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Tuesday, May 23, 2017

The Debt Waters Keep A-Risin'

Today we're going to talk about national debt since no one really ever focuses on it anymore..  Hope we don't scare off all the math haters out there..

Out of boredom, yours truly watched some YouTube videos regarding President Reagan's first year in office and in particular his very first press conference on January 29, 1981

Before Reagan took mundane and stupid questions from the reporters, he read a prepared statement that said among other things he was submitting a request to Congress to raise the debt ceiling...

To $985 billion
In his statement he apologized for doing so but felt it was necessary to control inflation among other reasons given

$985 billion used to be a ton of money..  Now its chicken feed

For instance, the national debt in 2015 was $18.151 Trillion and at the same point in 2016, it was $19.573 Trillion, an increase in 365 days of $1.422 Trillion   (* Today it is at $19.9 Trillion or thereabouts)

In other words, the increased differential in debt between '15 and 16' was of a far greater number than the entirety of the debt when Reagan took office
It is just so impossible to get that kind of debt under any semblance of control when Presidents refuse to raise taxes and cut spending

Reagan's goal of stimulating the economy was massive tax cuts, especially to the wealthy and corporations, with middle class thrown a small financial 'bone'..

When Reagan left office in 1989, the national debt was $2.857 Trillion, meaning an increase of $1.872 Trillion compared to when he first raised the ceiling

Most will say it was due to expanding military spending and engaging in a nuclear arms race, and yes that contributed
But the bigger picture is he cut revenue while dramatically increased spending and any person who runs the household checkbook knows that's a recipe for disaster

When Bush Sr was in office, he tried the same thing - cutting taxes while expanding military spending to accommodate Desert Storm

Ultimately he was forced to go against his 'Read my lips - no new taxes' pledge when he realized the national debt had grown by $1.2 Trillion in only 3 years due to once again, lack of a tax stream revenue to match increased government spending

So we move to the Clinton years..
Admittedly he did a good job containing the national debt as it only rose $1.4 Trillion in a span of 8 years.. ($4.4T in 1993; $5.8T in 2001)

Of course it helps when you raise taxes and receive full economic benefit of the dot.com bubble which only began to deflate during the very tail end of his Administration

So now Bush Jr becomes President and thanks mostly in part to fighting the War on Terror, the national debt just skyrockets by $6 Trillion over a span of 8 years

To be fair, you have to assume 9/11 would have occurred during a President Gore's watch and that he would have engaged the enemy as Bush had..
We like to assume Gore would not have invaded Iraq but honestly who knows if Saddam would have done something to ultimately provoke a military regime change or not

So anyways you have dramatic spending increases and yet Bush gets tax cuts passed which were supposed to be temporary but which Obama made permanent

We all know Obama was a horrific President who allowed the Fed to spend upwards of a Trillion a year to bolster the stock market along with other wasteful spending and more tax reductions

In 2009, the debt was $11.9 Trillion and when he left office four months ago, it was at $19.573, an increase of nearly $8 Trillion
And Lord help us, the President wants to fix the economy by...  Yep..  lowering taxes and expand spending on the military, based on the Reagan trickle-down model

Ugh!

Very few people care anymore on national debt..  It feels so abstract; so out there

The argument basically is 'well, we've survived for the last few decades at high debt and nothing has happened to us so why should it start now'
This belief is allowed to exist because no one ever talks about the debt/GDP ratio which in simple terms means what we spend to maintain good standing in repaying the debt vs the entirety of what the nation does in terms of the domestic economy and trade

When Reagan took office, the percentage was at 31%

In 2016, Obama's last year in office, the percentage was at 105%..

Yes, 105%..
This means we spent more than the entirety of what the nation could produce as an economy

In fact, the debt/GDP ratio has been over 100% since 2013

The whole economic model we've been living under since the 1970s when Nixon took the US off the gold standard is just unsustainable

At this moment, the government spends $600 billion more than it takes in through all revenue streams
Our biggest fear is what could take Trump down isn't the bullshit media with their fake news and axes to grind, but a true economic crash; one that was not allowed to happen in 2008 so that we'd all be through it and sincerely recovered by now

We're honestly not sure he truly gets it because among other things the wealthy and corporations need to be paying far more in taxes, not less

Besides most corporations supported Hillary so why should they get rewarded
Everyone is very complacent on this debt load -- Idiot liberals in particular only get passionate about protecting their social progressive rights to be immoral and unethical deviants

But this heavy debt load is not ever going to decrease.. It will only expand, especially as interest rates increase (the last time our national debt decreased vs the previous year was during the Eisenhower years; 1957 v 1956 to be specific)

When the bough breaks, the stock market plunges and people are wholly unprepared, we hope Trump and his team of Goldman Sachs appointees has a plan to stabilize everything

We like Trump but we're just not confident on this..