WASHINGTON -- Sometimes you have to revisit the past to account for the present. So let's see if we can't figure out how the nation accumulated a debt to outside investors approaching $10.5 trillion -- around $35,000 per American, counting every man, woman and baby.
It took us only a decade to plot a course toward financial ruin. When President Bill Clinton left office in 2000, the federal budget was balanced and the nonpartisan Congressional Budget Office expected years of revenue surpluses, which could be used to pay off the debt or placed in a "lockbox" to finance Social Security payments. The debt owed to outside investors -- not counting intra-governmental debt, such things as payments owed to the Social Security trust fund -- was about $3.5 trillion.
There's no getting around what happened next: President George W. Bush blew through the surplus with massive tax cuts and spent recklessly, driving the country into a deep fiscal hole. Those are facts easily found in CBO documents.
So why drag the former president into the present day's political drama? Here's why: It seems most voters are confused about the debt ceiling and its importance; polls have shown that a majority of Americans say Congress should refuse to raise it -- an abdication of responsibility that would send the economy skittering off the edge and into the abyss.
House Minority Leader Nancy Pelosi told me last week that she believes those polls reflect a misunderstanding of the arcane mechanics of the debt ceiling.
"The public has to know that ... we have to lift the debt ceiling to pay for past debt. This harkens back to President Bush. ... Some in the public have the view that lifting the debt ceiling is about future spending. It's not," she pointed out.
The behavior of many leading Republicans, who pose and posture as if they represent a virtuous thrift arrayed against Democratic dissipation, is precious. Bush's 2000 presidential campaign centered around his pledge to cut taxes; he claimed that budget surpluses proved that taxes were too high.
"The surplus is not the government's money. The surplus is the people's money," he said. He conveniently forgot that "the people" had also accumulated a debt owed to investors, notably China, and obligations to retirees.
Bush didn't stop with huge tax cuts. He also pushed through a needless and expensive Medicare prescription drug plan. And he became the first president in history to fight wars without increasing taxes to pay for them. The invasion of Iraq was needless -- costly in countless ways.
Nonpartisan economic analysts agree that the policies of President Barack Obama have made only a small contribution to the sea of red ink. A recent Washington Post analysis assigns about $1.7 trillion of the debt to Obama-era programs.
By far, the biggest portion of the debt is the result of Bush-era policies. (Even as the Bush administration pursued fiscal recklessness, some among his team knew better. Paul O'Neill was pushed out as treasury secretary because he opposed those irresponsible policies.) This is important -- and not just to render an accurate accounting for the history books.
The GOP is still touting the same old voodoo economics that got us into this multitrillion dollar mess. Even as evidence of their wrongheadedness threatens to drown us all in red ink, Republicans -- with a couple of important exceptions -- continue to denounce tax increases. They insist that low taxes will magically produce jobs, widespread prosperity and overflowing government coffers.
Can they be serious? That's the stuff of fantasy -- Santa Claus, the Easter Bunny and the tooth fairy. To his credit, Georgia Sen. Saxby Chambliss, a member of the "Gang of Six" working on a budget compromise, is among the few Republicans who have acknowledged that spending cuts alone will not right the treasury.
As any good partisan might, Pelosi says that Democrats are the party of fiscal rectitude, even as she acknowledges that idea is "counterintuitive." She points to Clinton's 1993 tax increase, which was so unpopular that it helped Republicans take control of the House the next year.
In fact, neither party deserves the mantle of fiscal responsibility. But few Democrats have fallen for the foolish notion that cutting taxes magically produces prosperity. It's a seductive idea, but only if you believe in fairy tales.
- Congressional Budget Office
- President George W. Bush
- Social Security payments
- House Minority Leader Nancy Pelosi
- the tooth fairy
- President Bill Clinton