Home » Uncategorized » Deficits, Debts and Democrats vs Republicans — US national debt in graphs by year and president

Deficits, Debts and Democrats vs Republicans — US national debt in graphs by year and president

As you read this article on Democrats vs Republicans when it comes to who did better or worse with the U.S. national debt, bear in mind that I am an independent voter. I cast my virgin vote for Ronald Reagan. I voted for President George II … but only the first time! After installing Bush 2.0, I repented. I refused to reboot the Bush administration and laid down my voting rights for awhile so as not to inflict more damage on America. I consoled myself by saying, “At least, I’ve learned not to do it again. I was not a hanging-chad voter.”


In fact, I’ve voted Republican more often than Democrat. I did not vote for Clinton or Al Gore. Bear all of that in mind, as you read the following, for I am writing against my own bias and was surprised by what I learned.


Personal income under Republicans vs Democrats

Here is a stunning fact in a simple graph:



(Graph used by permission of Catherine Mulbrandon, http://VisualizingEconomics.com )


This graph goes against what I think would be conventional wisdom — that Republicans do a better job with the economy than those taxing, government-worshipping Democrats. Surprisingly, if you look at personal income growth over the last fifty years under each kind of president (Democrat vs Republican), you discover that no matter which income percentile you fall into, you saw your income grow more during Democratic presidential administrations than during Republican administrations.

The other telling thing shown here is that the amount of income growth under Democrats gets better as you move to poorer segments of the population, even though ALL groups experienced greater income growth under Democrats (except for the top five percent) than under Republicans. Here’s what Slate.com has to say in their summary that accompanies the graph …


Did the United States grow more unequal while Republicans were in power? It sounds crude, but Princeton political scientist Larry Bartels has gone a long way toward proving it. Bartels looked up income growth rates for families at various income percentiles for the years 1948 to 2005, then cross-checked these with whether the president was a Republican or a Democrat. He found two distinct and opposite trends. Under Democrats, the biggest income gains were for people in the bottom 20th income percentile (2.6 percent). The income gains grew progressively smaller further up the income scale (2.5 percent for the 40th and 60thpercentiles, 2.4 percent for the 80th percentile, and so on). But under Republicans, the biggest income gains were for people in the 95thpercentile (1.9 percent). The income gains grew progressively smaller further down the income scale (1.4 percent for the 80thpercentile, 1.1 for the 60th percentile, etc.).

But here is the aspect of these facts that shines the brightest for Democrats:

In all income categories except the 95thpercentile, income growth rates under Democratic presidents exceeded income growth rates under Republican ones. That suggests greater income equality can coexist with (or even help create) greater prosperity.

Just the facts. Possibly unsettling to some, but facts all the same. The graph shows even the 95th percentile as seeing more income growth under Democrats vs under Republicans, but the article notes that the difference is less than the statistical margin of error at that point, so not significant. From the 95th percentile up, individuals saw equal growth under either party. Both parties, you see, always look out for their richest supporters!

Seeing that graph caused me to wonder in defense of Republicans, “Did individual income under Democrats do better because Democrats blew huge deficit holes in the U.S. budget and, so, stimulated economic growth that led to income growth … by burdening the next generation with enormous debt? Did they cause the US national debt to balloon so that people gained this income at the government’s expense? After all, this income growth did not just happen down in the welfare section; it happened throughout the middle class and even above.


Republican vs Democrat on the US National Debt

The next US national debt graph is equally telling in its Democrat vs Republican comparison, year by year:


Republicans vs Democrats on US national debt

( Graphic provided by The Creative Commons and found on Wikipedia at: http://en.wikipedia.org/wiki/File:Federal_Debt_1901-2010.png )

 (Click on graph to enlarge, or zoom your browser window.)

Studying this graphic, you can clearly see that US government debt by year after WWII (1945) declined as a percentage of the nation’s gross domestic product (GDP) continually all the way until the Reagan years. You can also see that most of those post-war years were under solid Democratic control in both houses. Throughout the years of Reagonomics, however, the United State’s national debt as a percentage of GDP — after decades of decline – grew rapidly and continued to do so under President George Bush the First. Then U.S. debt plunged for the first time throughout the Clinton years (when taxes on the wealthy were raised) and finally began to rise again during the Bush II years (when taxes on the wealthy were cut again … even more than they were cut by Reagan).

So, while individual income grew better for everyone during Democratic administrations, the U.S.A. national debt grew much better for everyone under Republican administrations.

You might have already noted that the debt soared in proportion to GDP under President Obama, but the Obama years do not afford a fair comparison of Republican vs Democrat on the national debt because we entered what may eventually be called the Great Depression II during the Bush II years. Let me put it another way: I don’t believe for a second that Republicans, who presided over the creation of this global depression, would have fared any better than Obama when it comes to US deficits for the following reason: Obama has carried out exactly the economic policies that Bush switched to in his final year.

If you don’t think he has, it’s time to remember that, when the so-called “Great Recession” began, George W. Bush said he had to “give up on my Capitalist principles” and approved a 900-billion dollar bailout to be followed by ANOTHER 900 billion later if necessary. This second 900 billion was already scheduled to happen during the next administration (whether the next election turned out to yield a Republican president or a Democrat) and amounts to almost half of Obama’s accumulated debt. With his first bailout, Obama merely carried out what had been established in the final Bush year. From there, Obama has used the same resident “experts” Bush was relying on, such as Ben Bernanke, and has continued more of the same bad economic programming on his own. So, Obama doesn’t get to wipe his hands clean of these failed policies, as he has been utterly uncreative, but they are no different than what Bush began. Don’t let Republican leaders beguile you when it comes to Obama’s deficits. Almost a trillion dollars of the Obama deficits were planned and approved by Bush before Bush left office.

The Great Recession is too much of an anomaly to compare how Democrats do versus Republicans in a head-to-head match on US deficits and the US debt. Even the Bush tax cuts that started the U.S. back into deficit spending remain in place under Obama. So, there has been almost no real change in economic policy. Q.E. continues. Bailouts continue. Even the Obamacare medical program has yet to begin.

In case you are thinking that looking at the debt as a percentage of GDP skews the facts, let’s look at what the gross national debt has done, regardless of GDP.


US national debt by year and by president

Here’s an interesting timeline of Republican vs Democrat presidents in relation to growth of the national debt:

1980: Ronald Reagan runs for president during a recession in which the national debt as a percentage of GDP held completely flat. (Prior to those Carter recession years, the gross national debt grew slowly (top of graph below), yet slightly decreased as a percentage of GDP (bottom of graph)).


( Infographic on national debt from Wikipedia, http://en.wikipedia.org/wiki/File:US_Debt_Trend.svg , provided for public domain use by its author, Dejo)

The biggest plank in Reagan’s platform, which he presents with poster infographics and considerable zeal is the promise to balance the budget against deficits that he claims will soon destroy the nation’s prosperity. Carter, he claims, is running the nation toward economic bankruptcy.

1981-1989: With full support from congressional Republicans, Reagan begins the worst annual deficits the nation has seen since WWII. During the Reagan and Bush I years, the gross national debt quadruples as a result of huge Republican military spending increases combined with Democrat refusal to cut social spending in order to make room for Reagan’s massive military spend-up.

1993-2000: As seen above, Bill Clinton inherits a national debt that is now ballooning at an alarming rate, but he gets an economic plan through congress that eliminates deficit spending entirely. (The Gingrich congress deserves partial credit here, too.) He does this largely by raising the taxes that had been cut by Reagan (which Republicans oppose) but to a point that remained a lot lower than taxes were before Reagan. Apparently, he strikes exactly the right balance in taxation because the recession of the Bush I year ends, and the country returns to growth. For the first time in decades the U.S. runs a surplus budget so that the gross national debt actually declines as we start paying it down with the budget surplus. It declines as fast as it had grown under Reagan … in part due to military cutback. At no time since WWII had the nation actually paid down its debt! The debt had declined as a percentage of GDP after WWWII only because GDP grew a lot after the war, but the actual debt, itself, grew continually after WWII (though only a in a trickle as the top graph shows). Clinton was the only president to reverse that.

2000: George W. Bush runs for president, inheriting the dot-com crash at the end of the Clinton era (a market correction of a bubble, something far less significant than the core collapse of an economy that we have today) … and something that would have righted itself as all stock market corrections do.

2001: At the very end of the Clinton administration, the CBO shows the United States is on track to pay off the entirety of its national debt within a decade! It’s practically a miracle after living with debt for many decades.

