3 October 2012: A difference between wealth and debt

A difference between wealth and debt

I am happy to see that letter writer Jim Leonard now encourages Courant columnists to weigh in on issues extending beyond Clear Creek, for state and national issues are local too.

It seems, though, Jim is missing a primary point in my column “We are not as broke as Republicans say.”

I stand by my assertion: When it comes to wealth, we are not broke, far from it.

One needs to distinguish between wealth and debt.  It is the former I address directly.  The two paragraphs after stating we’re not broke make that clear.

Unlike in a private life in which one’s assets balance out his/her debt, our societal construct does not allow for that.  Further, if one insists on using an abacus to predict calculate future obligations, one ought to also allow for increasing wealth to offset those debts

When I write, “Are we facing hurdles?  Absolutely, but nothing that cannot be overcome,” I implicitly acknowledge our national public debt, a dragon we’ve begun slaying before.

During the Great Depression, the last economic crisis comparable to this one, government spending, the New Deal and World War II, saved us, but in so doing, as one might surmise, caused the national debt to soar astronomically.

After World War II, many predicted we would sink back into economic doldrums, but the historical greatest growth in private wealth occurred.  Post-WW II was a time of high and growing unionization in both the public and private sectors.  Many veterans took advantage of the GI Bill.  The interstate highway system was built.

Labor unions and government spending—anathema to rightwing economic dogma—both invaluably contributed to that economic success.

Conservatives and rightwing Randians alike like to argue Ronald Reagan rescued the economy circa 1980.  Before getting too giddy, let’s separate fact and myth:

  • The economic crisis we faced then was entirely different in nature: wringing inflation out of the economy.  Remember Gerald Ford’s (R) campaign to “whip inflation now—WIN–campaign?  It was the 70s version of today’s “free market policies, free enterprise, and reducing tax rates” nostrums.  All that’s needed to complete the time warp is Abba on vinyl.
  • Reagan was not dogmatic, but a center-right pragmatist, high on rhetoric willing though to engage in realpolitik.  He raised taxes 11 times, says former U.S. senator Alan Simpson (R-WY); he did not eliminate the Department of Education as promised; and he wisely added more than 60,000 people to the federal workforce by creating the Department of Veterans Affairs.
  • With the regard to the national debt, under Reagan it grew from $700 billion to $3 trillion.

Bill Clinton began to slay the dragon of debt that had gorged itself under Reagan and George Bush I.  Each year from 1998 through 2001, his budget ran a surplus.  Then there was the 2000 election.

Remember the debate between Al Gore and George W. Bush when Gore was derided for saying he’d put the surplus funds into a “lockbox”?  On the other hand, Bush promised to cut taxes especially for those he affectionately called “his base,” the One Percent.  He did and the monster that had been on a weight-reduction program under Clinton grew more obese more quickly than an American dieting on super-sized fast food.

But Bush wasn’t finished: He piled on, starting two unfunded wars.  The War on Iraq alone has cost our national treasure $800 billion in upfront costs and an estimated $3 trillion in larger costs that include diagnosing, treating and compensating disabled veterans.  The Afghanistan affair remains to be tabulated.

For Republicans to talk with authority about those issues after having supported and still continuing to support massive tax giveaway to the wealthiest and unfunded government programs is nothing short of hypocritical, cheeky chutzpah, if you will permit me to be redundant.

History is repeating itself as George Santayana has promised with a Democrat cleaning up the economic fecal mess left by Republicans.  As Bill Clinton stated unequivocally, no president, including himself, could’ve done any better than Barack Obama not only by preventing a Great Depression II—the first was a gift from Republicans as well—but also steering the economy back to firmer ground.

Next week: How that is being done and the changes that must be made to avoid future economic catastrophes.

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