WEALTH AND MONEY PART X: DEBT – THE ULTIMATE WEAPON OF CONQUEST
“Meet the Campaign to Fix the Debt, the billionaire-funded project that uses Alan Simpson and Erskine Bowles as figureheads for a fear mongering campaign to convince Americans that the deficits the United States has run throughout its history have suddenly metastasized into “a cancer that will destroy this country from within.” It is the latest incarnation of Wall Street mogul Pete Peterson’s long campaign to get Congress and the White House to cut Social Security, Medicare and Medicaid while providing tax breaks for corporations and the wealthy.” – – The Nation
“Fix the Debt” is a coalition of more than 80 CEOs who claim they know best how to deal with our nation’s fiscal challenges.” “The irony is that CEOs in the coalition’s leadership have been major contributors to the national debt they now claim to know how to fix. These are guys who’ve mastered every tax-dodging trick in the book. And now that they’ve boosted their corporate profits by draining the public treasury, how do they propose we put our fiscal house back in order? By squeezing programs for the poor and elderly, including Social Security, Medicare, and Medicaid.” – – Sarah Anderson, Scott Klinger / AlterNet
Understand, to the ruling class, the oligarchy, national debt is not a problem – – it is an opportunity. It opens the door for the looting of America called austerity. Billionaire Pete Peterson is once again running fear mongering ads on major television networks claiming national debt will be the end of the world for our kids and grandkids. The noble billionaires, who have used every “every tax dodging trick in the book” to bleed Americans, are once again telling us how concerned they are about our children. As always, of course, the only way to take care of these children is to kill all of the programs and policies that actually help them over the course of their lives and give more tax cuts to the rich. Social Security, Medicare, Medicaid, and programs for the poor and elderly must be slashed. Supporting community and the common good is for fools and the weak.
National “debt” is now the underlying basis of all of our national political discourse. We can afford to do nothing to help ourselves. Infrastructure must crumble, social programs must be cut, and public properties, public education, prisons and access to clean water must be privatized. The attacks on the middle class and working people are endless. And it is all based on fraud. It is all based on the lie that government spending is out of control.
Government spending as a percent of gross domestic product has changed little in 4 decades. Using statistics available at www.usgovernmentspending.com , we find that federal spending as a percentage of Gross Domestic Product (GDP) was 18.84 in 1970, rose to a high of 22.92 in 1982, and settled at 20.65 in 2008. If we include state and local spending, a similar pattern emerges. Total government spending was 31 percent of GDP in 1970, rose to a high of 37.22 in 1991, and fell to 36.94 in 2008.
Because of bank bailouts and stimulus funding, federal spending rose to 24.57 percent of GDP in 2009 and 25.44 in 2010. However these years must be viewed as anomalies resulting from the economic collapse and spending has since returned to historic levels. The critical issue is what occurred with government debt from 1970 to 2008, even though spending remained relatively constant.
Federal debt was 35.72 percent of GDP in 1970 and remained near this level until ending 1982 at 35.10. At this point (not coincidentally at the same time that the Ronald Reagan presidency was ushering in the era of “trickle down” economics), we begin to see a dramatic change. Federal debt rose to 38.96 percent in 1983 and climbed steadily to 69.15 percent in 2008. If we include state and local government debt, the pattern is the same. Total government debt was 49.55 percent in 1970 and closed out 1982 at 47.52. In 1983 total debt rose to 51.81 percent and it continued rising to end 2008 at 86.81. The graph below compares total government (combined federal, state, and local) spending and debt as a percent of GDP for the years 1970 to 2008.
Total Government Spending and Debt as Percent of GDP (1970 – 2008)
The claim that our national debt is the result of runaway government spending is patently false. Government has largely been doing what government is intended to do – providing the services, regulations, and infrastructure required for a healthy society. If we are to understand what caused America’s growing debt, we must look elsewhere.
Much has been written to explain the growth of government debt, but three factors stand out; deregulation (especially of the financial industry), tax cuts for corporations and the ultra-wealthy, and worst of all, the fact that the US Government is required to borrow its own money at interest from the private banking cartel. Deregulation began with President Carter and continued through every administration thereafter. Largely harmful to average Americans, it enabled the predatory banking practices responsible for the economic crash. The dismantling of corporate and progressive taxes on the wealthy over the past 40 years has resulted in historic levels of concentrated wealth and the loss of revenue required for government to meet its normal obligations. The parasitic nature of the Federal Reserve and the private banking industry has been looting Americans for decades.
“And if all others accepted the lie which the Party imposed—if all records told the same tale—then the lie passed into history and became truth.” – – George Orwell
Orwell’s prescient words are more applicable to each of us than we realize. When we unthinkingly agree that government has overspent, we become complicit in the myth – we become the “all others” who accept, who confirm, the lie.
Part IX will discuss: Ending Government Debt