We learned at the beginning of this month that Rep. Patrick McHenry from North Carolina wants Ulysses S. Grant to step down off the $50 so Ronald Reagan can slip into the place the general has occupied for 96 years. Even people in McHenry's own state don't think that's such a good idea. Apparently, the majority of folks in that heavily unemployed segment of the Old Confederacy would rather have their Congressman working on stuff that matters.
From the minute Reagan escaped the porous Iran-contra prosecutorial net, I knew in my heart that while I yet lived an effort would be made to enshrine the guy on a piece of our currency. My gag reflex was subsequently triggered every time I imagined the visage of the Great Pitchman eternally smiling out at me from my cash. Bad enough I have to look at Andy Jackson every time I go to an ATM. Seriously, if we're going to change who appears on our money, how about we recognize some other kinds of people who made America great? Engrave Nathaniel Hawthorne, Harriet Tubman, the Wright Brothers and Jackson Pollock on some of those denominations. Give Frederick Douglass, Tecumseh, or Mother Jones a century of prominence on the $50. Keep Ben Franklin where he is.
But if we just must have yet one more kowtow to the 40th President, let it be the Ronald Reagan Memorial Debt.
Republicans are the most tenacious deficit hawks. Except when they're in power. Which, as others have pointed out, makes them deficit peacocks, fitting companions for the party's innumerable chicken-hawks. All preen and squawk. Although Republicans are right now spending most of their time shrieking about how the first step in health insurance reform we just took will equal Pol Pot's reign of terror, they'll be back soon enough to point fingers about deficit-spending.
They could start with the fellow they've been gilding for the past 20 years.
Ronald Reagan arrived at the White House in 1981 touting three major agenda items. Two of these were just like George Bush's 20 years later: greatly increase defense spending and slash taxes on the wealthy. He did both. His greatest effort was devoted to cutting the top tax rate from 70% to 50% to 38% to 28%, giving obesely wealthy Americans gigantic new piles to play with. Thus did he start us down the road toward a Third World gap between rich and poor.
Reagan achieved his defense boost and plutocratic tax reduction by borrowing more than all the Presidents who had preceded him. This generated a bit of contradiction with the third item supposedly on his agenda: ending the annual budget deficit. At the time of his first inauguration, this hovered around $80 billion a year. The accumulation of past deficits – the national debt – was nearly a trillion dollars. That gave Reagan's scriptwriters a powerful image for him to use in his first address to Congress in February 1981. He said:
I've been trying ... to think of a way to illustrate how big a trillion is. The best that I could come up with is that if you had a stack of $1000 bills in your hand only four inches high you would be a millionaire. A trillion dollars would be a stack of $1000-dollar bills 67 miles high.
Like so many other things Reagan said, this wasn't true. A trillion-dollar stack of $1000 bills would actually measure just over 63 miles high. But never mind. The big flub wasn't in math. Since the last one was printed in 1945 and use of all large denomination bills was discontinued by the Treasury in 1969, most Americans have never seen a $1000 bill. Reagan's image-makers missed the mark. They should have picked a bill familiar to every American. A trillion-dollar stack of $20s would be an impressive 3150 miles high, about the distance between my house and Stephen King's lair in Maine.
The national debt nearly tripled on Reagan's watch, from $993 billion to $2.6 trillion, a stack of Jacksons soaring 8190 miles high. By the time George H.W. Bush left office in 1993, the stack had grown to 12,915 miles. But Reagan and the first Bush were comparatively frugal. George W. Bush added 15,435 miles to the stack. What did we get for that extra $4.9 trillion added to the national debt while Bush smirked his way around the Oval Office? As Linda Bilmes and Joseph Stiglitz wrote a year ago in The $10 Trillion Hangover in Harper's:
The worst legacy of the past eight years is that despite colossal government spending, most Americans are worse off than they were in 2001. This is because the money was squandered in Iraq and given as a tax windfall to America's richest individuals and corporations, rather than spent on such projects as education, infrastructure and energy independence, which would have made us all better off in the long term.
President Bush did manage, by way of deficit spending, to grow the economy by 20 percent during his tenure. But who benefited from that growth? Between 2002 and 2006, the wealthiest 10 percent of households saw more than 95 percent of the gains in income. And even within those rarefied strata, the gains tended to be concentrated at the very top. According to one study, the nation's 15,000 richest families doubled their annual income, from $15 million to $30 million. And in that same period, corporate profits shot up 68 percent - more than five times the growth seen in the overall economy.
