Sunday, September 2, 2012

Don't Trust Republicans When it Comes to Spending


Increasing public debt is not as important a metric as debt/GDP. The key is making sure economic growth (GDP) outpaces debt accumulation. It is also important to make sure that during economic boon times, government doesn't waste money and frivolously spend because when the downturn comes, and it will come, it will need to ramp up spending to offset declines in consumer and business spending. When looking at this chart please note:

1)    The rapid growth in debt/GDP during the Roosevelt administration was due to the ramp up to fight WWII.

2)    For the 36 years following the peak in 1945 each administration, Republican and Democrat alike, managed to reduce the debt/GDP ratio.

3)    However, for the next 12 years encompassing the Reagan and George H.W. Bush administrations, debt/GDP went from the mid 35% to 65%.  The GOP loves to tell us about the Reagan Recovery, Reaganomics, and the Reagan boon times.  But they never talk about the explosion of debt/GDP.

4)    When Democrat Bill Clinton took over from 1992 – 2000, debt/GDP was dramatically reduced.

5)    Unfortunately, we were returned to Republican control  under the Bush Administration and voila debt/GDP increased again and when the great recession hit UNDER Bush leadership, spending was increased to help offset a drop in consumer spending and debt/GDP exploded.

6)    Under President Obama, the increasing debt/GDP ratio has been a result of the tepid recovery from the worst economic disaster where consumers have tightened their belts to repair the severely damaged balance sheets.  By the way, the biggest source of the debt under President Obama has been the continuation of his predecessor’s tax cuts.  Keep in mind the 2009 numbers, while showing up under President Obama is actually the Bush budget.

Now if Presidents Reagan and Bush had bothered to manage the government’s finances and kept spending in check, instead of exploding the defense budget and providing tax cuts to the richest 1%, the debt/GDP ratio would have been at a reasonable level when the tumult of the Great Recession hit in 2008.

If these alleged ‘conservatives’ had actually been fiscally conservative, the government and Federal Reserve would have had far more tools at their disposal to stimulate the economy.

Therefore, I do not trust Republicans on fiscal matters because the same thinkers behind Reaganomics and trickle down BS are the ones advising Romney.  The numbers speak for themselves, if you want to reduce debt/GDP don’t vote for another Republican.

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