WW II debt was much larger than Obama's projected debt, so how did we get out of it looking so darn good?

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. 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 almost 190%. All of these nations are fairly prosperous and are without inflation. They beat us in measures of education, infant mortality, food quality, health care, vacation time, retirement benefits, transportation systems, obesity, and more.





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 http://www.geocities.com/thereaganyears/… with disastrous deregulation. http://www.motherjones.com/politics/2008… So it's time to go back to basics. We have to stimulate the economy with investment in infrastructure, put people back to work, and cut the $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.|||You are so absolutely right.


Our country survived because of FDR, and those who don't know that, don't know history.|||We didn't get out of it. That's the problem.





Things have changed since WWII.|||it cost us all our gold, so if that is your idea of "looking good" then you need to study some more history.|||Because we took the vast majority of the world's gold rebuilding Europe. That same opportunity doesn't exist today. So, substantial increases in GDP fueled primarily by home building helped to mitigate the risk of currency devaluation.|||America is paying on WWII debt.





France and Germany are warning Obama about his socialistic agenda. Chinese are worried about our spending. Wants to replace the dollar. Chavez thinks Obama is ignorant, Putin is arrogant karate dude who has an affinity for Plutonium 210 holding all of Europe hostage with natural gas and hates America. North Korea needs food and medicine and is flexing their pathetic muscles in an attempt to get it. Iran hates America.





Taxes is the least of our worries.|||You sound like Barack. If new investment doesn't come with tax cuts, why did the republicans come out this week with their economic stimulus plan, which was 14 pages, state that they will triple the tax cuts for the freakin wealthy? Are they stupid, in denial, or a lost party?|||The reason why America became such a rich/powerful country after WW 2, is because the war was not fought in America but in Europe. After the war, Europe had to regroup/rebuild America did not. Simple.|||It's a different world with a different face. First, energy was very cheap back then, today it is very expensive. Second, our currency was pegged to gold and the rest of the worlds currencies were pegged to the USD per the Bremerton-Woods Act. Third, today we are a debtor nation rather than a lender nation able to generate good will by forgiving debt as we did in WWII. Fourth, we are spiking our National debt at the same time as our National GDP is in free fall. This is in contrast to the end of WWI where we exported expertise, materials, etc. to rebuild rapidly in the two theaters. Fifth, Much of our debt during WWII was held in the hands of the average families so that when the government repaid it, the money freed up went straight back into the economy or local banks. Today's debt, when repaid goes out of the country, thus reducing the economic vitality of our economy. There are several other points to be made. The main thing is, your thesis misses the many changes that have occurred in this country, as well as on the world stage. As a last thought here, Countries who have gone to a a flat tax on income in recent years have had stronger economic progress than we have. If this country is in such an adventurous mood why don't we give it a shot? Say 14% or 15%? That seems about right to work.|||If Obama keeps the printing presses rolling, all of our problems are solved .....in Land of the Liberal fairy's|||Yes, two very diffrent principles





Republicans - The "basics" are fiscal responsibility, large military, low taxes, less government, and capitalism.





Democrats - The "basics" are fiscal spending, small military, high taxes, the most government, and socialism.








The reality is...Republican principles...are correct. And the Democrat principles...are for ******* that need handouts.





Did you forget the 2nd great depression that FDR caused?