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I don't get why there is a debate over the debit ceiling. The U.S. took in less money from the nation’s wealth in 2000 instead of paying off debt with the surplus. Now the nation needs money or it will go broke. If this were me, I would go back to the type of budget I had when I got to the surplus! To make this into an analogy, I had a job that was paying great, told my employer that I would like to take a pay cut, and then wasted all my savings on maintaining my current lifestyle. If it were me, I would get my old pay back either by telling my employer to give me a raise (remove tax cuts), or find a new job. Being this is a country, and we can't exactly just get a new job, the only option is to remove the tax cuts.
Now you can say that when we gave the tax cuts for the wealth and corporations in the early 2000s, it created jobs and you wouldn’t be lying per say. Over the span of 8 years (2000-2008) roughly 3.5 million private jobs and 1.7 million government jobs were created. So you would think that cutting the taxes for the nation’s wealth increases the amount of money the government can take in since more people are working and wages can go up etc. This would be true if the economy worked as imaginations in Washington thinks it does. Unfortunately this is not Wonderland, Snow White is working in the mines with Dopey and Cinderella is on welfare.
If we limit our scope here to just the figures above it would look like we are doing great. However, during that same span of time, the country lost about 3.2 million jobs in the goods producing, wealth creating jobs but increased in the service providing jobs, which is where those first two numbers came from. What this means is the jobs that earn money and fund the government went down, and the things that sap money and cost the government went up. While at the same time we cut our revenue by creating wealthy tax cuts. To sum this section up, we increase our spending, while lowering or ability to generate income and also giving tax breaks to the most likely people to afford it the sudden paradigm shift.
Let’s look at it from a historical point of view rather than strictly a numbers game, since as we all know number can be manipulated. For this exercise let’s first look at Reagan’s era. In the early 80s, Reagan got elected based off his movie start good looks, charismatic delivery of his script and an astonishing ability to convince people not to look at facts. He rode his way to the white house on a cloud of a make believe budget crisis claiming that debit was out of control. The fact was that the national debt, compared to national income, was the lowest in 50 years. Here is a graph. Clearly, the debt percentage Vs GDP (basically the measure of our national income) when Reagan got elected was fantastic. The previous administration (Carter) helped nominally in lowering the debt but not enough to say that he was influential in the trend the last 40 years had given him. To be fair, he had taken office during a national energy crisis which he tackled with domestic deregulation, and the tail end of recession unemployment’s trend was getting higher and through all the opposition in congress he arguably did very little either way for the nation. So we can say without any bias that what happened after Reagan took office were his own administrations doing. Over his 8 year term, he increased the national debt over %20, when it had been its lowest since WW2. His first year policies namely the tax cuts for the wealthy, lead to the worst year in 40+ years, as far as the debt was concerned. By the time the 1st Bush took office, debt was in an upswing, and his policies only continue that trend adding over 13% debt during his tenure.
Any trend in life carries momentum, which help propel the trend. At this point Bush contributed to the trend and then left office. Bill Clinton took the reins with over a $3.4 Trillion debt with mounting interest. He not only had to stop the current trend but reverse it. In his first term, he managed to halt the growing debt trend, though interest was still a problem, and even managed to squeak by a small (<1%) decrease in debt. In his second term he managed to create a surplus which and lowering debt by 9%, had this trend continued it could have helped pay off the debts accrued from Reagan and Bush #1.
You see the theories at work in all of this is that, if you lower wealthy taxes, it will give the incentive for the wealthy to work harder themselves to make more money, give pay raises to employees (help the middle class ect.) so they produce more and investing. Thus everyone would be paying more taxes cumulatively, even though the rates are low. For all the years this theory was put into practice, it never worked. As Clinton said in his campaign, “It’s the economy stupid!” Remove the tax cuts enacted by the second Bush, this will increase revenue. Once that is done, balancing the budget will be easier since the income level will be up again and paying bills will be easier. As far as raising the debt ceiling, sure raise it without being able to gain funds to pay for it and allow the country to lose its credit status. Yes that sounds like a plan that will work! Let’s teach our children that the key to having good credit is to not have the money to pay for you ever increasing amount of debt.
