theorists recognize that inflation is the one event that could upend their theory that debt does not matter to a country with its own currency. Inflation is starting to rise at a fierce pace. Interest rates hit 20% in the late 1970s under President Carter. A twenty percent interest rate on bonds today would require the federal government to pay $6 trillion a year in interest, an amount larger than the budget of the U.S. The U.S. would be crushed by debts it could not pay. It would have to default or render the dollar worthless against world currencies.

So, who gets hurt if the federal government defaults on its debt obligations?

As of March 31, 2021, the U.S. National Debt exceeded $28 trillion. $ 21trillion of the debt is owned by the public or 78% of the debt. $7 trillion of the debt is owed to foreign countries.

Put aside the $ 7 trillion in foreign debt, it will be renegotiated. The real concern is what happens to citizens whose retirement rests on the government’s promise to make payments on its financial obligations. Unfortunately, federal agencies collected trillions of excess dollars from federal programs like social security and loaned that money to the federal government to spend. The citizens paying these social security taxes only received promises from the federal government to repay the borrowed funds at some future time. That money or a large portion of it will be lost in a default?

There is nothing citizens can do about it if the federal government defaults. Yes, nothing! Government can change pension laws at will to relieve itself of a debt problem. Only the government is sovereign. Moreover, the doctrine of sovereign immunity protects the government from its citizens. Government wins, you lose. An easy proposition to understand.

The magnitude of what the federal government owes citizens is staggering:

$10.81 trillion is owed to the Federal Reserve and government agencies that gave cash from certain programs like Social Security to the federal government to spend.

$3.5 trillion is owed to mutual funds.

$1,.09 is owed to state and local government pension plans.

$ 784 billion is owed to private pension plans.

$253 billion is owed by insurance companies.

$147 is owed to owners of U.S. Savings Bonds.

$2.28 trillion is owed to a variety of individuals, government-sponsored enterprises, banks, and other investors.

Most of the beneficiaries of these debt instruments are Social Security recipients, pensioners, mutual funds investors, bondholders, and insurance companies. All these payments are long-term payments to individuals who depend on those payments for survival.

Would Social Security recipients, mutual fund investors, pensioners think the same about “free” federal money if they knew their retirement savings were being put at risk by their government?

The federal government is in a predicament that it cannot get out of without actually making fiscally sound decisions that address the long-term sustainability of the country. As the federal government creates new multi-billion- and trillion-dollar programs, it moves closer to a default. If the Federal Reserve can keep interest payments around zero, debt is manageable since there is little interest due. Every 1% increase in interest rates raises the debt over a few years by trillions.

. The federal government is pitting Americans against Americans as to who gets a piece of the pie and when the pie is divided. Does the federal government give away the entire pie now and let those who invested in the nation live without pensions? Does the federal government opt to forgive student loans, authorize child care and universal basic income for all? Should the federal government support illegal immigrants with food, shelter, clothing, health care, education and basic income by putting social security recipients at risk?  How high can taxes go before people abandon the country? How much can we cut from the military before the U.S. can no longer defend the USA?

Tough questions that must be answered.

The federal government is now an entity separate from its people. It lives in a world that does not exist for ordinary people who must survive without the ability to tax others. If the national debt is not addressed soon, “we the people” will live in involuntary servitude to the federal government.

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  • Modern Monetary Theory: A Banana Republic with No Bananas

Modern Monetary Theory: A Banana Republic with No Bananas

William L. Kovacs

May 2021

Modern Monetary Theory: A Banana Republic with No Bananas

Part I of this series charted the massive increase in the debt of the U.S., by both political parties, over the last twenty years. Now with the Progressives in total control of the federal government, far-Left economists and socialist politicians like Bernie Sanders advance Modern Monetary Theory (“MMT”) as a justification to continue unlimited spending without any consequences to the nation. If the Progressives are correct, there is a free lunch for all, most of the time. If the Progressives are wrong, the U.S. becomes a “Banana Republic.”

While our Constitution does not mandate any specific economic system, it does specify how government acquires, values, and spends our money. Politicians should understand how MMT squares with our constitutional structure before promising unlimited free money without increasing taxes or interest rates.

