Part of it is the standard theology and story telling about free markets and America always being number one and the envy of the world. Add to that the great grasp of media manipulation on the part of the administration, the herd mentality in politics, the media, even, and especially, among economists.
The key fact is this: during the Bush administration the US economy "grew" by 37 percent. Give or take, plus or minus, but something around there
What has been ignored is what that growth consists of. And even more, what it cost.
The middle class has shrunk and is less well off. So the growth isn't there.
The stock market is flat, so it's not in business. Manufacturing jobs have been dramatically reduced, so it's not there.
The "growth" in the US economy is a bubble. It consists entirely of debt. Can it be true that the growth in the US economy in the last seven years, such as it is, consists entirely of debt?
Here are the numbers:
The US economy grew by about $4 trillion.
-- The national debt in Jan. 2008: $9.2 trillion
-- The national debt in 2001: $5.7 trillion
An increase of $3.5 trillion
-- Total consumer credit debt in 2008: $12.8 trillion
-- Total consumer credit debt in 2001: $7.65 trillion
An increase of $5.25 trillion
In the course of achieving growth of $4 trillion, we took on $8.75 trillion in debt, combining what we owe as a nation and as individuals.
Since we have nothing to show for it, it's the worst single investment in world history. Is debt innately evil?
No.
There are lots of good reasons to take on debt. But the national choices should be made on roughly the same basis as taking on personal debt. If you can pay as you go, it's cheaper.
But sometimes there are emergencies. If something is vital, like saving your child's life, even when you don't have health insurance, you will hock whatever you can. When the nation is attacked, we normally spend what we have, plus what we can raise with taxes, and then borrow more, for the national defense.
It also makes sense to borrow to do something profitable - start, expand, or improve a business. The government equivalent is building infrastructure. Roads, education, communications, criminal justice and court systems, all facilitate commerce and generate more business, which ultimately creates new tax revenue.
Sometime you borrow to buy something that's worth the extra cost of paying interest, either because of it's utility, like a car, or because you expect it to appreciate more than the interest you pay, like a house.
Nowadays, governments routinely borrow to jump start or stimulate economies.
That idea started during the Great Depression. It's generally credited to John Maynard Keynes and is exemplified in many of the New Deal experiments. As originally conceived, it was trickle up, or ideally, multiply up economics. If you put the unemployed to work, they would spend their income on housing, food and other necessities. That would go to shopkeepers, service people, property owners, farmers and the manufacturers of the goods they all bought. At each step there would be tax revenue so the deficits would ultimately pay for themselves.
Then along came the trickle down people.
They believed that if rich people had more money, they would invest it in businesses, creating more employment, that would produce more things, that people would flock to buy, which would, likewise, create more tax revenue.
The problem is that it doesn't work. If there was a real shortage of investment capital, it might work, but in a generally balanced economy it doesn't. It didn't work under Reagan or Bush the Elder. They each saw it fail and retreated from it.