2001-2009: With full support from congressional Republicans, Bush begins running enormous deficits again as a way of pumping the economy back up from the dot-com crash. Bush hits the accelerator hard enough to double the gross debt that had already been quadrupled during the Reagan-Bush I years. Most of the new annual deficits that add to the debt are due to the Bush Tax Cuts, two wars, and the expansion of government. Bush manages to break the United States for the first time since the Great Depression just as Reagan broke the Soviet Union … by drawing it into military spending that it obviously could not actually afford. Same plan. Even Republicans like Representative Boehner freely announce the United states is “broke.” (A sentence any American would be deeply ashamed to say if it were not a fact that has to be admitted.) The entire world economy goes down the toilet due to sloppy credit rules and deregulation of banks that went way too far. This is not the crash of a bubble, but the collapse of the United State’s economic core. It’s a core meltdown! (That’s why I begin telling friends that we have entered another economic depression, not just a recession. Few believe me, but  four years later we have no real recovery and none in sight.)

2009: Barack Obama inherits a $1.3 trillion deficit from Bush. It’s a simple fact that most of this deficit was already budgeted during the Bush years; yet the Republicans immediately condemn Obama’s fiscal irresponsibility.

There is no getting around the fact that the Republican track record for deficit spending is abysmal or that the Great Recession began for the entire world in the eighth year of their watch under George Bush II. Not only has personal income for ALL segments of the population (except the top 1%) done worse during Republican administrations over the past fifty years, but the United States’ gross debt has skyrocketed under every Republican administration from the beginning of Nixon’s second term onward. That’s a numerical fact, and their feet should be held to the fire for it. Moreover, the top five percent of the U.S. populace pays a lower percentage of income taxes in proportion to their total wealth than do the bottom ninety-five. (See “Bush Whacked by the Bush Tax Cuts.”)

So, that’s why I haven’t voted for Republicans in some time, even though Democrats currently are carrying out the same lame bailout economics that Bush began. I didn’t change the facts in the presentation above to match the way I vote. I changed the way I vote to match the facts.


I particularly invite Republican debate in the comments section below. Correct me with facts … if you can!


For more on the US national debt and ways to end it, I invite you to read/watch one of the following:


For more reading on Republicans vs Democrats:


  1. Comment by bill:

    I would agree if it were not for the following. First the Glas Stegal Act of 1933 was repealed under Clinton setting the stage for Wall St and banks to run wild. 2nd The Community Reinvestment Act of 1995 under Clinton setting up the housing bubble by allowing people to borrow money they couldn’t repay. 3rd 911 that threw the country into chaos and spending not only to find the terrorists but to create Homeland Security and fund a fight to protect our country from terrorism. 4th Hurricane Katrina one of the largest natural disasters in years that affected the entire country because of oil refineries. And the final blow came in 2007 when Nancy Pelosi and Harry Ried held the countries credit card and destroyed our economy with during the last 2 years of the Bush administration. Both the House and Senate were under democratic control and that is how we ended up here. Obama just continues what his party started and that is the destruction of the USA. Check my facts but its all there and the worst of the fallout has democrat prints all over.

    • Comment by Summation:

      You “facts” do not adequately fit in this debate. It is better suited for discussions where you just point out random facts to discredit people or the party. Does not address GDP or debt adequately and therefore cannot refute the author who challenged you to the debate.

  2. Comment by khydraa:

    The question a dispassionate observer would ask is, “Given that Republicans and Democrats are so similar in terms of policy changes, even more similar when you consider that the overwhelming majority of policy doesn’t change in a single presidency, why did republicans tend to get elected in times of low wage growth?”

    It seems too strong a relationship to be pure coincidence. However your claim that policy has anything to do with it is just childish partisanship.

    Poorly done. You need a smaller stage.

    • Comment by David Haggith:

      I hardly think you’re a dispassionate observer, but you’ve asked the question all the same … to which the answer is a common one: your premise is wrong. Republicans often did not get elected during times of low wage growth. Rather, wage growth slowed down after Republicans were elected. The Bush administration is a prime example. Wage growth has rarely ever been worse than it was during the Bush administration.

      The exception would be the Obama Administration, which came into being under the economic rubble of the Bush Administration. Wage growth has continued to do poorly under Obama because he really hasn’t done any of the right things to right the economy. He continued the Bush policies of bailing out mega-banks; he’s continue to let the same banksters run the Federal Reserve and Treasury. They’re all part of the same club and have no real answers to the dilemmas they created. He has completely shied away from putting banking criminals in jail, saying we need to look forward, not backward. He has not managed to accomplish much in re-regulating banks, though he has done a little. (Actually, mostly Democrats in Congress have.) He continued the Bush tax cuts for four years, which were a good part of why wages for the Middle Class stagnated. He did nothing, just as Bush did nothing, to break up banks that are “too big to fail” so that they cannot fail and crush the rest of us again. He is truly a sad disappointment economically. What did he mean when he first campaigned on a slogan of “change?” Economically, very little changed.

      All of this does support one point you make, which is that when it comes to Republicans vs Democrats there often isn’t a lot of difference, and that’s because they all are easily swayed by those who court them with the most money and seeming appreciation. (I add the word “often” to your own claim because actually there was a lot of economic difference between Bush and Clinton.) So, of course, the economy has continued to look like the Bush economy. Where Obama did try to make some small changes, such as investing in infrastructure to put people to work, Republicans blocked him, knowing that presidents rarely get re-elected during bad economies.

      So, REALLY, almost nothing changed … until the recent election where he partially undid the Bush Tax cuts. Even there, he did not go far enough. He and the rest of the Democrats should have taken taxes back to where they were during the Clinton Administration, but they couldn’t seem to get that past the Republicans.

  3. Comment by j fitzgerald:

    First allow me to begin with a Magic Trick:

    Year 1. My Debt is $100. My Income(my personal GDP) is $100.
    Year 2. My Debt is still there. $100. My income is $50.

    In Year 1, my debt to GDP ratio was 100%.
    In Year 2, my debt to GDP ration was a stunning 200%.

    Only thing is, I didn’t really do anything but earn less money.

    It’s pretty cool to use Accrued Debt, which is a Total, and compare it to Annual GDP which is a detail line, but a more honest (and much more common) way to analyze these numbers is to use Deficit, which is the accrual of debt for that period, and compare it to GDP which is the Income for that Period.

    Go back and compare the Asset Value of the US to the Debt by President, or compare annual deficits to annual GDP, if you want to play honestly.


    Personal Income (as measured by the Census Bureau) is a “Pre-Tax” measurement. Hence, although my Personal Income may have risen, if my tax rate is higher, then my “Discretionary Income” may be lower, and I’m not really better off.

    Likewise, these are the inflation rates during the Carter Presidency: 4.8% in 1976,6.8% in 1977, 9% in 1978, 11% in 1979, and hovered around 12% at the time of the 1980 election campaign.

    So…unless I had a Personal Income increasing at those amazingly high rates each successive year, and taxes didn’t negatively impact my discretionary income, I was pretty much f*cked those years.

    The old saying stands, beware of Greeks bearing gifts, and liberals bearing statistics.

    • Comment by David Haggith:

      Your math is correct. Your argument is baloney. Such I have come to expect in the argument of Republicans vs Democrats. It’s not only cool to measure total debt as it relates to annual GDP, it is also one of the most common measurement comparisons made by economists. The reason for doing focusing on that is that it is total debt that kills you, not the occasional deficit. Personal debt means nothing unless you know personal income. A man with enormous income can afford more debt and merely shrug it off. In the same manner, national debt means nothing unless you know national income (GDP). So, in order to see whether our debt is becoming dangerous to our survival, we need to look at it as percentage of income (GDP). That’s the only way to see whether our debt condition (whether as individuals or nations) is getting healthier or is declining.

      Indeed: Beware of geeks baring their giftedness.

      P.S. You’ll see nothing in my own arguments favoring the Carter presidency. In my opinion, he’s a smelly red herring you just dragged across the trail to try to lead people off the scent. It is the Clinton presidency we need to look at (coupled to the Gingrich congress) to see when America finally solved both its annual deficit problem AND its total debt problem (by using the negative deficit (surplus) to pay off the accumulated debt. Go back to school, and study the Clinton era. The success of paying off that enormous debt by turning deficits into surpluses ended the SECOND the Bush Tax Cuts became effective. What a fool he was to destroy the nation economically just to throw out candy to the masses in the form of popular tax cuts. There is no question that those tax cuts ended our first budget surpluses in decades and our first time of paying down the debt in decades — that and two VERY expensive wars for which America is not really much better off that I can see.