The U.S. recently finished an election for president, the entire House of Representatives, and one-third of the Senate.  Not one candidate for federal office in 2020 made serious mention of our $28 trillion national debt. $24 trillion or 84% of our $28 trillion national debt has been created since the presidency of George W. Bush. On top of the current debt, President-elect Biden is proposing $11 trillion in new spending. Every president has an excuse for massive debt. Trump had the pandemic; Obama the 2009 financial crisis; George W. Bush had 9/11. Biden just wants to spend for any cause.

http://entreconpensacola.com/speaker/kristen-hadeed MMT argues government debt is irrelevant

MMT asserts when a nation has a sovereign currency, debt can be accumulated since it is owed to itself.  Money can be simply credited to another’s account (printed in old-fashioned terms) without having to sell bonds that require interest payments. This magic process involves keystrokes on a computer. New digits are created electronically on a balance sheet allowing government to spend whatever it needs.

The foundation for such MMT magic is the belief that government creates all wealth by spending money into existence. Government spends to incentivize citizens to want more of what government wants us to have. And by commanding that all taxes be paid in the currency controlled by the government, everyone needs to earn money to pay taxes for the government services they want.

MMT economists view money creation as a valuable economic tool that does not automatically devalue currency when used to address an underperforming economy. By creating new money, jobs are created, and productivity increases. According to Federal Reserve chairs, “…government can print all the money it needs, and nothing bad happens.” Simply, MMT economists posit that when an economy has unemployment, government is not spending enough money and can spend until full employment is reached.

Under MMT, inflation is the primary risk of spending more than needed to reach full employment. When inflation occurs, MMT recognizes it will need to raise taxes and interest rates to control inflation, yet proponents ignore the implications of such recognition. However, as long as the Federal Reserve keeps interest rates near zero, there is not a need to repay the debt since no interest is due. But is there a point where the accumulated debt is so great that it cannot reasonably be serviced if interest rates rise?

buy prednisolone eye drops Our Constitution does not authorize free money by keystroke

Our constitution starts with the words “We the People of the United States”  have created a government with certain limited powers. As to currency, our government is authorized to coin money, and regulate its value and relation to foreign currency. Our government can borrow money on the credit of the United States however, money cannot be drawn from the treasury unless Appropriations are made by law and all expenditures accounted for. These limits impose constitutional accountability by limiting government action.

Since the currency of the United States is only as valuable as the credit of the government supporting it, there is no provision allowing government to magically create an unlimited money supply by a keystroke and then by another keystroke use the money for other purposes.

In the world of finance, MMT resembles a money-laundering scheme, i.e., concealing the origins of money, then passing it through a complex sequence of transfers to make the money appear legitimate. By illustration, the Federal Reserve creates money from” thin air” and transfers it to the Federal government through a series of transactions. It works like this – the Social Security Trust Fund collects more real money in taxes than it pays out. Social Security uses its excess money to purchase U.S. Treasuries from the federal government. This transaction immediately gives the federal government real money to spend. The Federal Reserve then buys the U.S. Treasuries from Social Security using the money it created out of thin air. The only real money is collected by Social Security and it goes to the Federal government which immediately spends it. The risk of this money laundering scheme is that Social Security, its pensioners, and the Fed own promises based on the creditworthiness of the U.S. which is constantly printing more money out of thin air and transferring it through the system.

As more dollars are made out of thin air, they become less valuable unless needed as a source of exchange in the U.S. Since the Constitution contemplates international commerce and a valuable currency supported by the credit of its government, MMT is far outside the Constitutional framework that requires a strong currency for trading with the nations of the world. In fact, MMT will force the U.S. to be an insular society to ensure its currency remains valuable to citizens.

It is easy to see why Progressives are so enthralled with MMT. They believe since government creates all wealth, it has the right to tax back all wealth, after all, it’s the federal government’s money. Citizens merely exist to do what the government wants them to do. Citizens merely buy the services government wants them to buy. Such a system could be termed communism but MMT is too misleading for such a serious term. A better description is that MMT promotes a Banana Republic without any bananas to back its currency.

