Monday, February 15, 2010
One Person's Perspective on the Federal Debt as a % of GDP
What's been the history of the Federal debt, what's been happening over time, and who's been in power when it happened?
Initial searches weren't very efficient and it was hard to find a reasonable summary. Here's one of them: http://zfacts.com/p/318.html. The web site owner claims to be an economist who does this in his spare time. Take it for what it's worth.
Ever the skeptic, I decided to check further and to account for Congress and the role they play. I decided to create my own chart. It's attached. The Sources at the bottom include a link to the actual Federal debt tables used to generate the underlying line graph.
Conclusions? Here are mine.
1. Federal debt as a % of GDP went through the roof due to WWII
2. Federal debt marked a steady decline after WWII regardless of who was in the White House and through 35 years of a mostly Democratically-controlled Congress until.......
3. Reagan, a terrific actor (which some mistake for intelligence and oratory skills) and famous co-star to trained monkeys, got elected...yes, I hate the stupid f***...
AND Republicans took control of the Senate
This next point is, IMHO, probably the single most important fact to remember about all of this.
4. The Republican-controlled 106th Congress takes Ronny's "smaller government" religion to its fatal extreme by passing the Gramm-Leach-Bliley Act in November of 1999 which is signed into law by another RWMF and career politician, Bill Clinton.
For those who need a little history review, GLB repealed many of the regulatory safeguards which had been put into place by the Glass-Steagall Act of 1933 which was the federal government's response to the unfettered and unregulated bankers who caused the * FIRST * Great Depression.
Go back further (http://www.pbs.org/wgbh/pages/frontline/shows/wallstreet/weill/demise.html) and understand how Glass-Steagall was coming under serious attack during Reagan's administration in 1986-1987....at the same time a former J.P. Morgan director and life-long disciple of Ayn Rand, Alan Greenspan, was being made Fed Chairman.
"In the spring of 1987, the Federal Reserve Board votes 3-2 in favor of easing regulations under Glass-Steagall Act, overriding the opposition of Chairman Paul Volcker. The vote comes after the Fed Board hears proposals from Citicorp, J.P. Morgan and Bankers Trust advocating the loosening of Glass-Steagall restrictions to allow banks to handle several underwriting businesses, including commercial paper, municipal revenue bonds, and mortgage-backed securities."
Do you see those words, "mortgage-backed securities"?
5. The upward trend continued on Bush 41's watch and with a Democratically controlled Congress (Dems can be such pussies...or are they just RWMFs of a different stripe? Both, I'd say.)
6. Yes, Clinton was in some ways the benefactor of a booming economy and, yes, some credit for reducing the Federal debt has to go to a Republican Congress
(In case anyone would like a quick primer on how the Federal budgeting process actually works, the roles various branches and departments play, etc., see http://useconomy.about.com/od/fiscalpolicy/p/Who_budget.htm)
7. Finally, it was without a single shred of doubt in my mind or any possibility for any sort of fact-based denial that a Republican-controlled Congress and a half-witted Republican son of a Texas oilman is who put us on this disastrous financial path.
The list of fiscal failures since 2001 is long, but we can start with cut taxes that primarily benefit the wealthiest Americans while waging 2 wars off the books. Add to that, the bottom dropping out of an unregulated financial services sector based too heavily on an overly-speculated real estate market that had so much credit and investment capital tied to it and what did those geniuses think would happen? It leads to a reality in which Wall Street and RWMFs everywhere get all the reward with none of the risk and we taxpayers are left to bail out the whole friggin' mess....
My point is the current pathetic state of our economy and the federal budget is something that began long before Obama came into office, before voters turned Congress back to Dems, and really began when Rs were in charge and is rooted in the desire of RWMFs everywhere to deregulate and get rich.
I have no problem with fiscal responsibility, but to think that a president and Congress can fix the mess of previous administrations over night - or even in a single year - just isn't realistic. And I don't think we'd be in this mess if the justifiable and now obviously needed regulations and oversights of the financial services industry had not been repealed.
If anyone has a better plan than what is being done now, I'd like to hear it. Was allowing all the TARP recipients, GM, and any other recipients of federal money to fail the better plan? In a perfect Randian world, I guess the answer would be, "Yes."
p.s. Snowboard Cross racing at the Olympics is way cool!