      • Comment by j fitzgerald:

        The problem with your response is I’m wasn’t the one making an argument. You were. Your argument is that the pecentage of National debt to GDP by President is an indicator of that President’s performance. And as my example implicity indicates, that is not neccesarily so. Therefore, if you want to indict a President (or Party), it would be more proper to compare his contribution to the National debt relative to his contribution to GDP.

        Again, the reason I mentioned the Carter Presidency is because it directly addresses your argument, which is: because Personal Income increased more under Democrats than Republicans, this is an indicator of well-being. During the Carter Years, if there was a 12% increase in inflation, their d*mn well better have been a 12% increase in Personal income, less we were losing ground. Therefore, why would one not expect Personal Income to rise more during his Presidency than others?

        The red herring here is your trying to rant about the Bush tax cuts rather than address your original point regarding obscure out of context indicators of National well-being.

        • Comment by David Haggith:

          “It would be more proper to compare his contribution to the National debt relative to his contribution to GDP.”

          That is exactly what the graphs above do. Why are you not able to see that? Forget looking at how high the peaks are (or low) and pay attention to which direction the line is moving — up, flat or down. If the line is moving up, then the president is contributing MORE to the national debt that year than he is contributing to the GDP. If the line is going down, he is contributing less to the debt than than to the GDP. The steeper the line is going up, the more the president is causing debt to rise in proportion to GDP.

          Read the graphs more carefully. In two of them, the line is not a measurement of the total debt; it’s a measurement of debt relative to GDP. Therefore, if a president was contributing a lot to GDP, then a fairly high contribution to the debt each year (his annual deficit) did not cause the line to rise at all. He might have been adding a lot of debt each year, but because he was adding just as much to GDP, the line would be flat. To the extent that the debt under a president faster than GDP each year, the line rises more and more steeply. If GDP is rising faster relative to the national debt, the line falls. Only one of the graphs shows a measure of total debt.

          You conveniently ignore the Clinton years when personal income rose, annual deficits turned into annual surpluses, GDP rose and total debt fell year after year. In other words, everything went in the right direction. I don’t care what happened in the Carter years. I despised Carter for exactly because of his horrid economic performance and did not vote for him. Overall, however, we’ve done better economically under Democrats. Carter is the exception. Yet, in terms of Democrats vs Republicans, I don’t care which party comes out on top. (In other words, if the economic numbers had turned out to show we did far better under Republican policies, that is what I’d be preaching.) I care about what happened in the years where we got almost everything right because those are the years we should now be guided by.

          There are, however, too many stupid ideologues for us to have any hope of being guided by what actually worked. They’d rather be Republicans than be right. People like yourself flat-out refuse to look at the Clinton years and acknowledge that the combination of higher taxes (esp. capital gains) pushed by the president along with moderate military cuts that he pushed for, coupled with the deficit hawks in the Republican House, produced the most sensible economic climate in our lifetime. Yes, there was the serious dot-com bust due to rampant and foolish speculation, and there was too much deregulating of banks; but in terms of national government, it was the most responsible economic performance we’ve seen. And the dot-com bubble for all it problems proves beyond all doubt that higher capital gains taxes CLEARLY DO NOT cause people to stop investing and stop creating jobs. The Clinton economy was one of the most highly accelerated economies we’ve known. A much higher capital gains tax didn’t do a thing to slow it down!

          It is insane that Republican voters continue to BELIEVE such a solidly disproven argument when their Republican politicians and talk-show hosts regurgitate it to them. Shame on them for being so willfully and intentionally ignorant.

          • Comment by jfitzgerald:

            That is exactly what the graphs above do. Why are you not able to see that?

            This is just incorrect, which was the point of my very first example. So, now I have to repeat myself.

            If Barack Obama had become President in 2009 and he completely balanced the budget, he would have added ZERO new debt to the budget. But the size of the Debt relative to GDP would have increased because GDP was shrinking.

            Thus proved: Using Debt to GDP and using Deficit to GDP are not the same. Your method would have held the theoretical Obama in less regard because of it.

            Why are you not able see that?


            …You conveniently ignore the Clinton…

            No, I’m not ignoring anything, you are just ranting again to avoid confronting that your original argument is overwhelmingly simplistic. You are claiming that a graph that maps “Personal Income” growth by President as a percentage is an indicator of the falsehood of a belief — that Republicans do a better job with the economy.

            Whether you like, dislike or are indifferent to Jimmy Carter, and regardless of what happened while Bill Clinton was president, your point does not take into account that high inflation rates under Carter undermined Personal Income growth, and your wonderful graphs are useless sh*t because of it.

            • Comment by David Haggith:

              Here is what you are not understanding. The debt is nothing but the sum of each year’s deficits. Therefore, when you look at a graph that shows only the debt from year to year, the amount that the line goes up or down each year IS the deficit. Therefore, when you show a graph that shows the debt from year to year as a percentage of GDP, the amount that it goes up or down from one year to the next is the difference the deficit of that year in the debt-to-GDP calculation. The deficit is nothing more than one year’s portion of the debt. While the line is showing total debt, it is ALSO showing CHANGE in total debt from year to year. Change in total debt IS the deficit of that year.

              I don’t disagree with anything in your math in this last statement. If Obama balanced the budget there would be no new debt, which is the same in any given year as saying there would be no deficit. Yes, the size of debt to GDP will increase because GDP (the denominator) is shrinking; therefore, the line on the graph will go up, even though there was no addition to the debt. And that is my point, by looking at the movement in the line and seeing that it is still going up, you can see the situation is getting worse, even in cases where the deficit is reduced (so long as GDP gets worse).

              I have never been saying that deficit and debt are the same thing, but that graphing total debt to GDP allows you to see if our overall picture is improving each year or getting worse. So long as the line is going up, the picture is getting worse. Either debt has gone up or GDP has gone down, and either one is a bad result. Usually it is that both are happening, which makes for an even steeper line (worse result). I am far more interested in how we are doing in terms of our total debt to GDP than in how we are doing on any one year’s deficit; but the deficit is nothing more than the measure of how much the total debt side of the equation has changed that year.

              I’m not talking about the personal income graph and never have been. I’m talking about the debt to GDP graphs, and I’ve been clear about that all along. You need to read my arguments more carefully. I haven’t said a thing in this discussion with you about the personal income graph, as it is less interesting to me than the other two. It is, however, not anywhere near as irrelevant as you are trying to make it sound, but it has nothing to do with the change in debt to GDP. I will fully acknowledge that high inflation rates under Carter undermined personal income growth. I have never argued otherwise. I have been arguing that measuring debt to GDP is the best way to tell the overall state of our country’s economy. If, for example, GDP is growing, but debt is growing equally fast, we are getting nowhere. If GDP is growing while debt is holding flat, we are gaining. If GDP is growing while debt is shrinking, then we’re really getting somewhere. It does no good to grow your GDP if you did it by adding more debt than you added GDP. That would be called a losing investment in most realms.

              There are many ways to measure things, but measuring debt to GDP is a very worthy measure. I also believe if you check out the personal income graph, you will see that inflation was factored in so that it is an accurate picture of how income improved; but I cannot recall now whether it was or not, and I don’t at the moment have time to check that out. Maybe later.


  4. Comment by nancy:

    This is so bogus. Where does it show anywhere what party the Congress and Senate BEHIND each president is? This shows nothing. I mean, good example is look at Woodrow Wilson who started WWI. He has glowing numbers, UNTIL his last few months when he took us into the war. Now notice the next president gets STUCK with all the red ink. Same thing happened during WWII.

    Clinton was a failure in his first term, the economy was bleeding. Second term the congress was owned by GOP and took off. Bush came into office with the good congress and did pretty well despite getting smacked by Clinton’s DOT COM bust and 9/11. Second term a democratic congress took over and the economy tanked. Then the democrats THIRTY YEAR in the making HOUSING BUBBLE and global economic meltdown occurred and Bush has been blamed ever since.

    • Comment by David Haggith:

      I don’t know why people cannot even read numeric graphs. Look at the graph above, and you will see that, as soon as Clinton came into office, the national debt as a percentage of GDP began to decline just a little. By the middle of his first term, it began to decline a lot. Once Clinton increased taxes and agreed to Republican budget cuts, that one-two punch of Republicans and Democrats working together brought the budget TOTALLY under control. Clinton inherited a recession from George Bush I, as the economy crashed in the last year of George Bush I just as surely as it did in the last year of George Bush II.

