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REAGANOMICS AND FISCAL RESPONSIBILITY


Whenever I hear the minions of the Republican Party, and the right wing goofballs such as Rush Limbaugh, screaming about the Democratic Party's lack of fiscal responsibility I am dumbfounded by their self deception. The fact is that history shows our worst years of fiscal responsibility have occurred under Republican Administrations. Data on the Federal Debt as a percentage of GDP, generated by the OMB, demonstrates this.

From 1960 through 1980 there was a general decline in Federal Debt as a percentage of GDP from 56% to 33.1%. However, with the beginning of Reaganomics in 1981 we can see a sharp increase in this percentage. It continues to grow sharply throughout the Reagan and Bush senior years. As stated earlier in 1980 the debt was 33.1% of GDP. Republican prolificacy led the percentage to top out at 67.3% in 1996. Throughout the balance of the Clinton years the value dropped. In 2002 it was down to 59.2%. With Bush junior's ascendance to the presidency there was a sharp increase in debt until it is projected to reach 67.5% when the final figure for fiscal 2008 is in.

Somehow the Republicans have managed to deceive the press and the public into believing their myth of Fiscal Responsibility. I guess they have learned well from Joseph Goebbels: If you tell a big enough lie often enough people will begin to believe it. When will the press start doing its job and start challenging the deceptions of the right?


7 Comments

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Thank you for the great figures. Maybe if you sent this information to CNBC they could use it. Maybe they would invite you to give them a seminar on economics for idiots to their finacial experts!

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By the way. I do believe that at least for the Bush jr. years it was a rovian concept to just keep repeating the lie - he probably got it from Gobbels.

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Great post. The truth. Will out.

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Econmavin - where did you get your figures? If you look at the link below the figures are very different. You're probably looking at gross debt instead of public debt? Either way I don't

http://www.heritage.org/Research/Budget/images/b2178_chart2.gif

My chart is a bit dated (from the 3rd quarter of last year) but the general trends should be in-line

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I was looking at total debt rather than public debt. The trends are true either way. Total debt includes Social Security which was removed from debt calculations during the Vietnam war when Johnson wanted the deficit to look smaller. Lets face it. We do owe the social security even if it is to ourselves. If we only look at public debt why don't we restrict ourselves to looking only at foreign held debt. When this was only a small portion of our debt there were economists who said: "debt doesn't matter, we only owe to ourselves"

The debt as a % of GDP fell in the late 90's

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Yes the trends are true either way. So I'm fine looking at total debt. The current level isn't much different than the post-WW2 average. So I don't understand what all the fuss is about the Republican numbers. At the end of '08 it will be at about the same level as it was in the mid-90's. Now if Obama really takes the deficit to new heights then it may get way too high. But I don't see what the big deal for where it is right now.

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Plus I don't understand why you say that it's not Clinton's fault that the percentage got so high in the late 1990's. Somehow that's the Republicans fault?

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econmavin

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Former Corporate Treasurer in multinational corporation. Currently teaching Economics and Finance at the college level. BS, MA, MBA

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