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First of all, let's be clear about one thing: three Republican Presidents (Ronald Reagan, George HW Bush and George W Bush) are directly responsible for approximately $12T of the current $14T that is the National Debt (ND). Keep reading to see that math. As between W, his daddy Bush I, and Ronald Reagan, W actually deserves the least (though nowhere near zero) blame for our current situation, at least with respect to the ND. This may seem counter intuitive at first glance considering that W's 2008-09 deficit of $879B (in 1983 dollars) remains the largest in history to date (though going forward that will admittedly change rather dramatically), and his 07-08 deficit of $472B is the third largest EVER. (Second is Obama's 2009-2010 $758 billion (in 1983 dollars) deficit-which was nonetheless $120 billion smaller than W's last budget deficit!). So, how can Reagan and Bush I be even more at fault than the hapless W? It's actually very simple: unfettered spending, tax cuts (i.e. reductions in revenue) and, the final piece of the puzzle, the magic of compound interest!
Here's what happened: During Reagan's two terms the ND almost tripled from $997 billion to $2.85 trillion, the ND as a percentage of GDP went from 32.5% at the end of Carter's Presidency to 53.1%, and the United States moved from being the world's largest international creditor to the world's largest debtor. Reagan himself later described the new debt as the "greatest disappointment" of his presidency. And you can't blame the Dem congress in power for most of Reagan's Presidency for any excesses in spending, though that is almost always put forth in Ronnie's defense. In fact, after Reagan left office , the House Appropriations Committee did a study that compared all of Reagan's proposed budgets (which, it turned out, were based on wildly optimistic economic projections that one of his own advisers later called the "Rosy Scenario") to what Congress actually passed. That study found that Reagan asked for $29.4 billion MORE than Congress ended up giving him.
In a nutshell: Reagan drastically increased Federal spending and cut taxes across the board (the essence of Supply Side Economics which Reagan introduced and which plagues the GOP to this day) which in turn dramatically cut Federal revenues. The result: massive debt. You follow so far? Cuz it's really quite simple.
Then along comes Bush I. Despite the fact that he labeled Supply Side Economics "Voodoo Economics" during his primary battle with Reagan in 1979, what did he do when he gained the office in 1988? You guessed it, he do the "Voodoo" and the results were completely predictable (if we've learned anything yet): the ND went from $2.9T to $4.4T and ND as a % of GDP went from 53.1% to 66.1%. Before you try that old red herring of blaming Congress, just know that, as with Reagan, Congress actually approved less spending than Bush asked for/projected would be needed over his four years in office.
Summary so far: Ronald Reagan reversed a long trend of reducing the national debt as a percentage of GDP, which had been lowered by every previous president (except Gerald Ford) since the end of World War II. The end result was that the ND as a % of GDP ballooned under Reagan and Bush I back to a point it had not been at since another Republican, Dwight Eisenhower.
That brings us to Bill Clinton. Despite being saddled with runaway spending and $3.4T added to the ND (and the burden of the interest due on that debt) by Reagan/Bush I, Clinton actually managed to lower the ND as % of GDP from the 66.1% left by GHWB down to 56.4% by the end of his time in office. Furthermore, though he did add $1.65T to the ND in total dollars, over $1.3T of that amount was from to the roughly 4% annual interest on the $3.4T of Reagan/Bush debt. Finally, and perhaps most amazingly, Clinton was able to not only balance the budget and leave a $230B surplus for W, he was able to do all this WHILE AT THE SAME TIME RAISING TAXES!! I know that this is heresy to Reagan lovers and the cult of Supply Siders, but it is the truth nonetheless.
So along came W, who inherited the $5.8T ND, a balanced budget (a surplus in fact) and eight years of reducing the ND as a % of GDP and what did he "accomplish" in 8 years? I bet you can guess. That's right, he more than doubled the ND to $11.8T, oversaw the ND/%GDP go from 56.4% to 83.4% (both due to huge tax (i.e. revenue) cuts combined with massive new military and national security spending following 9/11), all while starting two wars, blowing all the international political capitol that Clinton had developed (and which 9/11 amplified) and continuing the great new Republican tradition (born in 1980 in a complete break from previous Republican economic ideology-think Nixon, Truman, Ike) of concentrating wealth at the highest levels while leaving the poor and the middle classes to struggle to survive on whatever largess "trickles down" from the almighty private and corporate millionaires and billionaires at whose feet New Republicans so pathetically grovel. It's sad and totally unseemly and Eisenhower is absolutely rolling over in his grave!