Even as the wealthiest families have increased their holdings, the families at the center of the income spectrum saw their incomes shrink by 1 percent. In 2000, the average weekly earnings of production and non-supervisory workers (70% of the workforce) amounted to $527 (in current dollars). Six years later, their wages ha[d] risen a mere $11, and those same workers have meanwhile seen their net worth (assets minus liabilities) wither as a result of falling home values, higher personal debt, and shrinking savings, factors now being exacerbated by the collapsing stock market.
The Great Recession – brought on by greed, corruption, conveniently relaxed regulations, and unfailingly poor oversight of those that remained – made things a good deal worse. The Democrats - while proposing nothing nearly as transformative as needed – got in touch with their New Deal roots long enough to keep the economy from sliding off the cliff. That required deficit spending to provide relief and rescue for some non-bankers. Infuriated by this, the Republicans, no longer in charge, returned to their out-of-power mode, squawking about deficit spending and class warfare. Democrats, they declared, will spend us into bankruptcy by handing out benefits so lazy unemployed people can buy bon-bons and watch cable all day.
Where were those voices of warning during the eight years Bush and his cronies were adding that $4.9 trillion to the national debt, $1 trillion of it a direct consequence of tax cuts for the rich? Doing what they and their predecessors were doing when the national debt nearly tripled during Reagan's eight years. Quietly assenting. But last year, amid the worst economic downward spiral in 75 years, with Democrats in charge, deficit spending became suddenly horrible to Republicans again.
To give a more accurate picture of where we are, inflation must be given its due. Such measures are imperfect for a variety of reasons, but I used the inflation calculator at the Bureau of Labor Statistics. By that gauge, the $993 billion debt that Reagan inherited in 1981 translates into $2.38 trillion in today's dollars. The $2.6 trillion on the books when he left office counts as $4.5 trillion today. The $5.7 trillion debt left when Bill Clinton departed the White House in 2001 translates into $6.9 trillion. The $10.6 trillion owed at the end of Bush presidency amounts to $10.7 trillion in 2010 dollars. Today, March 28, 2010, the national debt has reached $12.7 trillion.
So, since 1981, under Republican presidents, the national debt in inflation-adjusted dollars rose slightly under $500 billion each year. In the Bush years, it rose $750 billion a year. Under Democratic presidents, the national debt has risen just under an inflation-adjusted $422 billion a year. Under Clinton, it was $100 billion a year; under Obama, it's obviously been far more.
Some people, however, might be prone to argue that when you inherit more than a year's worth of impacts from the worst economic downturn in 75 years, the direct and indirect spending for two ongoing wars, the cumulative impact of tax breaks for the rich, a lengthy period of "deferred maintenance" on the nation's infrastructure, and the loss of government revenue because so many Americans are out of work, high deficits are to be expected. That is if you create a budget that pretends to do anything to keep the situation from getting worse. To be sure, the deficit in that Obama budget is eye-opening. But if the Republican whiners were more than tin-horn con artists, they'd be able right now to crow about the trillions of surplus dollars they frugally tucked away in the nation's mattress in preparation for this rainy day.
Instead, they saddled us with gigantic debt for their wars (enabled by too many Democrats). And they upwardly transferred current and future wealth to the Top 10% (opposed by too few Democrats). This made it very tough indeed to argue last year, as presidential adviser Christina Romer apparently did, that the nation needed something around a trillion and a half dollars for education, infrastructure, unemployment insurance, jump-starting green manufacturing, and patching the battered safety net in the states. We got half that, a welcome influx that helped immensely but has fallen short of full effectiveness.
By the time George Bush left office in 2009, the national debt had climbed to a stack of $20s 33,380 miles high, only 15% of which had been added by a Democratic President. The Republican deficit-squawkers are careful never to remind anybody of who piled those trillions onto the stack. They choose not to point out how an unconscionable transfer of wealth - plus waste and outright corruption – have once again ensured that those who can afford it least get shafted most.
None of this means that progressives can ignore the impact of deficit spending. We can't. But this doesn't mean becoming "fiscally conservative," a lie that has nothing to do with the actual policies pushed by the right-wingers who so often spout this slogan. Fiscal responsibility is the proper approach. This requires, among other things, restoring a progressive tax structure to the nation, getting our vast military spending under control, removing income caps on Social Security, eliminating counterproductive subsidies in energy and other parts of the economy, and imposing a regulatory regime with the teeth to keep financial institutions from running us aground every time their recklessness outruns their normal high level of greed.
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This is a heavily rewritten version of a previous piece on the subject 15 months ago.