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  • Are There Limits to National Debt? Part I, The Facts

Are There Limits to National Debt? Part I, The Facts

William L. Kovacs

April 2021

Are There Limits to National Debt? Part I, The Facts

With the end of the fiscal year (“FY”) 2020 and estimates for FY 2021, the facts are clear. Republicans cannot claim they are concerned about the national debt.  Republicans have incurred more debt than Democrats up to FY 2021. This fact could quickly change with the many massive spending proposals of the Biden administration. The calculations below are based on FY rather than annual spending, to calculate only debt attributable to the presidential budget responsible for it.

President Years Republican* Democrat* Total Debt        %inc
Hoover 1930-1933 $ 6 billion $ 6 billion               33
F. Roosevelt 1934-1945 $ 236 billion $ 242 billion      1048
H. Truman 1946-1953 $ 7 billion $ 249 billion         2.8
D. Eisenhower 1954-1961 $ 23 billion $ 272 billion         8.2
J. Kennedy 1962-1964 $ 23 billion $ 295 billion         7.8
L.B. Johnson 1965-1969 $ 42 billion $ 337 billion         13
R. Nixon 1970-1974 $ 121 billion $ 458 billion         34
G. Ford 1975-1977 $ 224 billion $ 682 billion         47
J. Carter 1978-1981 $ 299 billion $ 981 billion         43
R. Reagan 1982-1989 $ 1.860 T $ 2.841 T              186
G.H.W. Bush 1990-1993 $ 1.554 T $ 4.395 T                54
W. J. Clinton 1994-2001 $ 1.396 T $ 5.791 T                32
G.W. Bush 2002-2009 $ 5.849 T $ 11.640 T            101
B. Obama 2010-2017 $ 8.588 T $ 20.228 T              74
D. Trump

 

J. Biden

2018-2021

 

2021 est. add’l debt

   $ 8.627 Test.

 

 

 

 

$ 2.0 T

$ 27.816 T              34
Cachan Party totals Cascavel $ 18.263 T $ 12.519 T $ 30.816 T

*The FY deficit numbers for each President are based on the FY deficits stated by The Balance, update in March 2021. For FY 2021, the estimate is for Trump through January 20, 2021, and thereafter the estimate is attributed to Biden.

What do these calculations show?

81% of our entire national debt was incurred by the last four presidents, George W. Bush, Obama, Trump, and now Biden. Two Democrats, two Republicans.

Republicans are responsible for 60% of the national debt; Democrats 40%. President Biden is proposing multi-trillion-dollar infrastructure plans that would increase the national debt by another $ 2-3 trillion. Estimates have the national debt rising between now and 2050 from 102% of GDP to 195% of GDP. Interest on the debt is estimated to rise from below 2% today to 2.5% by 2030. On a minimum of $30 trillion in debt, annual interest payments could easily reach $750 billion, about one-half of  FY 2020 discretionary spending. In FY 2021, each person’s share of the national debt is $85,049. The average household’s share of the national debt is $218,614.

All presidents have an excuse for their debt (Biden – the pandemic and need for more stimulus; Trump – pandemic and need to build-up the military; Obama – to address the financial crisis; Bush – 9/11, and on and on). The difficulty with excuses is that all presidents have them and none even try to address the growing national debt. Moreover, not one candidate for federal office in the 2020 elections even discussed the massive national debt.

Basic questions remain. Can the U.S. print money out of thin air and borrow at a near-zero interest rate forever? If not, what are the consequences if inflation or interest rates rise significantly? Is there anything concerned citizens can do to address what might be an existential threat to the nation? Should our government care about future generations? Why should politicians care about the debt and future generations since their sole goal is to be elected? Should citizens care? Perhaps the real answer will be found by re-asking Benjamin Franklin’s profound question  – “When the people find that they can vote themselves money, will that herald the end of the republic.”

Part II of the article will explore the reasonableness of the current assumption that a nation, with its own currency, can print an unlimited amount of its currency without consequence?