What does it all add up to? Here it is: We are currently spending $1.13B PER DAY on interest on the national debt of $14T (of which about $12T can be traced directly to the deficits run by Reagan and the two Bushes with a boost from that wonder of capitalism, compound interest). Scarily, due to the historically low interest rates we're currently being charged, the $1.13B/day is actually much lower (half or less) than the would be if we were in any kind of normal interest rate range.
Two remnants of W's legacy — tax cuts and the wars in Iraq and Afghanistan — are directly responsible for over $500 billion of the deficit in 2009 and will lead to almost $7 trillion in deficits between 2009 and 2019. In 2019, the tax cuts, if continued, will account for nearly three-fifths of the deficit. Without the economic downturn and the fiscal policies of the previous Administration, the budget would be roughly in balance over the next decade (though even that would do little to reduce the overall balance of the ND; it would essentially maintain the status quo).
The economic "prosperity" we all enjoyed as Americans over the last 30 years, while not an illusion, was nonetheless unsustainable simply because it was based on unlimited borrowing (the VAST majority of which was incurred under three Republican Presidents) and no plan to pay it back. And just like a naive or over zealous consumer with a credit card and no limit, we have managed to dig ourselves into one heck of a hole. In the future we as Americans will all have to bear the burden of the halcyon decades spent under the spell of the strongest and most destructive "Voodoo" this country has ever been subjected to. But first we must look back in order to understand how we got into our current predicament and to ensure that we never again fall for the lie that is the only economic policy that the (New) Republican's know-cut taxes (i.e. revenue) and run massive deficits. To say that those policies have turned our economy into a "zombie" is a bit of hyperbole but nonetheless apt, in my opinion.
If that's not enough for you, here are a few more tidbits:
1) From 1978-2005 spending under Democratic President's increased an average of 9.9% per year. In that same time period, Republican President's raised spending an average of 12.2%/year.
2) ND per capita (i.e. how much every American "owes" on the ND) in 1980 (the last year of Carter budgets/deficits) was $4,094 which was 53% of Per Capita Income . By 1988 (Reagan's last b/d year) those number rose to $10,979 and 84%. Bush I, 1992: $16,379 (increase of $4,400 in FOUR years) and 110%. Clinton, 2000: $20,067 (increase of $3,700 in EIGHT years, including a DECREASE from $21.182 in 1999 to the 2000 level of $20,067) and 90%. W: $35,153 (increase of $14,000 or 70% in 8 yrs) and 130%.
3) In the twenty years that Reagan and the two Bushes were in power they increased federal spending TWENTY times.
4) From the end of WWII through the end of W's second term, the only President's NOT to decrease the ND as a % of GDP were, you guessed it, Reagan and the two Bushes (and Ford).
5) W raised the debt limit in 7 or the 8 years he was in office (and it would have been 8 of 8 if Clinton hadn’t left him a surplus in his first year).
6) If W's tax cuts just for the wealthy are left in place until 2015 (ten years after they were enacted) the final cost will be just over $1.1T (and, additionally, will have reduced net revenues by $200B).
7) Prior to Reagan's election, his "Supply Side" economic philosophy was considered extreme by his own party and was sharply criticized by both Nixon and Bush I (who called it "Voodoo Economics" before he converted to the new Republican religion).
8) If he hadn't had to pay the interest on Reagan/Bush I's $3.4T debt, Clinton would have almost finished paying off the $1T of debt left from WWII by the end of his second term. Furthermore, without those same interest payment, W would have racked up "only" $3.8T in deficits instead of the $6.1 he ended up sticking Obama (and, by extension, the American people) with.
9) During WWII we ran the ND up to the equivalent (in 2010 dollars) of $10.5T. There are two huge differences between that scenario and what's happened since Reagan: almost all of that WWII debt was held by Americans through the sale of war bonds and other methods. In other words, we borrowed from the American citizens and when those debts came due that's who got paid. In addition to borrowing "in house", we also were the world's largest creditor until (as mentioned at the outset of this piece) Reagan came along and in eight short years turned us into the world's largest debtor. Now we owe China almost $1T in principal (not to mention the associated interest and any other carrying costs that will accrue in the future) and another $3.3T to other foreign countries.
