Public Domain
Ronald Reagan national address on tax reduction legislation
Our national debt now stands at a record $31.4 trillion. How did we get there? One former congressman blamed it on entitlement programs.
Let's take a look.
In 1946 our national debt was $269 billion—$4.2 trillion in today's dollars. That sum represented our cost for World War II, a war in which we put 16.1 million citizens in uniform (1 in 8), built 5,500 ships, 300,000 aircraft, and created the atomic bomb.
In the 35 years from 1946 through 1980 our national debt grew at an annual rate of 3.64% and by 1980 was $908 billion.
Then Ronald (“Let's undo the New Deal”) Reagan became president. He cut taxes on the wealthy by 60%, on the middle class by 40%, cut the capital gains tax, did away with the estate tax, weakened the National Labor Relations Board, weakened the Securities Exchange Commission and slashed the budget for the Internal Revenue Service, crippling its ability to audit corporate tax returns.
Then he deregulated the savings and loan associations, a move that cost $160 billion, $132 billion of which was dumped on the backs of the taxpayers.
Result: The national debt, which had been growing at 3.64% a year, now grew at 13.15% a year, and in the 12 years of the Reagan and George H. W. Bush presidencies the national debt more than quadrupled. Had Reagan left the tax structure alone and the national debt increased by 3.64% annually, today it would be $4.22 trillion.
What did we, the people, get out of this? The top one percent of our citizens (3.3 million) are sitting on more of our nation's wealth than the lower 90% (294 million). Seventeen percent of our children are living in poverty. Our health-care system ranks 37th in the world.
In 1993 Bill Clinton became president. He restored the pre-Reagan tax rates, reduced the growth in the national debt from 13.15% a year to 2.83%, produced four balanced budgets, and had one of the best stock markets of any president. A $10,000 investment in the Standard & Poor's 500 index at the start of his administration eight years later was $35,600, an average annual gain of 17.2%.
Then, in 2001, George W. Bush became president (although Al Gore won the popular vote). W. could have made history by continuing Clinton's economic policies and becoming the first Republican president since Dwight Eisenhower in 1960 to produce a balanced budget. Instead, he gave the Clinton surplus back to the people (my wife and I each got $600 checks) and restored the Reagan tax rates. He also got us into a war in Iraq that consumed the lives of 4,500 members of our military and cost $1.9 trillion. In his eight years the national debt grew at 9.05% a year and doubled to $10 trillion.
|
|
In 2008 came the Great Recession, in large part fueled by poorly designed deregulation. When the financial company Bear Stearns went bankrupt its debt-to-asset ratio was 97/3. In 2008 the S&P 500 tumbled 38.5%, its greatest drop since 1931's minus 43.3%. A $10,000 investment in the S&P in W. Bush's presidency was reduced to $7,445, an average annual loss of 3.62%.
Then came the bailouts. Companies that got into trouble largely because of their own mismanagement came to Washington begging for help from the taxpayers. These so-called “too big to fail” companies walked off with some $1.2 trillion. More than 60% of this money was in the form of grants, so it didn't have to be repaid.
If W. Bush had been wiser, he would have sent all these corporate beggars to Harvard Business School to find out what they did wrong and to clean it up themselves. They could have down-sized, right-sized, or (horrors!) cut their CEOs' pay.
Among the bailout recipients: General Motors, Bank of America, Wells Fargo, American Express, AIG, Capital One, Goldman Sachs, KeyCorp, Morgan Stanley, PNC, and the Bank of New York.
When Barack Obama assumed the presidency in 2009, he could have taken advantage of a deal the Democrats made on tax cuts –- that the pre-W. Bush tax cuts could expire in 10 years. Obama didn't do so, using the excuse that we were in the Great Recession. But he did dole out one-time stimulus checks to ease the impact of the economic downturn. Along with that he could have restored the Clinton tax rates and we would have had a chance to halt the constant massive borrowing to pay the bills to operate the government.
His successor, Donald Trump, continued the mess by getting through two tax cuts for business.
It is ironic that the countries we defeated in World War II–Germany, Japan and Italy—now have democracies that are more stable than ours. Take health care. These three countries have national health-care systems. Germany's system ranks 25th in the world, Japan's 10th, Italy's 2nd.
Our neighbor Canada's system ranks 4th. Seventeen percent of Canada's health-care costs go to administrative expenses, compared to 34.2% for the U.S. That's because we turn medical care into a free-enterprise system, and hospitals and pharmaceutical companies make fortunes with that system.
Members of Congress, who make $174,000 a year, get to pick the pockets of the taxpayers to provide Cadillac health care for themselves. The US Supreme Court has ruled that no hospital can turn away a person in dire need of care. Of course! We don't want dead bodies piling up in the streets. But who pays for the health care of people who don’t have health insurance? Well, hospitals are profit-making entities, so to cover these costs they raise the costs of services on the rest of us. Small wonder that health care is a leading cause of bankruptcy in this country.
When it comes to life expectancy, Japan ranks second in the world in this category, age 85.03. Italy is 6th, age 84.01, Germany 27th, age 81.88, United States is 46th, age 79.11.
Our Canadian neighbor ranks 16th, 82.96.
Surely one of the reasons for America's low life expectancy is guns. The chances of being killed by a gun in the US are 11.7 times greater than in Germany, 10.8 times greater than in Italy, 611 times greater than in Japan. (And 6.3 times greater than our neighbor Canada).
(Data from the latest United Nations population Division estimates).
The leading cause of death of America's children used to be cancer and accidents. Now it is guns.
Steve Maersch worked as a journalist for the Chicago Tribune, Chicago Daily News, Melbourne (Australia) Herald and 25 years for The Milwaukee Journal.