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  • Brewster’s Millions Is Funny; Who Pays for Big Fed Spending

Brewster’s Millions Is Funny; Who Pays for Big Fed Spending

William L. Kovacs

May 2020

Brewster’s Millions Is Funny; Who Pays for Big Fed Spending

If one needs a laugh in the last days of the stay-at-home orders, watch Brewster’s Million. The time will be well worth spending. And if you need more stress, think about a federal government spending at least $4 trillion in under 45 days. All that money will be paid by our kids. What are we doing to them?

Brewster’s Millions provides comic relief to generations of Americans. The massive national debt will provide long-term economic pain to generations of Americans.

Congress and the Federal Reserve’s spending spree to address the coronavirus pandemic is wasteful and poorly targeted. Some stimulus is necessary due to government action to shut down the economy, but thoughtlessly giving away trillions of dollars is a poor choice if the goal is to reinvigorate the economy. As seen, Federal Reserve intervention has created “zombie companies” companies, large publicly traded companies vacuumed up funds meant for Main Street, and the two trillion dollar stimulus is likely to become a hotbed of fraud.

Over at the Libertarian Republic, I compare the reckless government spending to Brewster’s Millions, a classic film starring Richard Pryor, where the plot highlights the difficulty of spending huge sums of money is a short period of time. A skill, politicians of all stripes have mastered.

In the post, I analyze the how the CARES Act and the Feds have decided to allocate trillions of dollars and note how quickly government can act when it involves frittering away taxpayer dollars.

Perhaps, a greater problem than poorly targeted stimulus, is how future generations will have to pick of the tab, a tab that is unlikely to do much good for Americans now. As I wrote:

Congress and the president certainly spent more money than anyone ever thought possible, in a few months. Whether these elected officials keep their jobs or needed to spend even more money for voters to be satisfied, is to be determined in November, 2020 by the recipients of the federal giveaways.

What is certain however, is that the children of this nation will inherit the debt. Lots and lots of debt. Seventy-seven percent of the U.S national debt was incurred by three presidents – George W. Bush, Barack Obama and Donald Trump. Simply, in 2001, at the end of the Clinton administration,     our national debt was only $5.791 trillion. When all the giveaways are completed, the national debt will be well over $26 trillion. The portion of every citizens’ debt today is about $ $72,000; and likely to exceed $82,000 per person in six months.

Since it is highly unlikely anyone alive today will offer to even start paying off the debt, yes, children, it is to a certainty, you will inherit the debt.

Brewster’s Millions provides comic relief to generations of Americans. The massive national debt will provide long-term economic pain to generations of Americans.

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  • A Modest Proposal to Stop Congress from Giving Our Money to Private Entities

A Modest Proposal to Stop Congress from Giving Our Money to Private Entities

William L. Kovacs

May 2020

A Modest Proposal to Stop Congress from Giving Our Money to Private Entities

Just a few days before Christmas 2019, Congress, in its 2020 fiscal year appropriations, resurrected from the grave, billions of dollars in expired tax extenders and spread the benefits to distilleries, race-horse and Nascar owners, short-line railroad, biodiesel blenders and other favored industries. Being Christmas, it even applied the tax credits retroactively.

Should Congress consistently give billions of our hard-earned dollars to private entities?

While common sense says NO, it is unfortunate that Congress fails the common-sense test.

The issue of Congress giving away our money to private entities has been debated since the founding of the Republic. Opponents of this giving argue taxpayer money can only be spent on matters enumerated in the Constitution. Government asserts it can spend it on anything that is for the general welfare.

Continuing this debate may seem irrelevant since the courts have made it clear legislatures determine what is general welfare. Such a broad interpretation of governments’ ability to tax and spend has resulted in a massive increase in the national debt and a huge expansion of government. The federal government provides grants, loans, tax credits, tax deferments and guarantees risk to incentivize certain activities. State and local governments provide property tax relief, tax abatements, low interest bonds and outright grants, usually to attract business to an area.

Examples abound at the federal level:

  • Up to a $7,500 tax break for purchasers of the first 200,000 electric vehicles produced by an auto manufacturer;
  • Oil and gas industries receive $20 billion in annual subsidies;
  • Tax deferment on capital gains from Opportunity Zone investment which was to go to poor areas but is a boon to rich areas, e.g. high-end apartments with yoga lawns and pools surrounded by cabanas and daybeds;
  • The prescription drug industry benefited from $64 billion in federal research funding;
  • Flood insurance subsidies promote building high-end housing in flood prone areas. This insurance program is potentially liable for $1.24 trillion in claims while only collecting $3.5 billion in annual premiums. The program is already over $25 billion in losses that taxpayers will have to pay; and
  • Pension bailouts to coal miners while laying the groundwork for a massive bailout of the underfunded private, multi-employer pension system.

