In 1978, toward the end of eighth grade, I appeared before the Downtown Optimists Club of Oklahoma City to deliver a speech focusing on the alarming growth of our national debt.
I did so as part of an annual contest that encouraged young people to become orators and to start thinking seriously about matters of public policy. I had a grand time. The Optimists were kind to a fault, fawned on me and fed me dinner, and when all was said and done honored me with a first-place medal that inspired me to participate in speech and debate contests throughout high school and even into college.
The subject of my speech was the alarming increase in the national debt, which I blamed on Democrats in general and President Jimmy Carter in particular, much to the delight of my father and most of the older men in the audience. The debt, I remember saying, was on the verge of reaching the unthinkable level of $1 trillion dollars. How, I asked, could a country continue down a path of such obvious fiscal insanity?
Pretty easily, as it turns out. Our national debt today is over $28 trillion. You can watch it grow online at usdebtclock,org, or immerse yourself in the current debate over whether President Joseph Biden’s proposed $2 trillion infrastructure plan is either affordable or sensible given our current deficits. And if the arguments seem familiar, they should. They have all been made before, are predicably partisan and largely pointless. Both Republicans and Democrats have pledged to lower the deficit countless times over the last four decades, and only Bill Clinton briefly succeeded (largely because of the internet boom and the end of the Cold War, which were more a matter of luck than deliberate planning on his part). Every President from Reagan through Trump failed, and so did every Congress, over and over again.
They failed because you and I are greedy. We all say that we despise deficits, but we certainly like Federal spending in all its forms — stimulus checks, subsides, tax credits, government health care, government jobs, defense spending, education programs, etc. — and we do not like taxes at all. So, what we have done over the last forty years, which the generations before 1980 manifestly did not, is to increase spending and cut taxes at the same time. It is a recipe no sane money manager would follow with their personal or workplace finances, but our elected leaders have done it time and again and the voters have never punished them for it.
The result of our collective trips to government coffers is that today the national debt as a percentage of our Gross Domestic Product (GDP) is larger than it has been at any time since World War II, when we at least had the excuse that we were helping to save the world from Fascism and Japanese Imperialism. We have lowered corporate tax rates so much that in 2018 the 400 richest Americans paid on average a lower percentage of their income in taxes than the working class. The top 1% of all earners now control 20% of all annual income in the United States, while the bottom 50% of earners share only 13%. The inequities in the system so obviously favor the super-rich that last year 55 of the largest companies in the United States (including FedEex, Nike, and Hewlett-Packard) paid zero federal income tax. Meanwhile, the middle class, which prior to 1980 saw annual increases in income averaging 2% annually, has had their income largely stagnate for the last 40 years. We are now living in an America where the rich/poor gap is worse than it has ever been, in a society that is riddled with inequality and in which the most affluent seem to lack the sense of collective social obligation held by previous generations. They hide their money overseas, exploit corporate tax loopholes, enjoy the benefits of extremely low taxes on capital gains, and apparently feel little guilt over creating an untenable, catastrophic fiscal situation which their children and grandchildren will inherit and be forced to confront.
It did not have to be this way. In the 1950s the United States had a truly progressive system of taxation, one in which the extremely rich paid as much as 70% in income taxes. Corporations paid much higher tax rates as well, and in turn the United States was able to afford better schools and roads and bridges and could build the finest armed forces in the world without creating crushing levels of debt. Investment in infrastructure and education allowed the lower and middle classes to raise their incomes, which in turn propelled the US economy through 25 straight years of economic growth between 1945 and 1970. We have never enjoyed a longer period of sustained economic expansion, and it happened when taxes were higher on the most affluent.
Now all of that wealth is squandered, and rather than pay down the deficit over the last 30 years after the Cold War ended we made it exponentially larger, to the point that now, amid the COVID 19 pandemic, when one can argue we need government spending to keep the economy going and to rebuild our infrastructure, we are rightly worried about the debt. There will be no easy solutions to this completely avoidable, utterly predictable financial calamity. We will eventually be forced to raise taxes or reduce spending. Period. And neither approach will be popular.
Whatever we do, I have the sad feeling that if I encounter those men from the Downtown Optimists Club in the next life I will have a great deal to answer for, because I saw the problem coming in 1978 and yet my generation and the ones that came after did nothing to stop it.
Lance Janda has degrees in history.