      As for Woodrow Wilson, yes, the debt got worse under Wilson; but that’s going back a very long time to where you’re looking at an entirely different Democrat Party and entirely different Republican Party than what we have today. You can, however, see the same rapid rise of debt under the Republican, Herbert Hoover, who handed catastrophe to FDR.

      It’s sad that people cannot see the obvious — that the combination of Clinton tax increases and Republican budget cuts (including Clinton military cuts) balanced the budget to the point of actually giving us a surplus. People don’t see what they don’t want to see because their ideology and political pride are more important to them than seeing the truth.

  5. Comment by Shane:

    Thank you for this. I have been trying to help my Republican friends understand that they are not doing themselves any favors by continuing to vote Republican. That isn’t just because of economic issues, it’s all the other stuff they’re up to since moving so far to the right they threaten to fall off the face of the Earth (Which is flat BTW). I don’t absolve the Democrats of their culpability in our current situation because everyone in Washington is responsible for where we are at economically, socially and globally.

    To stick with economics however. You touched on a double-dip recession that is coming our way in the near future. Do you see that potentially happening sooner and not being a recession but an all out depression if Romney takes office or Obama doesn’t change his stance. The way I read their plans looks something like this….. -Taxes+(+Spending)=Overwhelming debt. The debt is at 70% of GDP right now and is forecast to reach 81% in ten years. I don’t see how continuing with the business as usual model isn’t going to crush us sooner rather than later through IMF credit downgrades and having our currency revoked as the World Reserves.

    • Comment by David Haggith:

      Yes, I believe we are in a depression that has been artificially propped up in what will someday be seen as its middle — propped up by the creation of over a trillion dollars out of nothing. If you print that much money and pump it into the veins of the economy, you are going to boost the economy. What is telling is how little of a boost has been created by the greatest influx of cash ever! So, that gives you some idea of just how bad this depression really is. The gov’t believes the economy will catch hold because of mainlining so much cash. I believe the economy will crash like a junky when the high wears off.


  6. Comment by Gordon:

    Wasn’t it BIG GOVERNMENT that Bailed out the Banks and Wall Street? If the bailout contributed to the deficit, whose fault would that be? I would hardly call that big government spending! Likewise, if the recession safety net with unemployment and food stamp benefits contributed to the deficit, whose fault would that be? The government didn’t cause the recession! Likewise, wasn’t the stimulus necessary? Whose fault was it that we needed the stimulus in the first place? Pure republican obfuscation!

    • Comment by David Haggith:

      Easy answers to those questions: It would be George Bush’s fault when Bush was president, and Obama’s fault when Obama was president, with the exception of 900+ billion that was signed into law by Bush at the end of his term but did not get spent until Obama’s term. As for congress, the bailouts are equally the fault of both parties. Both parties in congress supported them.

      That’s why I call Obama “Obamney” and Romney “Robama.” We have had four years of the Bush Tax cuts under a Democrat vs Republican tax cuts for seven years under Bush. Your harping is misplaced, however, because the above article clearly shows that overall we have faired much better under Democrat presidents (in terms of deficits) than under Republicans.

      The government totally caused the recession because it approved the total dismantling of banking regulations that were created during the Great Depression to prevent another depression of that kind. As a result of the dismantling of those safeties, we DID have another depression of that kind.

  7. Comment by B R i a n:

    The blame game for both parties needs to end. The reality is the graphs above need to be updated up to 2012 and the numbers are not going to let anyone retire early anyway. It is common sense to understand that a large government cannot efficiently handle money. You should start posting some of the branches of government that do not get a ROI that is acceptable and we can go about eliminating them. Downgrade deployment of our military and utilize that money for defense budgetary spending. If we would also eliminate Healthcare reform I can stop watching people all around me getting laid off as well. You can vote based on those numbers above, but that is not going to help us reduce government. Government was meant to be very small and not burden the American people. It has gotten out of hand and it does not take Thomas Jefferson to see that.

    • Comment by David Haggith:

      Blaming big government is favorite Republican propaganda. Where there is some merit to it, there are so many instances where there is not. Let’s look at your own argument one point at a time to examine that proposition:

      “You should start posting some of the branches of government that do not get a ROI that is acceptable and we can go about eliminating them.”

      Let’s look at the U.S. Mail to examine the Republican vs Democrat debate, since Republicans are hell-bent on destroying the post office on the basis that it is “WAY too big government” where services could be provided cheaper by private carriers. For that, I’ll refer you this article I wrote on the US Mail. In short, the article points out that the ONLY reason the United States Postal Service is going broke is that 1) It provides some of the cheapest mail delivery in the world; 2) It is delivering mail to parts of the U.S. that NO other carrier will deliver to because the routes are not PROFITABLE (but as a country we need to all be able to communicate and vote); 3) In the war of Republicans vs Democrats, the Republicans have saddled the U.S. Postal Service with having to immediately fund fifty years worth of retirement benefits as an underhanded way to kill this “big government” entity, which is a requirement that no CORPORATION on earth is saddled with; 4) Republicans and Democrats both vote in absurdly low postage rates for bulk mail because that serves Wall Street with all their credit-card offers. Banks make more use of bulk mail than just about anyone, and the post office would be in the black immediately, if their bulk mail rate was raised by just five cents for the first ounce.

      So, there is a situation where Republicans are deliberately making a major government institution insolvent just because they want to flush it down the toilet for the sake of their big campaign donors who want cheap bulk mail and mostly the donors who own UPS, FedEx, and other courier services that would love to not have to compete with U.S. mail’s low rates.

      “Downgrade deployment of our military and utilize that money for defense budgetary spending.”

      Would love to see it happen. I believed George Bush was in the right to go to war with Afghanistan. I think the practice of not “declaring war” when we go to war is rubbish and deceitful. I think that going into an undeclared war with Iraq was a fool’s errand and a huge and needles burden on the U.S. economy. I was certain they would not find WMD, and they did not find any WMD, except some worn-out, leaking junk that was made a couple of decades earlier. Yes, government should stop deploying the military so much and solve the military’s budget deficits that way.

      “Healthcare reform I can stop watching people all around me getting laid off as well.”

      Healthcare reform, so far, has nothing to do with any layoffs you are seeing. It has even really gone into effect yet. I know because the company I manage just did all-knew health-care policies for our employees last month, and Obamacare never even entered the discussion. Half of our employees are part-time and not covered by insurance, and universal health care had no impact on what we did with those employees. The rest that are covered actually all got a CHEAPER plan than what they had before as the company sought to save money. Bottom line: healthcare reform truly had not cost us one penny as of yet; so it’s a completely bogus argument to blame current unemployment on healthcare reform. Our company is set for another year on a plan that costs us less than the plan we had for the past full year and the plan we had before that.

      • Comment by RAH:

        Just curious. So US Mail is forced to give cheap rates to corporation for bulk mail and banks benefit from this and FedEx will love to eliminate USMail as a competitor etc. make sense, but what does not make sense is that if USMail is eliminated and FedEx/UPS are the sole carriers, then who will give the cheap rates to banks for bulk mail? Is this not counterintuitive for banks to want to do away with US Mail?

        • Comment by David Haggith:

          You’ve got a good point, but you cannot expect congress to make sense ; ) I thing congressmen have many people who drop cash in the pockets. Some run parcel delivery companies, others run banks.

          I wouldn’t jump to the cynical conclusion that money is driving the situation, except that it would clearly be so easy to solve the post office’s problems if congress really wanted to by 1) dropping the absurd requirement that the post office finance its retirement program fifty years out and 2) raise postage a nickle across the board. Who would really care that postage went up a nickle. Instead, congress always makes certain the post office is broke by raising stamps just one penny.

  8. Comment by PopMod:

    I don’t have a lot a lot of time, but the first chart only tells 1/3rd of the story, which therefore makes it invalid as an argument. We are missing the other EQUAL branches of gov’t. the house and senate and their party majority at these times.

    If I get more time, I’ll check the rest of your information.


    • Comment by David Haggith:

      Since you didn’t have time to get to reading the second chart, your argument on Democrats vs Republicans can be excused for not noticing that the second chart tells 3/3rds of the story. In it, you will see that the federal debt (as a percentage of GDP) fell after WWII during the Roosevelt years and the all-Democrat Truman years. It, then, rose just a blip during the first all-Republican Eisenhower administration. Democrats immediately seized control of both houses, and the debt immediately began to fall sharply again. It continued to fall for decades throughout the time when Democrats controlled both houses, except that the fall flattened out when a Republican gained the office of president again (Richard Nixon).