Presently the U.S. carries over $23 trillion in national debt and could be on the hook for over $200 trillion in unfunded liabilities. Yet Congress continues to give away billions to private entities.

 While there is almost no limit to governments’ power to give away taxpayers’ money, there are historical precedents for limiting such gifts. In the mid-1800s, many municipalities and states used public funds to purchase stock in railroads being built across the continent. Many government entities were swindled out of large amounts of money. To prevent future losses, forty-six states enacted constitutional limitations preventing gifts to private entities. These restrictions were called “gift clauses” or “anti-donation” clauses or simply “government gift-prohibitions.”

The government gift-prohibition policies barred state and local governments from giving or loaning public funds to private corporations or associations for private undertakings. Initially, these provisions stopped government speculation with taxpayer money. Over time, however, the courts defined public welfare to be anything that has a “public purpose.” Fitting within this definition is almost every type of government project conceived by a legislature, e.g. parking lots, sports facilities, corporate rent subsidies, politically favored forms of energy. Taxpayer money just flows, and the courts find it legal, based on legislated appropriations.

More troubling is that government gives taxpayer money to the largest and most profitable corporations in the world. “The Good Jobs First” report tracts the one hundred largest companies receiving government gifts (federal, state, local). First on the list is Boeing at $14.9 billion; number two is General Motors at $6.9 billion and number three is Intel at $6 billion. Most companies on the list are in energy, transportation or technology.

These large corporations persuaded our government that a tax cut would spur investment in new business and equipment. These corporations however, spent three times as much on additional dividends and stock buybacks than they invested in their businesses.

We the people need to clearly re-enact the wise-policies of the mid-1800s and demand all candidates running for office take a government gift-prohibitions pledge:

I pledge that, if elected, I will serve as a fiduciary of public money and will not vote to give, grant, or loan public funds or extend the credit of the public to any private corporation, association, or private undertaking.

By asking every candidate for public office to take this pledge, citizens can identify candidates willing to protect taxpayers. If the pledge is broken, the public will quickly know who is not trustworthy. The entire effort becomes self-policing by citizens.

A modest proposal, but it is a start!

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  • 5 Easy Ways to Reduce National Debt & Shrink Government

5 Easy Ways to Reduce National Debt & Shrink Government

William L. Kovacs

April 2020

5 Easy Ways to Reduce National Debt & Shrink Government

The President and those running to replace him ignore the nation’s $23 trillion in national debt; $18 trillion of which was incurred by the last three presidents. Every person living in the U.S. owes $70,043, as their share of the debt.  This is a staggering amount for an ordinary worker.

Debt can be reduced in several ways, cut spending, raise taxes, inflate it away or default. Since paying it off is unlikely and the other options pose great risk, future generations face difficult options for dealing with it.

We must all keep in mind, complex societies collapse. Massively indebted societies collapse. Societies with their militaries deployed throughout the world collapse. Highly regulated societies collapse. We are all these combined, contentedly sitting on a bubble of debt, unable to address the serious risks it poses. We delude ourselves that collapse can’t happen here. It has happened to every major empire in the history of the world, and it will happen here unless the risks from debt are addressed.

And as with all collapses, societies can live with risk for decades. At some point however, if not addressed, risk turns into disaster; society slips into the abyss. Once in the abyss, it can take centuries to reemerge as chaos rules.

To address our national debt, everything must be considered: taxes, spending, sale of assets, elimination of overreaching laws and regulations, and transferring to states the programs they can implement better than the federal government. These dramatic options may exceed the courage of today’s politicians. But there are smaller steps that could start the process of reducing debt and government.

