Why Republicans Love Debt
They sure talk a good game... wait, no they don't
One of the most successful deceits of modern times is that Republicans oppose government debt. In fact, Republicans love government debt and expand it whenever they can. It’s important to understand this fact. It’s even more important to understand why it is so and why Trump’s tax cut is a classic case of self-interested Republican budget busting.
The last Republican president to produce a balanced budget was Richard Nixon, in 1969, almost 50 years ago. Since then, not a single Republican administration has produced a balanced budget. Not one. All have produced debt. Mountains of it.
Ronald Reagan was the King of Debt. When he came into office, in 1981, the national debt stood at $1 trillion. Twelve years later, when his Vice President, George H. W. Bush, left office, the national debt stood at $4 trillion. Think about that for a moment.
Over the span of 204 years, from 1776 to 1980, the nation fought the Revolutionary War, the War of 1812, the Civil War, built out the continent, fought World War I, survived the Great Depression, fought and won World War II and the better part of the Cold War. And through all of that it only created $1 trillion of debt.
Then, in a single 12-year period of relative peace and prosperity, Reagan and Bush I quadrupled it.
Bill Clinton raised taxes on the wealthy. The result was not only the longest peacetime economic expansion in American history, but the first budget surpluses in 30 years. He handed George W. Bush a $128 billion surplus.
Bush immediately enacted Reagan-esque tax cuts where 50% of the gains went to the top 1% of income earners. He turned the Clinton surplus into a $158 billion deficit in his first year, a staggering swing of $286 billion in only two years. Bush more than doubled the national debt in only eight years, fom $5.8 trillion to $11.9 trillion.
So, the FACT of Republicans producing debt is indisputable. It is even more important to understand why they do so with such relentless intensity.
First, debt enables them to borrow from the future, creating the illusion of growth. By spending money today that won’t have to be paid off for decades, Republicans create artificial prosperity which allows them to masquerade as economic wizards.
But any fool with a handful of credit cards charged off to future generations can gin up the illusion of prosperity today. When the debts become due—as they must—repaying them will force a shrinkage of economic opportunity. In this sense, Republican debts are a theft, from the future, literally stealing from our children to lavish the fruits on themselves today.
The second reason Republicans love debt is the Grover Norquist strategy to “Starve the Beast.” Once debt becomes too onerous, Republicans will be the first and loudest to claim that we need to cut spending on social services—Medicare, Medicaid, Social Security, Education—anything that helps the poor, working, or middle classes.
Starve the Beast also aims to remove government as a check on the predations of private enterprise. Republicans want to gut the Dodd-Frank restrictions on banks, EPA regulations on carbon emissions, hobble the Consumer Finance Protection Board, and more. When government goes “bankrupt” all such regulatory efforts will have to be pared back.
Another incarnation of Starve the Beast is that Republicans want to turn government functions over to private enterprise. Think charter schools replacing public schools. Wall Street managing Social Security. FedEx and UPS taking over the Post Office. Private mercenary contractors replacing the military.
Trillions of dollars flow through these and other institutions every year and Republicans want to get their hands on it. They wouldn’t be good capitalists if they didn’t try. When the government is bankrupt, the rationale will be all the more compelling.
Finally, and most importantly, more debt produces higher interest rates. This is simple supply and demand. When the demand for anything goes up its price goes up. More debt increases the demand for borrowed money. The price of borrowed money is the interest rate, meaning that greater debts produce higher interest rates.
Republicans like higher interest rates because they are net lenders. When the government borrows more money, interest rates rise, and not just on Treasury bills. They rise on all borrowed (or, in the case of Republicans, lent) money: mortgages; car loans; student loans; credit cards.
In other words, more government debt is a way to transfer income in the private economy from borrowers to lenders without the transfer appearing to be government-mandated. But it is a government-caused transfer, which is even better, because it flies below the radar of public consciousness but still carries out the Republican agenda of transferring national income and wealth to the already-wealthy.
Republicans talk a good game when it comes to debt and the mainstream media, which is owned by the wealthy, is scrupulous to not discuss these facts or reveal these motives. But we have a long enough trail of evidence to know the truth and the motivations could not be simpler: national debt makes the wealthy wealthier. Indeed, the effect is probably larger than the regressive impact of the tax cuts themselves.
As Deep Throat said in All the President’s Men, “Follow the money.” It tells us everything we need to know about Trump’s tax cut helping the already-wealthy.
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