Despite the great damage they have done to our economy, Republicans have a good chance of winning a majority in the House of Representatives on Nov. 2. Incredibly, their campaign promise is to do more of the same damage.
The unwavering goal of the Reagan-Bush GOP has been to drastically reduce the role of government. Its biggest obstacle is that most Americans want the programs that would have to be cut back or even eliminated if Republicans get their way.
To overcome this obstacle, the GOP has devised two strategies. The first is to divide and conquer by supporting some programs while attacking others. For example, Rand Paul appeals to seniors and aging Tea Partiers by supporting Medicare while opposing national health insurance for everyone else.
The second strategy is to reduce taxes. When taxes are cut, one of two things happen: (1) spending on social programs is reduced to offset the revenue loss or (2) the spending is not reduced, so the government runs a deficit.
The first rarely happens, since most social programs are so popular that Republicans rarely attack them in the open. Instead, we get recurring deficits and a growing national debt. Republicans seem to hope the deficits and debt eventually become so large that the government is forced to cut spending by reducing social programs.
In carrying out this strategy, the Reagan-Bush administration enacted massive tax cuts, ran large deficits and tripled the national debt from $930-billion at the end of 1980 to $4.2-trillion in 1992. George W. Bush did the same, raising the national debt from $5.7-trillion in 2000 to $10.7-trillion at the end of 2008.
The best way to judge the size of our national debt is as a percentage of the nation's income -- its gross domestic product (GDP). As with a household, the larger its income, the more debt it can responsibly carry.
The highest ratio of national debt to GDP in American history was 120% in 1945, due to the expense of WWII. Since then, each American president reduced this ratio until it reached its low point of 33% at the end of Jimmy Carter's term.
Then came Reagan, Bush I and Bush II, under whom the ratio climbed from 33% to 74%. The only exception to this steady and steep climb was under Clinton. He brought the ratio down from 68% to 58% by reducing the deficit and eventually running a surplus.
Ah, but look at the deficits in Barack Obama's first two years! Latest estimates are $1.4-trillion for 2009 and $1.3-trillion for 2010. The national debt continues to soar!
This is the great "gotcha" for Republicans in the current campaign: Obama is a spendthrift! He blew billions on a stimulus plan and enacted a national health insurance plan we can't afford. Our moment has come -- shrink government!
This hue and cry makes as much sense as someone suing the fire department for water damage from putting out the fire he started in his house. Under George W. Bush, the GOP did something to our nation just as irresponsible and harmful as that home owner. It launched two wars while enacting massive tax cuts.
Due to this combination of lost tax revenue and escalating war costs, the government ran deficits in the hundreds of billions all during the weak economic recovery of 2001-07. As a result, when the Great Recession began in late 2007, the government was low in resources to meet the crisis.
The standard remedy in economic bad times is for the government to cut and spend, i.e., reduce taxes and create demand by government spending. Normally the bad times are preceded by good times when the government has had sufficient tax revenue and lower expenses. That enables it to absorb the revenue losses and extra expenses when unemployment rises and the GDP is weak.
The Bush administration's huge tax cuts and war expenses during good times seriously weakened the government's ability to cope with the Great Recession. Tax revenues were so inadequate in 2008 that Obama could do very little to further tax reduction. Deficits were so large that he could not provide a big enough stimulus.