Action: A Few Small Steps to Make a Big Difference

  1. Congress should not fund unauthorized laws. Many laws are authorized for a few years at a time. At expiration, Congress is to review how the law works to determine if it needs to be reauthorized, modified or repealed. Congress fails to undertake this process when it wraps all funding into an Omnibus appropriation or Continuing Resolutions. If Congress does not have the concern to review the workability of these laws, it should let them lapse. In the FY 2019 appropriations, Congress funded 971 expired laws at a cost of $307 billion.
  2. Congress should enact a ban on government gifts to corporations. A prior article outlined tens of billions of dollars in government gifts to corporations. It proposed that elected officials serve as a fiduciary of public money and promise not to give, grant, or loan public funds or extend the credit of the public to any private corporation, association, or private undertakings.
  3. Re-constitute the Joint Committee on Reduction of Non-Essential Federal Expenditures, which existed from 1941 to 1974. This committee was established after World War II to recommend ways to reduce a massive federal budget. Its goal was to identify non-essential spending. While the committee was only a study committee, requiring its recommendations be submitted to authorizing and appropriation committees, it had a major impact on budgeting in government. With the inability of Congress to control spending or the states to force a Balanced Budget amendment to the Constitution, an alternative would be to create a similar committee to make recommendations to Congress but require its recommendations be voted on by Congress. This process creates accountability.
  4. Enact a Base Realignment and Closure Commission (“BRAC”) that applies to general appropriations. Due to political pressure to locate the military in numerous congressional districts, the U.S. constructed an excess of military bases but was unable to close unneeded bases. To address the situation, Congress established BRAC; giving the Commission power to identify unnecessary bases and to send the recommendations to Congress. The key to BRAC’s recommendations to Congress is that they became law unless Congress passed a Resolution of Disapproval and the President signed it. Using the BRAC structure, Congress could apply the same concept to all recommended reductions as a means of reducing political support for unneeded programs.
  5. Establish a Budget & Waste Reduction Director in every agency to identify unnecessary expenditures. Federal agencies have recycling and permit streamlining directors to help implementation of certain laws. Due to massive budget deficits, there should be a similar position to identify ways an agency can eliminate unneeded programs. The person should report directly to the head of the agency. All reports must be addressed by the head of the agency and reasons for “No Action” must be justified. Mandate each director to recommend a 10% reduction in expenditures. Give the director a big bonus for success.

The above are easy actions to get the debt reduction process started. After the initial phase, more stringent mechanisms can be debated, like firm spending caps, balanced budget amendments, and reducing appropriations through normal legislative processes. The larger reforms will require courage but the nation is not at that point. Until then, we need small reforms by our elected cowardly lions.

There is never a right time to start reducing the national debt; there is only now!

This article was first published in The Libertarian Republic,  February 12, 2020.

 

 

 

 

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  • Democrats Promise to Spend and Spend, But Republicans Spend More!

Democrats Promise to Spend and Spend, But Republicans Spend More!

William L. Kovacs

November 2019

Democrats Promise to Spend and Spend, But Republicans Spend More!

In every presidential election the Republican candidate runs as a conservative promising to reduce the debt and deficit. Democrats run with bold ideas to spend unlimited trillions to provide Medicare for all, eliminate student debt, raise teachers’ salaries, increase the minimum wage and in the 2020 election, to spend trillions upon trillions to eliminate fossil fuels and rebuild our entire economy into a “green utopia.” Republicans attack Democrats as crazy, uncontrolled spenders. Unfortunately, the statistics tell a different story.  Republicans like spending, even a little more than Democrats.

In the 2016 election candidate Trump ran as a conservative promising to wipe out the National Debt in eight years. The debt was $20 trillion when President Obama left office.

By February 2019 the National Debt hit a record of $22 trillion, a $2.065 trillion increase in two years. By May 2019 it became clear the tax cuts would not generate enough income to offset the lost revenue and under budget estimates, debt would rise to $29 trillion in eight years.

Then the kicker! In July 2019 Congress and the President arrived at a budget deal that suspends the debt limit thereby allowing the government to spend whatever it wants for two years. The estimated cost of the deal is $2.7 trillion for two years but it could be much more.

