To the editor of THE EAGLE:
Kathryn Mickle’s entertaining but rather random history of US debt published in the Jan. 11 Eagle leaves out some pretty significant facts which I think should be amplified ("The debt through US history, Right from the Berkshires.")
The biggest thing she left out is where our present high level of debt came from. The peak of US debt in the 20th century was reached towards the end of WWII, when it briefly rose above 100 percent of GDP. But thanks to a far-sighted leadership determined to pay down the debt, aided by a steeply progressive income tax, effective corporate taxes well above what we have now, and a high estate tax that encouraged each generation to make its own way, by 1970 the debt was about 30 percent of GDP. It hovered in that neighborhood through the 1970s, until President Reagan started running up the debt by cutting taxes on the wealthy without reining in government spending in any meaningful way. Thus, when Mickle says Jimmy Carter increased the debt and does not even mention Reagan, she is presenting a selective and misleading account of recent history, apparently for partisan purposes.
It seems to me beyond doubt that Reagan is the father of the modern debt problem. He interrupted three decades of debt reduction with an unnecessary peacetime debt binge which accomplished nothing except to make the rich richer. I have seen studies which show that if Reagan and the first George Bush had balanced their budgets, and Clinton did what he did, the debt would have been retired completely by the turn of the century.
The other thing that Mickle left out is the complicated, dynamic relationship between government spending and government revenue. When the economy is doing well, government revenues rise, and this can result in an opportunity to pay off government debt faster. Capitalism is prone to booms and busts, and after particularly severe busts, it has a tendency to get stuck in a paralyzed, depressed condition. Deficit spending by the government can significantly shorten such recessions and pave the way for a new period of prosperity not just by helping those hardest hit by the recession, but also by investing in infrastructure and education which make us more competitive in global markets. Thus, our wisest councilors would suggest that we may need to engage in deficit spending in time of war or in times of recession, but that we need to pay down debt in times of peace and prosperity.
The modern Republican Party has confused the issue by loudly proclaiming a different and less defensible set of priorities: when Democrats are in power the debt is an out of control monster which threatens to destroy our country, and when Republicans are in power debt doesn’t matter. In the 1990s when Clinton was in the White House, we had Newt Gingrich making moralistic arguments accusing us of stealing from our children by running up debt, and when the second George Bush was in the White House, Dick Cheney says with a snarl, "debt doesn’t matter." Now that Obama is in the White House, we are hearing shrill arguments once again about the dangers of government debt.
Mickle’s argument is not shrill, and a reasoned argument for prudence and debt reduction is always welcome. But we need to keep in mind also that we have barely emerged from a bad recession, and it may be a bit premature to cut back on unemployment benefits, food stamp funding, or education and infrastructure spending before the recovery is well underway.