Will the American electorate ever come to grips with paying for what they vote for politicians to "give" them?
Asked by
ETpro (
34605
)
October 19th, 2010
Voters give politicians their vote because they promise to “give” us goodies or “give” us tax cuts. Cutting programs is never popular. Look at the unrest in France over the idea of raising the retirement age from 60 to 62 to avoid bankruptcy. Apparently, nobody is willing to even consider the thought that if the French want early retirement, and yet are living much longer, they might actually raise their already high tax rate to pay for it.
This question comes from a quote often misattributed to Alesxis de Tocqueville or Alexander Fraser Tytler, that runs along the lines of, “Democracy (or The American Republic) will endure, until politicians realize they can bribe the people with their own money.” It actually comes from an American newspaper article in The Daily Oklahoman (9 December 1951) in which Elmer T. Peterson wrote: “A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship, then a monarchy.”
The US National Debt today is around $13.6 trillion. Democrats and Republicans squabble over who ran it up and who will pay it off—while making no serious efforts to do anything other than add to it. The truth is that in today’s dollars, it was just $2 trillion when Ronald Reagan slashed taxes for the rich, winning the hearts and minds of the people. Since then, the three Republican Presidencies have added $8.8 trillion to the current deficit and Clinton plus Obama’s first 2 years can be charged with $2.3 trillion.
Clinton actually began paying the debt down, so most of the Democratic contribution is from Obama, and some of this goes to rescuing the economy from the Great Recession of 2007. Perhaps Mr. Peterson had it wrong. The voters are not voting for more gifts, but to keep all they have but year after year pay way less for it..
As the above link shows, the debt as a percent of Gross Domestic Product was considerably higher after the massive cost of WWII, and we paid that debt down. Do you think we will grow up as an electorate and eventually vote to tax ourselves enough to pay for what we get from government, or drastically cut what government does for us? Or will we just slide into bankruptcy and whatever that brings with it? What does happen if we default on our debt to foreign powers? Wealth doesn’t just evaporate, it flows from place to place. If we vote to just go broke, who ends up with all the wealth that’s been transferred out of the USA?
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17 Answers
First let me point out that your chart only shows up to 2009. Not the first two years of Obama. Since the debt was $10 trillion when bush left office and it is now $13 trillion, that sounds like $3 trillion in his first two years. Three times the highest annual increase of any other president. And he’s only just started.
As for the rest of your point I can’t help but recall one of Obama’s town halls. There was a lady all giddy with excite. She was asked what Obama would do for here and she said he would pay for her house and car. She was then asked where would the money come from. She answered (I’m paraphrasing here) I don’t know, it’s Obama money.
When you rob Peter to pay Paul, you get Paul’s vote.
Many voters have. The Tea Party people, for instance, tend to wholly reject certain expensive government ‘gimmies.’
@Jaxk I can’t redraw the chart. But the numbers I stated come from the fact that the debt in 2009 dollars was around $2 trillion in 1980. It was $10.6 trillion after bush and is $13.6 trillion now. I extrapolated from that, the contribution that Democrats added to the $2 trillion. Clinton actually brought it down a trifle. So Obama is the Democrat who has contributed $3 trillion and Clinton shaves a tad off of that. Not easy numbers to calculate. Let’s say it’s Democrats $3 trillion, rhen Republicans get credit for the other $8.6 trillion.
Truth told, I don’t care who we blame. I care what we do to stop it and turn that curve back around like we did in 1945. If that means electing Martians as president and members of Congress, that’s just fine with me. Rather than fixing blame, let’s figure out what to do to fix the problem.
@Nullo You mean the Tea Party people carrying the “Keep your government hands off my Medicare” signs? Or the ones who insist they need a raise in their Social Security—it’s not been adjusted for inflation in two years now. Or is that the ones who write letters complaining about all the potholes in their roads or the crumbling infrastructure? Seems to me those are exactly the kind of willfully ignorant people who got us to where we are today. The something-for-nothing set.
@ETpro I was thinking about the ones who railed against the healthcare bill and bailouts, actually.
Wealth certainly evaporates. Ask anybody who has a house in Detroit. The only thing that moves is the debt, much of which in this case belongs to people who buy US bonds.
In answer to your question-people will continue to expect goodies from the government as long as they can be convinced that,
a. they deserve it, and
b. someone else will pay for it.
The first is a sign of moral weakness. The second is a sign of stupidity.The government is reasonably effective at picking out groups of folks who are deparate or gullible enough to believe either or both. Some are old or sick. Many are simply clueless. A lot of them do not even know that it is somebody else’s money they are spending. They simply think that money is a gift from government.
The fed will not go bankrupt per se. They will just print money until it is worthless and until nobody will buy US bonds anymore. Then they will stop paying out benefits, things will be very tough for a couple of generations and gradually, with luck, real wealth will be produced again.
@Nullo The bailouts are done. The TARP has been paid back with interest. The stimulus generated enough jobs to do some good. Both are water over the dam. We doubled the national debt under George W. Bush. Can’t blame any of those bugaboos you listed for that. We keep talking about fixing a massive, mortal wound that is gushing red by sticking a band-aid on it here or there. We will not fix it unless we get serious about confronting where all the money is going.
@josie I fear you may be right. We paid down a larger debt in 1945, but that was a very different time when the rest of the world was mostly in shambles from war and the US was the only manufacturing giant on the block. The only hope I see short of the cataclysm you predict is that we invest in renewable energy technology and make such a breakthrough that we get ourselves back into producing something of value we can sell to the rest of the world. The notion that we outsourced manufacturing but would transition to a service economy was patently absurd.