      The debt did not do badly, however, until Republicans took control of both the presidency and the senate for 2/3rds of the power when Reagan was elected. Then it escalated tremendously. When Democrats took back the senate, the growth in debt flattened out briefly, even while Reagan was still president and then began to grow again. When Clinton took the presidency so that Democrats owned all the power in the war of Democrats vs Republicans, the growth in debt stopped. Then Republicans took both houses, and that combination of a Democrat president and a Republican Congress finally started bringing down the debt. The big change there was the Clinton tax increases that briefly reversed Reaganomics. As soon as George Bush Ii took office, debt started piling up again under the infamous Bush Tax Cuts.

      Prior to Obama, look at all the times when Democrats owned all branches of government, and you will see that, after the huge debts created by the Great Depression and WWII, the debt went down in every instance where Democrats held all power.

      A second problem I have with your argument regarding Republicans vs Democrats when it comes to just the presidency is that it assumes presidents are not responsible for the economy. (Should take NO blame unless their party controlled both houses of congress.) I suspect that, if the debt had done better while GBII was in office, you’d be first to show that as a proof that Republican presidents have managed the debt well. The real problem, which is obvious in all three charts, is Reaganomics and deregulation. You can clearly see in the charts that the debt problem ramped up for the first time with the advent of Reaganomics, only got better when Clinton reversed the supply-side tax cuts of Reagan, and immediately got worse when GBII took us into Reaganomics on steroids with even deeper tax cuts for the wealthy than Reagan had ever proposed.

      It’s math. Inconvenient math. (And, as I say, I voted for both Reagan and George Bush the Second, though I was, at least, smart enough not to vote for George Bush the second TIME.)

  9. Comment by Robert:

    Interesting article. Just found it today.
    However, it must be pointed out that the “Republican vs Democrat on the US National Debt” actually shows since Reagan, the debt has gone down or leveled out when Republicans were in control of both houses. When they were not, the debt went up. This demonstrates the newer ideals of the party since the Clinton days for more fiscal responsibility. Many believe GW and fellow Republicans went to far in spending, and condemn them for it. The rise of the tea party members, who people call the extreme, actually call for more fiscal responsibility and lowering of the debt.

    • Comment by David Haggith:

      It seems to me the Tea Party’s hero is Ronald Reagan. While I voted for him the first time around, he is clearly the source (the head waters) of the present economic deluge. You can see how the debt problem hugely ramps up when Reaganomics begins, reverses when Clinton takes us away from supply-side economics by raising taxes on the wealthy, and immediately resurges when Bush takes us back to even larger tax cuts for the wealthy than we saw under Reagan. To underscore the point, look at the chart of total debt (versus debt as a % of GDP) — the top half of the third chart. The line for debt growth is EVEN STEEPER under George Bush than it was under Reagan. Why? Because his supply-side cuts in taxes to the wealthy were even larger than Reagan’s. He wanted to try a bigger-and-better version of what Reagan did.

      We have enough history now to where supply-side economics SHOULD BE a dead idea. Tea Party votes are ALL FOR supply-side economics. So, their ideas are bankrupt. We have CLEAR proof of what worked in history. In the long battle of Democrats vs Republicans, a Republican congress willing to make spending cuts (the Gingrich congress) coupled to a Democrat president willing to raise taxes on the upper class was the only combination that actually worked. That was a one-two punch that knocked the debt for a loop. It is not really, of course, about Republicans vs Democrats. It is about the need to make tax increases for the wealthy at the same time one makes spending cuts. The combination for a strong economy that pays its own ways is making sure the wealthy pay their own freight and cutting expenses.

      Right now, Republicans and Democrats have created a smoke-screen tax system that appears to tax the rich at a higher percentage rate, but does not, in fact, do so. The rich receive enormous tax breaks that the rest cannot qualify for, which reduce their effective income tax rate to LESS than the average person’s rate. Most importantly, the rich do not make their money off of wage income. They make it off of capital gains, and capital gains are taxed at the same percentage rate that the BOTTOM of the middle class pays. So, the rich wind up enjoying an effective tax rate that is actually lower than anyone in the middle class.

      The system is nothing but smoke and mirrors with Republicans claiming that the rich already pay more than their fare share because the top 10% pay 70% of the taxes. The problem with that lame argument is that (surprisingly to many) the top 10% make over 80% of all the income! Therefore, they are not even paying an equal share. Just to pay an equal share of the tax burden, they would have to be paying 80% of all the taxes since they’re making 80% of all the money. The numbers swing even more in their favor when you start factoring in other taxes than just income tax and capital gains tax, such as Social Security Tax, Medicare, Medicaid. There they pay a MUCH lower percentage of their income than the middle class.

      That is how the Romney’s of this world wind up paying 15% or less of their gross income in tax, while I wind up paying 18%!. Yet the greedy pigs squeal about paying too much. This year, I will wind up paying about 23% in income tax alone, while Romney remains at 15%, so that I am actually paying 8% more of my income just in income tax than Rich Romney! Add in Soc. Sec. and other taxes as a percentage of gross income, and the picture gets even worse. Today’s rich are DEADBEATS and will remains so until their taxes are significantly raised. Why the Tea Part opposes raising actual taxes on the rich so they pay, in the very least, an equal percentage of all their income in taxes, is beyond me. For example, making the rich pay Soc. Security tax on ALL of their wealth (as I have to on all of mine) would probably be enough by itself to save Social Security.


  10. Comment by tj:

    The banks were bullied by the Clinton Government into giving these loans then demonized when “the community reinvestment act” went bust. And you are incorrect. Poor people with good credit? I don’t think so. People who worked at McDonalds making 25K a year were blindly given loans for 250K dollars houses…

    Bill and Jimmy tried to sell the philosophy “It’s everyone’s God-given right to own a home.” which is the furthest thing from the truth and reality..

    It’s a PRIVILEGE to own a home. It’s something you work for. NOT a right.

    • Comment by David Haggith:

      You read an article like this and yet choose to remain sadly uninformed. The truth is that the Community Reinvestment Act loans that you are speaking of played no greater roll in the housing bust than all the other loans all the way up to the top of the mortgage spectrum. Just as large a percentage of home loans failed among those who bought McMansions as among those who were poor.

      The CRA never required banks to give loans to people with bad credit. It required banks to give loans to people with good credit who lived in neighborhoods that were considered a bad-credit risk. Even the Federal Reserve concluded that CRA loans played not greater roll in the nation’s downfall than any other kind of loan. You listen to Rush Limbaugh too much an parrot what he says, but the facts do not support what he has said about CRA loans at all.

      You are also an insult to poor people when you assume that all poor people have bad credit. Many have much better credit than a lot of rich people.

      It is seeming more and more evident to me that in the war of Republicans vs Democrats, there is no end to the lies that Republicans will swallow and then repeat without checking the facts just because it’s all they have left to stand on. (And that’s from a man who used to vote Republican more often than Democrat. NOT ANYMORE!)

    • Comment by Lily02886:

      WHAT A TEA BAG FALSEHOOD ! When Bush left office the USA had a ten trillion dollar deficit. And the U.S. economy was plummeting into a free-fall towards another Great Depression. This was all caused by a piece of Republican Legislation which unleashed the voodoo “price to market” banking accounting. To avoid writing an entire book for you: “price to market” accounting allowed banks which had for ex. $500 million in loans – to say that they had a “profit” of $100 million if the real-estate market went up 20% in value. OF COURSE – ANY EDUCATED PERSON KNOWS THAT PROFIT WAS NON-EXISTENT. The Banks paid out this non-existent profit as dividends to their rich, Republican stock-holders.

      • Comment by j fitzgerald:

        before writing an entire book for anyone, I suggest learning the difference between a deficit and the national debt.

        • Comment by David Haggith:

          You’re having a fitz over nothing. I suggest you learn to read more carefully, and you’ll see that I fully know the difference between the annual deficit and the accumulated national debt that is created by the piling up of deficits year after year.

  11. Comment by Matt:

    Your interpretation of the 2nd graph is curious.

    You ignore the 1st, approximate, 50 years showing decreases in red and increases in blue.

    You mention the post-war years under Democratic control in both houses but don’t credit the Republican control in both houses with Clinton as president.

    You excuse & minimize the growth in all blue during the Obama years.

    • Comment by David Haggith:

      Perhaps you are young and so do not remember that Republicans during those first fifty years were NOTHING like Republicans from the time of Reagan on. Reagan introduced “Trickle Down Economics,” and that is what destroyed the economy. It was primarily under Reagan that deficit spending ran wild. From the days of Reagan on, a new kind of Reaganite Republican was born that was no longer economically conservative. To be economically conservative means to create a budget you can live within AND to make sure you raise enough money to pay as you go. From Reagan onward, Republicans SPENT FAR OUTSIDE THEIR MEANS. Just look at the graph, and you can plainly see that.