While one wild spending Republican president does not undercut decades of promises from conservatives to cut spending and reduce the deficit, some simple calculations undercut the myth that conservatives care about debt and deficit more than Democrats. In a well-researched May 12, 2019 article in The Balance, Kimberly Amadeo sets out increases to the National Debt by each President since Woodrow Wilson.

To non-academics like me her article provides all that is necessary to answer one simple question – Which of the two major political parties spends more of our money and puts us deeper in debt?

To answer this question, I start with Herbert Hoover since he followed Calvin Coolidge, the last president who added $0 to the National Debt. In fact, according to her statistics, Coolidge decreased the existing National Debt by 26%, a $5 billion decrease. Amadeo’s numbers are set out in fiscal years (“FY”) since FY’s reflect the amount each President signs into law. This approach avoids the fact that a new president assumes the prior president’s budget for the first year in office. The amounts are actual dollars, without any adjustment.  I simply added up the amounts spent by each Presidential administration per fiscal year and put them into two columns, Republican and Democrat, to determine which political party added the most to the National Debt?

President* Years Republican Democrat Total Deficit
Hoover 1930-1933 $ 6 billion $ 6 billion
F. Roosevelt 1934-1945 $ 236 billion $ 242 billion
H. Truman 1946-1953 $ 7 billion $ 249 billion
D. Eisenhower 1954-1961 $ 23 billion $ 272 billion
J. Kennedy 1962-1964 $ 23 billion $ 295 billion
L.B. Johnson 1965-1969 $ 42 billion $ 337 billion
R. Nixon 1970-1974 $ 121 billion $ 458 billion
G. Ford 1975-1977 $ 224 billion $ 682 billion
J. Carter 1978-1981 $ 299 billion $ 981 billion
R. Reagan 1982-1989 $ 1.860 T $ 2.841 T
G.H.W. Bush 1990-1993 $ 1.554 T $ 4.395 T
W. J. Clinton 1994-2001 $ 1.396 T $ 5.791 T
G.W. Bush 2002-2009 $ 5.849 T $ 11.640 T
B. Obama 2010-2017 $ 8.588 T $ 20.228 T
D. Trump** 2018-2021 $ 5.088 T $ 20.228 T
Party totals $ 14.725 T $ 10.519 T $ 24.474 T

*The FY deficit numbers for each President are based on the FY deficits stated by The Balance,        update August 26, 2019.

** Estimate of deficit based only on one term as President.

At the end of the Obama administration the two parties were almost statistically tied in the amount of debt they imposed on the nation. The seven Republican administrations imposed $9.637 trillion in debt. The seven Democratic administrations imposed $10.519 trillion. While both parties controlled the White House seven times during this period, the Democrats’ occupied the White House forty-eight years while the Republicans occupied it only forty years.  On a FY basis, Republicans, on average, increased debt by $241 billion a year whereas Democrats, on average, increased the debt by $219 billion a year.

The Trump administration however, is projected to add $5.088 trillion to the National Debt in his first term, leaving us with a National Debt of $24.474 trillion at the end of FY 2021. By comparison President Obama added $4.829 trillion to the National Debt in his first term. This time period however, includes the Great Recession and the added spending was necessary to hold off a depression.

Together, Obama’s two terms ($8.588 trillion of new debt) and the first term of the Trump administration ($5.088 trillion of new debt) added $13.676 trillion to the National Debt. Percentage wise the two administrations are responsible for 52% of the total National Debt. If there is a second term for the Trump administration, and it can hold the increase in the debt to projected amounts ($3.524 trillion), his administration would add $8.350 trillion to the national debt. Together, Obama’s $8.58 trillion and Trump’s $8.35 trillion would add almost $17 trillion to the national debt. Simply, Presidents Obama and Trump would be responsible for 59% of the nation’s national debt.

Therefore, after the first term of the Trump administration, conservative presidents, in their forty-four years in office, will have increased the national debt by $14.725 trillion whereas the wild-spending Democrats, in their forty-eight years in office, will have added  $10.519 trillion to the national debt.

So much for the myth that the Republicans care about debt and deficits? The moral of this story that Democrats tell the truth when they promise to spend our money and lots of it. Republicans merely tell us what we want to hear and when in office, they spend more of our money than Democrats.