One of the most successful deceits of the past thirty years is that Republicans are the party of "fiscal discipline." In fact, Republicans are the party of fiscal wreckage. Simply put, Republicans love deficits and debt. They have buried the country with them. They expand them with orgiastic fervor every time they get the chance. Until we come to grips with this simple truth we will never gain control of our fiscal destiny.
In 1980 the national debt stood at $1 trillion. Over the prior 204 years, the nation paid for the Revolutionary War, the Civil War, the build-out of an entire continent, the First World War, the Great Depression, the Second World War, Korea, Vietnam, and the better part of the Cold War. And through all that, we still only borrowed $1 trillion.
But over the next 12 years of relative peace and prosperity, Republicans Ronald Reagan and George H.W. Bush would quadruple the national debt, to $4 trillion. They did it by dramatically lowering taxes on the wealthy and furiously expanding government spending. This isn't even economics, it's arithmetic: bring in less income while spending more money, and the result is debt. Mountains of it.
Bill Clinton reversed the Republicans' destructive formula, raising taxes on the rich and cutting spending to 17.4% of GDP, a level not seen in 30 years. The result was the longest economic expansion in American history. More than 20 million jobs were created, another record, while the stock market tripled. Most importantly, Clinton produced the first budget surpluses since 1969, handing George W. Bush a $140 billion surplus.
Bush immediately returned to the tried-and-true deficit producing policies of Reagan and his father. He lowered taxes on the wealthy through a $1.6 trillion giveaway in which 50% of the gains went to the top 1% of income earners, his "base" as he called them. And he expanded spending to 20% of GDP by initiating two wars, lying to pass a $600 billion giveaway to the pharmaceutical industry, and more.
Again, bring in less income, spend more, and the result is debt. Under Bush's catastrophic economic stewardship, the national debt more than doubled, from $5.6 trillion to over $12 trillion while producing the greatest economic collapse since the Great Depression.
A Republican has occupied the White House for 26 of the past 40 years. Not once in any of those years has any Republican president mustered a single balanced budget. So, the fact that Republicans love deficits and debt and expand them whenever they get the chance is not an ideological or political construct. It is the empirical, manifest conclusion of their own policies and actions. Those are the facts.
Less well understood is why this is so. But like the record itself, it is important that Americans know why it is that Republicans love debt. The reasons are two-fold and straightforward.
The first and most important reason Republicans love debt is that they make more money when there's more debt outstanding. The wealthy, after all, are lenders. They would prefer everybody-governments, companies, individuals-be up to their eyeballs in debt. That way they can charge everybody obscenely high rates of interest, as they do the desperately poor who use payday lending facilities with interest rates in the hundreds of percent a year.
The wealthy will collect almost $4 trillion in interest payments in the U.S. this year-27% of the entire $15 trillion GDP going to pay interest! And that's a time of extreme slack in the economy. As the economy recovers and demand for borrowed money increases, rates will rise. Imagine the obscene interest the country will be forced to pay on its $14 trillion national debt when the U.S. government itself becomes a payday borrower!
Which points to the second reason Republicans love debt. At some point it becomes so onerous it will bankrupt the government. This will make it impossible for the government to carry out its essential functions. It will have to sell off assets to its creditors, just as it is doing now, to raise money.
The same wealthy interests who caused the nation to go bankrupt will then buy up public resources at pennies on the dollar. That's how foreclosure sales work. They will then sell the services from those resources back to the public at monopoly rates. We see this around the country where thousands of cities and dozens of states are already selling off essential assets in exchange for a one-time infusion of cash.
Arizona selling off its state-house. Michigan selling the bridge to Canada. States across the country selling their toll-roads, airports, prisons, water systems, parks, even police and fire departments. School districts selling their schools in the guise of making them "charters" when in fact, they are franchised corporate education providers: McSchools.
Privatization of everything is the goal, with no public sector. You can do it when you have bankrupted the government. This is Republican nirvana: the rich paying essentially no taxes; extracting trillions of dollars in interest payments from captive, maxed-out borrowers, public and private; and owning all the public resources (in addition to all of the private resources which they already own). How much better can it get?
The second advantage of bankrupting the government (at least from the vantage of Republicans), is regulatory. It leaves no institutional force in society capable of standing up to the concentrated power of big capital.
This is what made the recent financial meltdown possible: regulation had been gutted, allowing the predators to run amok through the economy. It is what enabled the catastrophic oil spill in the Gulf of Mexico: little or no regulation on the oil companies.
What Republicans want in the private sphere is untrammeled dominion over desperate workers. In the public sphere, they want the ability to cow the government to do its bidding and to transfer all governmental operations to private hands. Bankrupting the government through onerous debts is the surest way to do both, for who, then, can stand up for the interests of the public? Or for democracy, for that matter?
Republicans have gotten so good at drowning the country in debt they even baked it into Obama's administration. According to the non-partisan Congressional Budget Office, almost ninety percent of Obama's deficits are due to policies and events initiated by George W. Bush: massive tax cuts for the rich; two unendable wars; and-once again-the greatest economic collapse since the Great Depression. Without these albatrosses Obama's budget would be almost in balance.
Republicans want nothing to do with policies that actually reduce deficits. If they did, they would have mustered more than a façade of concern over the past 40 years. But they haven't. And the most insufferable part of it all is their unctuous posturing about "fiscal discipline." It's like Heidi Fleiss posing as a model of moral probity, all the better to sucker more two-faced Johns into her bordello.
It was Cicero, in 45 B.C., who laid out the simplest formula in history for understanding such matters. They are the two most powerful words in political forensics: "Qui Bono?" Who benefits? When we answer this question and look at their record, we learn everything we need to know about Republicans and debt. All the rest of the posing is a sham. It's a shame the Democrats don't have the backbone to call this truth for what it is.