      I minimized the Obama years for one reason only — his economic policies have been exactly those of George Bush … outside of health care, which we did not experience during these first four years because health care was tied up in court. He has exactly the same tax program with the Bush Tax Cuts fully intact the whole time. He has done very little in the way of government spending projects because the Republicans have kept him reigned in, so there has been no greater spending on infrastructure than under Bush. He has used the very same appointee in charge of the Fed running exactly the same Federal Reserve ideas of cutting interest way back along with much wilder ideas; but even those wilder ideas were all hatched in the last year of the Bush administration by Hank Paulson.

      The Obama economy has been the Bush economy, and I will readily blame Obama for it right now. He is a man bereft of any vision. Bush was a man bereft of any intelligence. Bush was an unmitigated disaster, and Obama has done very little to improve things. He has tried somewhat to create jobs by spending money on projects that we need anyway, and has been cut off at the knees by congress, but he has not tried hard enough. Why it is so hard to see that such programs would work vastly better than bailing out banks is utterly beyond me. It is not as if we cannot look back at the Great Depression and see how the Democrat’s enormous job programs helped ease the pain and how they created superb assets that we enjoy the benefit of to this day — schools, highways, electrification, parks, all kinds of projects that are still running remarkably well. I went to high school in a building created by the WPA under Roosevelt. My mother went to the same high school. Ten years ago they remodeled this enduring building into a state-of-the art school that is astounding. A hundred years from the day it was competed, it will still be a great asset to our town.

      There are numerous legitimate government projects that can create economic momentum for decades to come, but Republicans have been stonewalling those programs. They need to get out of the way. If we’re going to be spending huge deficits, as we did under both Bush and Obama, we need to stop spending it on banks and insurance companies (all worthless), and spend it on hard physical assets that we can turn over to the people who will be paying the bill SO THAT WE GIVE THE SOMETHING FOR THE MONEY WE ARE TAKING AWAY FROM THEM!

      (Not yelling at you, just the politicians who are all doing such a poor job.)


  12. Comment by rahul:

    Good article. Did Clinton raise taxes for all income groups or only the very rich (millionaires and above). Conservatives say that there are not enough millionaires so taxing them more won’t make much of a difference in revenues. If Clinton created a surplus by taxing the top earners only then it debunks this argument.

    • Comment by David Haggith:

      In 1993 Clinton raised personal income taxes only on the top two income tax rates to 36% and 39.6%. In addition, his legislation raised corporate taxes from 34% to 35%, removed the cap on Medicare payroll tax (so the rich would have to pay that tax on all of their income), expanded the taxable portion of Social Security benefits (so the requirement to pay for Social Security would go higher up the ladder), and imposed a 4.3 cent per gallon increase in fuel taxes.” So, only the latter hit the poor and middle class.

      This combination resulted in a $90 billion increase in government revenue, which was pared to a $45 billion cut in spending, leading our first surplus budgets in many decades. It resulted in a slight decrease in the GROWTH rate of GDP, but GDP continued to grow at around 2.5%, and may have fallen to that level of growth or worse anyway because of the recession at the end of the Bush I era. Even if the slower rate of GROWTH was only because of Clinton’s tax increases, that was a small price to pay to load the economy into doing the heavy work of finally lifting away our debt (while still sustaining growth!).

      Clinton did all that while also reducing the phase-out of Welfare benefits that the poor experienced if they went back to work. His stated goal there was to create more incentive toward going back to work. Prior to that, the penalty in lost benefits for going back to work was a huge disincentive from returning to work.

      In ’97, to accelerate the economy more, he caved in to the rich and lowered the capital gains tax paid by the rich from 28% to 20%. That resulted in a stock-market speculation BOOM that went bust in the dot-com crash. He should have stayed with his original tax policies and enjoyed modest GDP growth with solid employment, while accomplishing the near impossible of paying down the debt. Growth was slowed down a little by his tax policies, simply because he had loaded the economic engine to doing what the U.S. had a dire need of doing — paying down massive debt. You cannot expect to pay down debt and not load the engine a little. That’s what engines are for.

      Bear in mind, though, that George Bush II also lowered taxes for the middle class. To get back to where we were paying off debt under Clinton, we would have to increase taxes on both classes back to where they were under Clinton.

      • Comment by tj:

        The GOP Congress and Clinton created a surplus by CUTTING SPENDING, REFORMING WELFARE. IF you’re going to raise taxes on the top earners you MUST CUT SPENDING. Obama will never comprehend this. What most democrats forget to mention. He raised taxes on the top earners THEN “through the back door” gave them additional tax deductions…..

        • Comment by David Haggith:

          If you’re going to speak part of the truth, speak all of it. The GOP Congress and Clinton created a surpls by CUTTING SPENDING, REFORMING WELFARE, AND RAISING TAXES. As for those back-door tax deductions, the rich have always had those. That’s why they have never paid their share as a percentage of their income. Their top tax bracket makes it LOOK like they’re being asked to pay MORE than their fare share, but the fact is that most rich people make the vast majority of their money off of capital gains, not wages, and capital gains are taxed at only 15%. So, in real fact, the rich share the same tax bracket as the poor, and it is the middle class who are pulling all the weight tax-wise. Moreover, the rich are the only ones who qualify for about 90% of the loopholes out there, so many wind up paying even less than 15%.

          This game has been long played by both Republicans and Democrats, which is why I have no respect for either party. Neither party has ever proposed a tax system that is straightforward, without dodges that are skewed to benefit only the wealthy, and that is progressive. All of the tax codes we’ve employed at any given time, have only appeared to be progressive by appearing to tax the rich at a higher percentage, but they apply that percentage toward a type of standard income that plays only a small role in the total earnings of the wealthy. They do that on purpose as a smoke screen so the rich can say, “We already pay more than our fair share. We already have the highest tax bracket.”

          • Comment by B R i a n:

            So you think capital gains should be taxed at a higher level? What planet do you live on? So you think it is a great idea to tax money that has already been taxed at a higher percent? Move to Europe please and stop spewing this silly rhetoric. You can comfortably find your way of life you have been dreaming of and hope you don’t need any medical emergency. But if you do, you are welcome to come back here and take what you have left after 60+% of your income has been taken and operate on you here.

            • Comment by Johannes:

              As a european paying the top income tax-bracket of my nation (marginal tax of 55% for about 35% total tax), I can understand why it seems a lot to you. But to be fair, we do get a lot for that tax – medical emergency for example is something no one worries about here, and that certainly includes high-tax payers like me.

  13. Comment by Jackie Q:

    Very well written. Thank you.

  14. Comment by Markus Stebich:

    Why don’t the Democrats ever use this information? It is so obvious that they are the fiscally more competent (and conservative).
    If they publish these graphs and the accompanying information they would win in a landslide.

  15. Comment by Ty Eggemeyer:

    No, the $1.3 trillion in debt was not “inherited” from G 2. As I recall, $800 million of this was the Pelosi giveaway sweepstakes and which economists universally acknowledge did little to stimulate the economy. Also, I think you forgot to mention that ONE of the factors (by any means not the only) causing the meltdown was Fannie and Freddie buying worthless crap that Wall Street pushed on them and that the banks happily complied with. As I recall and the facts support this, the GOP wanted to curtail and dismantle these 2 Federal agencies and their implicit Govt guarantee. All Dems on the Senate Finance committee voted against. The “bank bailout” actually resulted in a profit for the treasury, while the Fannie/Freddie bailout cost the Treasury over $280 billion to date.


    Now the Dems are creating a student loan problem/bubble.

    • Comment by David Haggith:

      Here are the bailouts that George Bush signed on to in 2008 alone:

      Bear Stearns Rescue – $30B
      Fannie & Freddie – $200B
      A.I.G. – $150B
      T.A.R.P. – $700B
      Auto Industry – $25B
      T.A.L.F. – $200B
      Total Commitments – $1.3Trillion

      Now, how much that contributed to the national debt is still up for grabs and is hard to calculate because the numbers are deeply buried, while repayment is still unfolding. What I mean is that much of this has been ostensibly paid back, but much has been paid back with subsequent government loans. So, it only appears to be paid back.

