Some Americans are scared by the level of national debt that President Obama’s budget will bring. A study of the Great Depression (GD), WW II, and its aftermath should calm their fears. We got out of the GD and we'll get out of this hole, too – unless we listen to the Conservatives.
At the peak of WW II spending, the national debt was 128% of the annual Gross Domestic Product (GDP). Post-war growth with a high tax rate lowered it gradually to 25% until Reagan almost doubled it to 50% by halving the tax rate. Bush (41) raised it to 65%, Clinton lowered it to 33%, and Bush (43) raised it back up to 40%. Under the worst case scenario, Obama's debt level will be less than 80% of GDP, now almost $15 trillion.
Germany, France, and Canada have debt levels around 65% of their GDP. Italy’s level is over 100%. At its worst, Japan’s level was over 185%. All of these nations are fairly prosperous and are without inflation. Don’t take their citizens’ complaints seriously. They better us in measures of food quality, infant mortality, health care, obesity, education, vacation time, retirement benefits, transportation systems, and more. How many French immigrants do you know?
Conservatives did not let FDR spend our way out of the GD, but Hitler did. The truly wasteful spending of WW II put everybody back to work or into uniform. The economy really went “socialist” for five years, with the government hiring almost everybody, directly or indirectly. Prices, wages, rationed gasoline and other supplies, contracts – almost everything – were strictly controlled.
When it was over, people cashed in their war bonds, bought cars and homes, and created the suburbs. Uncle Sam paid for the college education of millions of veterans and practically gave them a home. That was followed by three decades of historic economic expansion for the middle class. And the rich did pretty well too, even with tax rates that were at least twice today’s rates. And if that WW II budget could have been spent on infrastructure, …??!!
Since Reagan, we've had three decades of trickle-down Reaganomics. See: http://www.geocities.com/thereaganyears/… with disastrous deregulation. See: http://www.motherjones.com/politics/2008… So it's time to go back to basics. Since consumers and entrepreneurs won’t spend, the government must use idle resources to improve infrastructure, thereby cutting $trillions of annual GDP loss due to unemployment and under-employment.
And we have to continue the stimulation until inventory runs down and production starts again, sparking new investment. Concern about the debt is like worrying about the cost of running the pumps when the ship is sinking.
Payroll tax cuts for the poor and payments for the unemployed make sense. They will spend every cent of it and put it back into the economy. But tax cuts for the upper middle class and the rich will only be squirreled away for a rainy day. Scared consumers are saving now at a higher level than they have in three decades. In a recession, new investment comes only with renewed consumer demand, not with tax cuts.|||What goes around comes around. The absolute certainty out of all this is that however bad it gets will be followed by a period of prosperity. What needs to be in place when things turn around is for capitalism to be controlled and for it to provide a good life for all and not just for the ones who have the power to grab 90% of the benefits.
Comparing the idea of stimulating the economy through spending and the same approach for a single household is ridiculous. Of course the household would soon be bankrupt and living on the streets. Not so the nation because it sees most of their outlay coming back through the tax dept.
Who knows what will work but doing nothing is a certain way to lengthen the time we spend in depression. The "great depression" took a long time and a war to clear up because governments did nothing.|||First thing he has to do is repair the damage done in the Neo-Con nightmare. that means the hole gets deeper for a while.|||Even a junior economist could tell you the worst thing to do in a depression or recession is to spend more Government money|||History proves that government can not fix one thing without breaking another, so fixing anything only depends on how you look at it.
My take is that when your in a hole, STOP DIGGING!|||Seems like Obama is digging straight to China.|||Well...it took 8 years to make this hole as Deep as it is, so I say it will take a bit of time to backfill this chasm!!!|||deeper and using a earth drill|||Sorry to tell you...
He will make it LOOK like dig out.
Truth is: Deeper into it.
Common Sense...
I almost forgot! In politicians etc. Is not place for common sense.
They don't care because is not their money is OUR MONEY.
God Bless The America.
One thing is truth this Government won't last forever. In the mean time just breath and and relax.
Ciao|||when youre in debt you dont spend more money to get ouf of it, its not rocket science. WW II got us out of the great depression because it made a lot of jobs become available, obama is just spending money to grow government.|||What you think: a. inflation is up
b. gov't spending is up
c wages/inflation pace are off cliff
d throwing money at problems instead of solve problems
e. national debt is increasing
f. economy is shrinking
h. increase tax on businesses and personal tax
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