Skip to comments.Study: "Debt Problem Began Four Decades Ago"
Posted on 01/22/2013 3:48:01 AM PST by Kaslin
A new report from the Federal Reserve Bank of St. Louis reminds Americans that, contrary to the narrative that huge deficits and debt are merely a recent product of the Great Recession, the problem began over forty years ago.
Daniel Thornton, the St. Louis Fed's Vice President and economic adviser, finds what conservatives have been saying all along is true: it's steadily increasing government spending, not a lack of tax revenues, that's causing all of this.
[A]fter 1970, both revenues and expenditures increased on average relative to the previous two decades; however, revenue increased marginally while expenditures increased significantly... on average, the government spent 2.4 percent of GDP more than it received in revenue during the 38-year period.
The new study confirms that what's been driving the increases in spending hasn't been that old liberal boogeyman defense spending. It's entitlement programs - Medicare, Medicaid, Social Security, and other transfer and welfare programs.
Finally, Thornton concludes, the progressive response that all the U.S. has to do is raise taxes is bankrupt.
The long-run perspective offered here shows that there is a deeper and more fundamental issue that must be addressed if the problem is to be resolved solely or primarily by raising taxes. Specifically, the analysis shows that the deficit/debt problem began when the government decided to increase spending significantly without increasing taxes.
I vividly remember the day my grandmother (Grhs), a NYC public school teacher for 50 years, brought home a news article about a new business venture called “a VISA card”. It was about the time they were taking silver out of the coins. She could barely contain her amusement.
She then went on and predicted the next 50 years history with what was in retrospect amazing accuracy.
Only four decades?
More like eight decades, back in the FDR administration.
But still - does any previous action justify Obama’s fiscal insanity?
Conservatives have been pointing this out for te last 40 years.
As a branch of the Fed oughtta know, it was renders inevitable in 1913. The watershed was 1932, of course, and the murder of the gold standard. The rest is trivial.
Heck, we haven’t had an actual balanced budget and no debt since, what, Jackson? Odd to say the debt problem derives from the 70s.
The problem is that every President is guilty. In the 80’s we did not care much for the debt at all. Now suddenly we do?
In the 80s the deal worked out by Reagan with the Rats was 3,dollars in cuts for every dollar in tax increases. The taxes went up but, we know the rest.....
“Conservatives have been pointing this out for te last 40 years.”
And willingly participating and perpetuating the tragedy, unfortunately.
Everyone should look at the success they’ve seen in the past 30-40 years, and then consider if it is even possible to have a period of austerity, reduced services, higher taxes, and harder word that lasts the same amount of time to pay the bill.
Both sides are guilty. Only one side sees it as a problem. That’s the issue.
True. Everyone always talks about cuts in Medicare as if that is the be all end all. I don’t see what they can use some imagination and cut the real fat which is the so called disability SSI and other nonsense like the study on the minsi fly....sure they will yell that studying different insects MIGHT find the cure from cancer but after 50 years, how long do you need to study the dang insect. Our Government can cut many areas but the only discussion is medicare which actually is the only area where people ACTUALLY pay into it. Such a weird direction we are going towards.
It went back to the 20’s and 30’s. The interstate/intrastate.
We’ve all been living WAY too ‘high on the hog’ for the entire length of my lifetime to date! ;)
Silver coins were last minted in 1964, Bank Of Americard changed it’s name to Visa in 1975.
I am 66 and I agree. Wolf has been cried too many times.
What scares me is that ZERO may get away with it.
The alternative is not pleasant. I hate ZERO with every molecule in my body. But I love my country. I do not want to see us go down. . . . .
Shortly after the welfare state started in earnest. Shocking. /s
OK, maybe she remarked about Bankamericard, or Master Card and not VISA. The story stands.
Once important to remember:
(A) Things that do not change remain the same, and
(B) You can never get the time back.