      Some of these commitments were doled out right away in Bush’s term. Some in Obama’s. Many of Obama’s later bailout expenditures, however, were additions to these programs that Bush created as the crisis unrolled to where further critical problems revealed themselves. It is highly likely that Bush, having created/approved these programs, would have done the same thing as more problems emerged. (It is sort of like committing yourself to repair rot in a building and then finding more rot than you budgeted for as you go.) The point is that there was a WHOLE LOT of money committed to bailouts before Obama ever took office that was spent after he took office as well as ongoing programs created by Bush that wound up costing more than anticipated in order to complete their job.

      My point in the article above, however, was simply that all of this makes it almost impossible to compare Republicans vs Democrats for deficit spending during the Obama administration because so much of the money the government is on the hook for during the Obama Admin. was committed during the Bush Admin. It is also difficult to make a Democrat vs Republican comparison of debt during this extremely complicated time because so much of what is going on is clandestine. Whether Pelosi championed one of these programs or not, Bush wholeheartedly approved all of the above. He signed on and didn’t speak a word against any of it and told the nation he had to sell-out his capitalist principles to do so. So, he doesn’t get off the hook just because Pelosi also liked it.

      You mention the “worthless crap” that Fannie and Freddie were forced to buy, and I’m sure you mean the C.R.A. — Community Reinvestment Act — which was created during Carter Administration and expanded during the Clinton Administration. The act did not under either administration require giving loans to poor people with bad credit. It asked banks to issue loans to poor people with good credit who lived in bad neighborhoods in exchange for incentives to the banks.

      Its intention was to stop the longstanding practice banks had of redlining neighborhoods, by which poor people with excellent credit often couldn’t get loans just because the only house they could afford was in a redlined neighborhood. That practice had virtually condemned bad neighborhoods to remain bad since they had NO ACCESS to credit. As Clinton’s Treasury Secretary said, “The only thing that ought to matter on a loan application is whether or not you can pay it back, not where you live.” The C.R.A. opened a path for bad neighborhoods to improve by allowing trustworthy (creditworthy) people to invest in them.

      I’ve heard staunch Republicans constantly try to blame the C.R.A. for this financial crisis by claiming the C.R.A. forced Fannie and Freddie to buy loans from low-income people who were likely higher credit risks. From my vantage point, I could never see that these loans were any bigger part of he problem than all other loans. If you look around you (at least in the city where I live), you’ll find just as many million-dollar homes in foreclosure (even at the beginning of this crisis) as you do homes that are obviously owned by people in lower income brackets.

      So, I never bought into this argument even prima facia. I have not seen any evidence on the ground that C.R.A. loans were any bigger a part of this downfall than other loans. More importantly, I have never seen anyone bring any proof of those accusations on paper. This claim is just vain words spouted by the likes of Rush Limbaugh to try to throw the blame of the economic collapse that clearly happened in the Bush Administration back to the Clinton Administration.

      In fact, the Great Recession winds up validating the C.R.A. precisely because, even in this worst of times, there is no evidence that people with good credit in bad neighborhoods (C.R.A. people) defaulted in any greater percentage than the rest of the American populous. Redlining bad neighborhoods was a from of discrimination that proved out to have no merit at all from a financial standpoint. By 1997, the C.R.A. had been around for twenty years. The Federal Reserve did a study of its impact on banks and reported, “[CRA] lenders active in lower-income neighborhoods and with lower-income borrowers appear to be as profitable as other mortgage-oriented commercial banks.” Other Fed studies revealed that loans to poor people had increased 40% in this same time period, while loans to rich people had increased 17%, indicating the C.R.A. was doing its job of helping the poor while not hurting the rich.

      Incidentally, most of what Clinton did in revising the C.R.A. was to remove a lot of the red tape and try to reduce the bank’s costs of implementing the requirements of the act in order to entice more banks into participating in the program. There is one fly in the ointment here, though. Clinton also required banks to be C.R.A. compliant in order to qualify for mergers. That requirement, itself, created no harm, except that SOME bad banks, then, cut their own throats in order to become quickly compliant. These banks started encouraging their loan officers to expedite C.R.A. loans, whether they were to credit-worthy applicants or not, because the banks were more interested in merging than they were concerned about potential losses from bad loans. The big money was in mergers.

      SOME banks, in other words, CHOSE to reduce their own lending standards. Clinton did not require them to reduce those standards or even WANT them to, but the banks wanted to rush toward their mergers. So, SOME BANKS started approving junk by rubber-staming any C.R.A. loan they could make. Their headlong rush out of shear greed created their own demise. These poorly reviewed loans that came about due to banker greed did cause problems; but, again, they were only a tiny part of the overall problem that created the Great Recession.

      Nobel prize-winning economist Paul Krugman said in November of 2009 that 55% of commercial real estate loans that had NO connection with the C.R.A. were failing! In fact, MOST of the failures in the financial crisis happened to banks that were not C.R.A. compliant (as compliance was not mandatory, but was merely enticed through credits and the more stringent requirement of compliance for mergers). So, the C.R.A. argument has been nothing but a Republican and banker attempt to make the C.R.A. a scapegoat.

      The Federal Reserve also stated in 2008, “Some critics of the CRA contend that by encouraging banking institutions to help meet the credit needs of lower-income borrowers and areas, the law pushed banking institutions to undertake high-risk mortgage lending. We have not yet seen empirical evidence to support these claims, nor has it been our experience in implementing the law over the past 30 years that the CRA has contributed to the erosion of safe and sound lending practices…. We found that the loans that are the focus of the CRA represent a very small portion of the subprime lending market, casting considerable doubt on the potential contribution that the law could have made to the subprime mortgage crisis…. We found that delinquency rates were high in all neighborhood income groups.”(*)

      The Fed further found that 80% of the failing subprime loans had no C.R.A. connection at all. (60% were to higher income populations than can qualify for C.R.A loans, and another 20% were through banks that did not participate in the C.R.A..) They also found “no difference in the performance of subprime loans in Zip codes that were just below or just above the income threshold for the CRA. The results of this analysis are not consistent with the contention that the CRA is at the root of the subprime crisis.”

      The C.R.A. “crap” you mention was really just a lot of brain-dead “crap” spouted by Limbaugh and other arch-conservatives who sought to take the blame of the financial crisis off of George Bush. Never mind that the financial crisis happened at the end of EIGHT YEARS of Bush’s tenure and almost as many years of the Bush Tax Cuts. (How such tax cuts are supposed to solve the financial crisis when they never even stopped it from happening is utterly beyond me.)

      In fact, the Fed’s findings are exactly in line with what I see visually in my town, which led me to believe (before looking into this) that the C.R.A. had nothing to do with the financial crisis: “The final analysis we undertook to investigate the likely effects of the CRA on the subprime crisis was to examine foreclosure activity across neighborhoods grouped by income. We found that most foreclosure filings have taken place in middle- or higher-income neighborhoods; in fact, foreclosure filings have increased at a faster pace in middle- or higher-income areas than in lower-income areas that are the focus of the CRA.” (*)

      I agree with you that all of the bailouts have done little to stimulate the economy, though that is hard to gauge as no one can say where the economy would be today without them. We can see the economy is terrible still, but we can’t see how much worse it might have become. My opinion, nevertheless, is that all the bailouts have merely FLOATED the economy — propped up this huge depression in the middle — but are a completely unsustainable attempt at a solution. They have done nothing to resolve the underlying flaws in our economy, and all these efforts will crash in a second dip. That’s why I say this is really a depression propped up in the middle by unprecedented amounts of artificial life support.

      Years from now, this ongoing financial crisis will technically look like two recessions (drops in GDP), except that both will be more devastating than any recessions since the Great Depression. The propped-up middle (which we are in now) will remain lower than the stock market or GDP growth were at the beginning. Until we reach some endpoint where we have recovered our starting position, we are still in the same period of loss. That will make the “Great Recession” graph out as a large trough that will eventually be called a “depression” like the Great Depression because of its extensive length and depth and interconnectedness of causes between the two major recessionary periods. In other words, we are a long way from recovering to where we were before all this began, and we’re going down for another dip that I think will be much deeper. Both will be part of the same financial crisis because both dips will stem from the same causes that were not resolved.

  16. Comment by Justin:

    This is very interesting. My question to you is why do you keep voting republican (until bush)? You are entitled to your own opinion of course, so far be from me to force you. I think pres. Obama has enacted some fairly… ill-advised moves and policies but I overall agree with most of his message and appreciate that he has tried (while it failed) to pass some legislation: the jobs bill and the buffet rule (which he tried to pass as the infrastructure bill). So I won’t say he’s perfect but I haven’t been alive for a perfect president (i was born during bush I’s term) yet.