@ETpro
I don’t want to beat this point to death but you are mixing gross debt and public debt. The gross debt is over $13 trillion Public debt excludes things like social security and medicare, debt we owe ourselves. When Clinton “balanced” the budget he did not ever stop deficit spending. The difference is the money borrowed from social security, et al. The Gross debt continued to climb throughout his presidency as shown here. That’s not to belittle his work but it changes your numbers which are based on gross debt. The chart BTW is in constant 2005 dollars.
As for fixing the problem, we’ve had this discussion before. When looking at the post war boom, you can’t recreate those circumstances. We were rebuilding the world so our industry was expanding to keep up. The expansion during the 90s as we built an entirely new industry, was a similar situation although not nearly as dramatic. Taxes had nothing to do with paying off the debt it was economic growth that did it. That’s what we need again and the policies in place won’t allow it.
@ETpro
And I have to take exception to your something for nothing comment. People that paid into Social Security their whole don’t see that as something for nothing. They’ve already paid for it. Now the people that want the government to pay for their health care, they want something for nothing. They haven’t paid in but want the rewards. Are you one of them?
@Jaxk
Sorry S/B – their whole lives don’t see that as something for nothing
Nobody will like what I’m about to say but it’s the truth. We have to grow the economy and reduce the cost of living for most Americans. There is one sure way to do that and it is oil. We have no alternative for it at this time and we have plenty of reserves to produce all we need until there is an alternative. Wind solar and all that crap won’t make a difference in our oil imports. Only about 1% of our electricity is generated by oil.
We are only producing about 25% of our daily usage. import about $400 billion and it is the major portion of our trade imbalance. About 30% of our oil usage is for industrial purposes (plastics, asphalt, etc.) more than we actually produce ourselves. You can play all the games you like with mileage but it won’t fix the problem. We still need oil. If we can produce enough to get off foriegn oil we will be injecting $400 billion per year into the economy producing real jobs and producing real products. We can cut our gasoline prices almost in half and how much more money will that inject into the economy (not to mention everyones personal pocket).
If we continue to run after this Green Jobs pipe-dream, we will watch our economy go quickly down the toilet. It’s time to decide if you’re serious about fixing the economy.
@Jaxk Go back and take a second look at the chart in the link. There are no mixed metaphors. My numbers are all looking at the black line on the chart, gross debt, all in 2009 dollars. The chart does cut off the top curve at January 2010. It is now $13.6 trillion in 2010 dollars, which aren’t different enough from 2009 to worry about. I extrapolated debt contribution from the end of the Bush Administration, where the debt was at $10.6 trillion in 2008 dollars to today, when it’s 13.6 trillion in 2010 dollars. Again, inflation has been low enough between 2008 and 2010 that we need not worry about how it differs from 2009 dollars. No matter how much you want to split hairs to claim nothing is wrong, the right is right always, there simply aren’t enough hairs on both our heads to erase the fact that roughly ¾ths of the debt added since 1980 was added by Republican Presidents.
As to the gross debt dip my chart shows fro 1998 to 2000, see the discussion here. I believe it shows the accurate picture. Regarding the raid on the Social Security Trust Fund I am sure you will be relieved to hear that the truth is Democrats who accuse Republican Presidents and Congresses of this are big liars just as are Republicans who claim the Democrats did it. Great politics, but a lousy distractions from very real endemic problems with our society.
Since the Reagan tax cuts for the rich, the Gross Debt has climbed from $2 trillion to 13.6 trillion in 2009 dollars. The top 1% have gone from earning around 12% of 1980 income to 231/2% in 2007. With the impact the recession has had to the poor and disappearing middle class, that disparity would have grown, not diminished from 2007 to today. The wealthiest 1% now own over ⅓rd of all the wealth in the nation. We are drowning ourselves in debt to transfer the wealth of the nation to billionaire multinationals. When the USA is drained dry, what’s to stop them from just leaving? Already, much of their investment is offshore where returns are better. There us Supply Side Voodoo Economics at work for you.
For a look at where we would be if we had not undertaken Bush’s two tax cuts for the rich, see the third chart here. I am sure we would have had the recession of 2007 even without Bush’s misguided Supply Side Voodoo tax policies. The underlying cause was financial deregulation which allowed banks and hedge funds to bundle bad mortgage debt of a few trillion dollars into a drastically leveraged $62 trillion annual derivative market, and that house of cards had to come tumbling down. But we would have been in a far better position to deal firmly with the crisis.
BTW, Obama’s financial reform was directed by the Wall Street Bankers who made so much on those derivatives, and so it does nothing to fix that problem. They paid enough to dictate the policies then and now. It will happen again unless we get the money out of politics and actually fix the endemic problems we face.
@CaptainHarley They are only worth a trifling $1 trillion today. I am sure if we are stupid enough to send it to them, they would welcome another $44 trillion or so.
Some people are never satisfied. Tisk! : )
@ETpro
Sorry for the delay but Ive been away. I also have quarterly taxes due (a bunch) so won’t be able to conitue for a few days.
I’ll leave you with a couple of thoughts. If you believe that spending is the answer, you’ve got the right guy in office. If you believe that spending is the answer, Bush was also the right guy. If you want to keep spending as a constant % of GDP Obama is not the right guy.
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