What Have the Presidents’ Done to America?

Posted on January 25, 2010
Filed Under Economy |

I have watched television talking heads and pundits expound on the insane debt levels that President Obama and the Democratic Congress has been heaping upon us lately, but each time I hear it, my doubt increases. I keep cringing at hearing how President Obama is leading us to economic oblivion by the growth in the size of the Federal Debt. The increase in the Federal Debt is clearly obvious but the big picture was just not clear in my mind. I went looking for some graphs that would show me exactly what was happening over the last one hundred years and frankly, I could not find anything that told me what I wanted to know in a nice, clear graphic. So I set upon the task myself.

Taking computer in hand, I went to various Federal government websites and pulled down the actual accumulated debt numbers since 1900 and compiled it in a spreadsheet. I then went to the website of the Congressional Budget Office and pulled down the projected deficits they expect for the years 2010, 2011 and 2012 and added that to the debt totals on my spreadsheet. I broke out the data by the various Presidents’ terms in office and generated a bar graph. Finally, I converted that graph to a pdf as well as a jpg to post to this blog site (click on image to get a larger view).

Though it is a little difficult to see, I did color code the bars in the graph by each President’s term in office.  This graph does not take into account what a federally mandated health care system or a cap and trade system would do to us. While the MSM pundits and economists are screaming about the current projected deficits, it appears to be no worse a condition than what occurred under President George W. Bush or for that matter President Ronald Reagan. In fact, the only recent president that has managed to even slow down the growth curve for even two years was President Bill Clinton.

So I ask the question, why is that? Why has every president since the end of WWII either let the debt stay as it was or let it increase incrementally? The answer is, because we told them to do it. That is right, we the people of America have told them, our presidents to do this to us. We did this through the voting booth.

”A democracy will continue to exist up until the time that voters discover they can vote themselves generous gifts from the public treasury. From that moment on, the majority always vote for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship.” Alexander Tytler, The Lifecycle of Civilizations, 1790

The bottom line is this, every single rascal that has been playing at being President of the United States since the American public voted Franklin Roosevelt in, has promised us something for nothing. Every single one has done exactly what we told them to do. This has progressed now to where we can no longer even service the interest on our debt that we the people created. Blaming a president for our dilemma is really too simplistic. It is a case of “be careful for what you wish for, you just might get it.” The bad news is, the time has come to now to pay up.

As I look at where we are heading, I am drawn back to all those economic courses I took in getting my various college degrees. Then in my usual engineering fashion, I try to take my knowledge and drive it down to its basic components to better understand the overall picture. So here it is:

One, we can no longer service our debt. The basic concept behind any borrowing is that debt is OK so long as you can afford the payments. Debt payments usually include principle and interest. However, we as a nation will be at the point on our Federal debt were we will not even take in enough taxes to cover just the interest payments in 2010. We will actually have to increase our debt to make the payments on the debt.

Two, too much money chasing too few goods leads to inflation. The Romans did this by pouring pot metal into their gold and silver; the Germans did this when the Weimar Republic printed money to pay off WWI debts due to the agreement they made at Versailles. Inflation also occurred in China in the 1930’s, in France in the 1800’s, and the Ukraine in 1994 for the same reasons. It is occurring in Zimbabwe today again because of the printing presses making easy money. It will be occurring in the US very soon as all the money spent to bail out companies “too big to fail” works its way into circulation.

Three, so long as there is no money available for small businesses to create jobs we will all suffer. There is a reason small businesses cannot get loans. Banks see them as too great a risk because their assets (homes, land, building and equipment) have fallen so far in value that for most people and small businesses, their current debt is already greater than their net worth. The fact is if you want to start up a small business, banks want you to put your home equity up as collateral. If your home equity is gone because of the depressed housing market, you do not get the loan. This also applies to commercial assets and buildings. As a result of devalued asset levels, no jobs are being created and people are spending less buying goods and services. This is leading to more job layoffs instead of job creation. As joblessness increases and sales drop off for businesses, the government tax revenue plummets. Our Federal deficit problem increases exponentially.

The only way to break this cycle is to cut government spending. We cannot take the Ronald Reagan approach or the Bill Clinton approach to solve our problem as the debt occurred in each of their terms of office. In November 2010 we will get a chance to elect a new slate of Congressmen. I suggest each of you consider not Republicans or Democrats when you vote. Just don’t believe their promises. Our only hope of a national recovery is to vote into office people that will actually cut Federal social services and the military. It will take a “meat cleaver” approach to solve our economic problem now, not just simple government reform. Many people will scream and cry in pain as their free handouts developed over the last seven decades comes to an abrupt end, but those handouts will end one way or another. Our only alternative to a drastic reduction in government spending and services will be total economic collapse. This will lead to war, societal collapse and ultimately, as Alexander Tytler predicts: dictatorship.

In the end, when I ask “What have the Presidents done to America?” The sad answer is, “exactly what we told them to do.” Now is the time to break this cycle of voting for whoever makes the biggest promise of a handout and take our country in a new direction. A direction to fiscal responsibility.

Clayton

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