    • Comment by David Haggith:

      The first president I voted for was Reagan. What can I say? I was young; he was charismatic; and he talked a LOT about reducing the federal deficit. Oh, and he was running against Jimmy Carter when the economy was in a terrible recession, though that recession didn’t compare to this one, which is still unfolding.

      Over time, I watched the national debt grow faster than ever under Reagan and a newly Republican Senate (along with a NEAR-majority in the house). In fact, the deficit as a percentage of GDP did a little better when the Senate turned Democratic again. (See charts above.) It took me until the Clinton years, though, to figure out that, while Reagan’s tax cuts took us out of the recession, ANY tax cuts would have taken us out of the recession. (That and Paul Volker’s cutting the money supply in the last year of Carter and into the Reagan admin. to curb rampant inflation that had been rapidly diminishing the value of everyone’s money.) G.B.’s dad rightly called Reagan’s tax cuts, “voodoo economics,” but then changed tune when Reagan said he could be V.P. I realized that, if ALL the tax cuts had gone to the poor, they still would have stimulated the economy. Poor people buy things when they have more money. As we’ve heard many times lately, consumers stimulate the economy when they buy things. (I do think, though, that taxes did need to come down for the rich in Reagan’s time because they were confiscatory. Clinton bumped them up, but nowhere near as high as they had been)

      So, gradually I realized the huge boom Reagan created had little to do with the supply-side equation of his tax cuts and everything to do with the fact that massive tax cuts put a lot of money money back into the economy. The cuts went to everybody, but especially the rich. Another thing Reagan did that helped get us out of recession was to dramatically increased military spending. That often works for juicing the economy because it creates manufacturing jobs and military jobs; BUT he and congress decided to let some future generation pay for all of that stimulus. (Technically, he said congress would have to cut other things; but presidents don’t get to tell congress what to do, and congress didn’t want to cut their other things, any more than he wanted to cut his. So, they locked horns just like now, and the nation ran enormous deficits.) It’s amazing what a good time an entire nation can have when no one is paying for anything they are buying! Citizens, too, switched from saving to buying much more on credit because Reagan also began deregulating banks making cheap credit easier. And now that generation that gets the bill has arrived. This is the result of the profligate deficit spending and bank deregulation that began under Reagan. It is the end result of voodoo economics when you have to start paying for all that deficit spending but cannot because the economy is on life support.

      I began writing letters to the editor pointing out the perils of the huge deficit spending we were doing while Reagan was still in office. My main point was that we should be paying DOWN the debt since the economy was going well again, rather than shoving it up higher. I argued that was crucial so we’d have ample credit available in the next recession that would enable us to goose the economic engines and spend our way out of it. That’s how credit is rightly used — when people cannot buy things, the government buys things to stimulate the economy (whether military things or roads or whatever). Then, when the economy is going strong, the government tempers the boom so that it doesn’t bust by taking money back out of the economy in the form of taxes to pay off that debt it took to get us out of recession.

      By the end of Reagan’s second term, I found I was out of synch with him because of he devastation to the budget that I was certain would come to haunt us in about twenty years. (And here we are!) I didn’t vote for his man GB 1.0 because he was out of touch with the average man’s reality, but I didn’t vote for Clinton either, as I wasn’t quite ready, I guess to go with Democrats, having grown up in a very conservative (Goldwater) Republican household. Since I couldn’t bring myself to vote for Slick Willy or Clueless Geoerge, I didn’t vote for president. (Later, I saw that Clinton and Gingrich found a midpoint between their ideals that balanced the budget nicely.)

      Then, I made my big mistake after Clinton, and voted Republican one more time for GB 2.0. I became infuriated with him, however, when he blew the wonderful surplus budget he’d inherited from Clinton into a million pieces with his tax cuts. (That’s when it became resolutely clear that Clinton and Gingrich had found the right middle ground.)

      So, that’s my story — one of learning along the way by observation and switching from the ground where I grew up to what I feel is a more balanced position in the middle. From there, I can be critical of both parties, but also approving of the things either one does right.

      • Comment by Markus Stebich:

        Any ideas on what could be done to get more people to think this way instead of the rabid, knee-jerk partisanship we are seeing now?

        • Comment by David Haggith:

          I don’t know, Marcus. It seems to me that people are sheep. They like to have a particular flock to belong to. There is security in numbers … as well as the feeling of popularity. They don’t like the feeling of hanging out alone. Take the individuality of hippies, for example, or punks, or Goths. They all look the same. They’re still as conformist as anyone, just conforming to something new.

          I think the most productive thing that could ever happen in America would be the loss of political parties altogether so that everyone has to think on their own and get rid of the pack mentality; but it’s not going to happen, being the social creatures we are.

          I see two best hopes to, at least, diminish the pack mentality. One is that people get so sick and tired of the present polarization that some become independents because they’re sick of both sides. The other is that they form other parties and start breaking up the two-party system … like most countries have. That way they have to form coalitions, which means making some compromises. That will only happen if the present polarization gets even worse.

          A third possibility is that the Republicans gain control of both sides of congress and the presidency, and their current tired ideas fail so bad in disgrace that they’re finally flushed down the toilet because there is no one else to blame but them. I don’t recommend that way; but, should it happen, I think it would reveal the bankruptcy of some of their ideas, so that, after thirty post-Reagan years, we could finally move beyond them.

          The genius of Clinton was that he governed toward the center, not toward the extremes of his party. Republicans right now have moved to satisfying their extremities.

          • Comment by tj:

            You make it sound like Clinton had this “revelation” of governing to the center. Yet you forget to mention Speaker Gingrich and a GOP congress dragged him kicking and screaming to finally sign Welfare Reform AND a balanced budget. (Independent?) I doubt it.

            Clinton’s speech last night proves he had no real back bone. He tells the masses what they want to hear. ‘The ERA OF BIG GOVERNMENT IS OVER!’ (rolls eyes)

            AND you neglected to mention Frank/Dodd and Freddie Mac and Fannie Mae during Bush’s first term he met with the democrat controlled congressional leaders telling them it needed to be reformed it was in trouble…Frank and Dodd’s response. “NONSENSE! It’s just fine!” And we see where THAT got us. Also, why did you also conveniently remove the fact that Bush 2 had 52 straight months of job growth?

            • Comment by David Haggith:

              There is now doubt that it was the combination of Bill Clinton AND he Gingrich congress that created a surplus budget; but that’s where you and I seem to be much different. I’m perfectly willing to give half of the credit to the Gingrich Congress, but you’re not willing to give half the credit to Clinton for raising taxes. Just as Gingrich dragged Clinton kicking and screaming to sign on to some of the cuts, Clinton dragged Gingrich kicking and screaming on military cuts; and our military has done the job just fine ever since. You also forget that Clinton dragged Gingrich kicking and screaming right over the edge on the tax increases, which Gingrich shut down the government over and then paid a heavy price because the American people did not (by significant majority) appreciate his stunt. You fail to admit that the Clinton tax increases did INCREASE revenue, and that increasing revenue is every bit as much a part of the equation as cutting expenses.

              So, yes, it did take Gingrich to get Clinton to cut enough, but it took Clinton to get Gingrich to raise taxes enough. That one-two punch of cutting costs and raising revenue is exactly what balanced the budget. George Bush blew that apart when he cut revenue with the Bush Tax Cuts and then expanded the size of government, doing nothing to cut expenditures. Instantly, he threw us right back into rampant debt spending. And the rest is history — an economically shredded nation.

              Had we staid on the Clinton-Gingrich path (a hybrid of Democrat and Republican ideas that actually worked and tightened up regulations on banks, we would not be in the mess we are in.

              I don’t see how anyone can possibly be willing to justify Bush when we had eight years of his tax cuts, and after eight years had never been more broke since the Great Depression. No president in our nations history has ever inflicted such great damage on this country and on the entire world. Bush 2 had 52 straight months of job growth that led us into economic hell because it is amazing how high on the hog you can live when no one is paying for the hog. He slackened credit restrictions to their most relaxed state since the Great Depression, taking the governor off the economic engine. If you know anything about enginges, you know that disconnecting the governor allows them to run wild and burn themselves out, and that is exactly what happened economically. We ran wild buying McMansions, sports stadiums, and buying and building all kinds of things on credit that NO ONE could begin to pay back. Even most corporations over-extended themselves until our debt load individually, corporately and nationally became so enormously top-heavy that we couldn’t support it any more. So, yeah, it’s easy to run the economic engine at full speed when you take all governance off of it, but the result is a crash. And a crash is what we got!



  17. Comment by Scott Morse:

    Well done. You need a bigger stage.

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