$12 Trillion Calc

zFacts-Reagan-Bush-National-Debt.gifFull-Sized Graph and Overview

This page provides the detailed calculation of the $12 Republican national debt. To see the full-sized graph and why this makes sense click back to $12 Trillion.

Complete Proof of the $12 Trillion Republican Debt

Just below you can see the calculation and the documentation links for the Reagan-Bushes $12 Trillion ($12,049 Billion) national debt as of September 30, 2010. You can download this as an excel spreadsheet by clicking: Download as XLS.

Their debt has 4 parts, but the bulk of it is calculated from 4 inputs (yellow and tan) that you can check with the color coded links to the treasury at the bottom. This will verify the $3.4 Trillion Reagan-Bush debt and the $6.1 Trillion G.W. Bush debt. Together that's $9.5 Trillion. Now some of G.W. Bush's debt is really interest on the Reagan-Bush debt, so he is not as bad as he looks, and Reagan-Bush are lot worse because of all their interest. You can see that in the graph above.

Interest is calculated on the second sheet (tab at bottom). But you know that 17 years of compound interest on 3.4 Trillion is going to add a lot. So a $12 Trillion total is very believable, and if you want to spend 10 minutes you can check it easily.

And if you think Congress did it, you better have a look here. Under Reagan and Bush-I, Congress actually made the debt a tiny bit smaller than what both presidents asked for. And G.W. Bush passed his supply-side tax cuts with a Republican Congress. There is just no wiggle room. The Republicans did it.


 

About the Graph

On the Graph above, the Reagan+Bush debt is the gap between the red line and Clinton's green line at the bottom. As it shows, if America had not had to pay the Reagan-Bush interest, Clinton's budget balancing would have nearly paid off the remaining debt from WWII--and we would have been in fabulous shape when the Great Recession struck.

Documentation

Here is the slide-by-slide documentation for The Supply-Side Story slide show.
(in progress Oct. 10)
2. The Supply-Side "Revolution"
3. How Not to Be Tricked: Everything's bigger, not just the debt.
7. G. W. Bush's promise
8. Debt Confusion Other web sites are still using misleading graphs.
9. $9.2 Trillion: Dowload spreadsheet: whose-national-debt.xlsxlnk.gif
10. The Problem The supply-sider's stealth agenda
11. What Fooled Reagan The Laffer-Curve "theory"
 
 

  2. The Supply-Side Revolution 
David Stockman, Reagan's first budget director, considered himself a leftist revolutionary when young, but then became a leading supply-side revolutionary a couple of years before Reagan was elected. In his book "Triumph of Politics," recounting the failure of the "Reagan revolution," he frequently refers to the supply-siders agenda as revolutionary -- for example, "The GOP rank and file's reservations about the Kemp-Roth tax cut really bothered me. That was the political gravy -- the easiest part of the revolution" (p.55).
During Reagan's campaign he tells us "Reagan had been converted to supply-side -- so for better or worse, Reagan now was the the voice of the revolution" (p. 50).
In the prologue however he tells us "In the final analysis, there has been no Reagan Revolution" (p. 15). In fact he realized this by the end of Reagan's first year in office. The problem was, that Stockman wanted the budget cut, and that did not happen. Instead only taxes were cut and this produced the huge deficits.
Stockman explains how this happened. "Jack Kemp liked the sound of their [the supply side gurus, Laffer and Wanniski] music on this issue. They were leading him, too, into a shriller and shriller anti-balanced-budget, the-tax-will-pay-for-itself, and deficits-don't-matter-that-much position" [emphasis added]
And here are some quotes by the press of the day:
"A few of the recently appointed sub-Cabinet officers will be on the cutting edge of the change Reagan has promised for the Federal Government. Their fervent beliefs are a radical departure from the policies of past Administrations, Democratic or Republican. Says one moderate White House aide: "The revolution is happening and nobody is noticing." --Time Magazine, Mar. 16, 1981.
President Reagan would not be proposing business as usual. The President had in mind what Stockman saw as "fiscal revolution." --The Atlantic, December 1981.
“Reagan Wins his Budget; the Revolution Begins” --Time Magazine headline, July 6, 1981
 
 

  4. Reagan's Promises
During his campaign Reagan promised to balance the budget by FY 1983, but on March, 2 1981, Time reports that Reagan changed that to FY 1984. Of course even his FY 1989 was still sending the debt through the roof.
 
 

  7. Bush's Promise Was Made More than Once
It will retire nearly $1 trillion in debt over the next four years. This will be the largest debt reduction ever achieved by any nation at any time. It achieves the maximum amount of debt reduction possible without payment of wasteful premiums. It will reduce the indebtedness of the United States, relative to our national income, to the lowest level since early in the 20th Century and to the lowest level of any of the largest industrial economies. --PRESIDENT'S BUDGET PLAN: "A BLUEPRINT FOR NEW BEGINNINGS"--February 28, 2001, President's Message To the Congress of the United States: www.ssa.gov/ history/ gwbushstmts.html
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Read Mr. Bush's speech when he presented his first budget in February 2001. He foresaw a $5.6 trillion surplus over 10 years and emphasized that much of that would go to paying down the debt.

''I hope you will join me to pay down $2 trillion in debt during the next 10 years,'' Mr. Bush said then, between his calls for tax cuts. ''That is more debt, repaid more quickly, than has ever been repaid by any nation at any time in history.'' His budget message that year promised that the U.S. would be ''on a glide path toward zero debt.'' --A Glide Path To Ruin, By NICHOLAS D. KRISTOF, June 26, 2005, New York Times.

 
 

  11. What Fooled Reagan: The Laffer Curve
"Jack Kemps bill would keep the income tax progressive by cutting substantially the income tax across the board in every bracket. People would have more of their money to spend as they wish and there would be more for investment to expand our industry. And government would reduce the deficit which causes inflation because the tax base would be broadened by increased prosperity." --Regan in his own Hand, p. 277

There are several mistakes here, but the one we are focussed on is the idea that cutting taxes would "reduce the deficit." This was a completely hypothetical idea put forward by Laffer, and was based on no empirical evidence. This is what George H. W. Bush called "voodoo economics," and so it proved.

Also note that the top rate was cut from 70% to 50% (and then later to 38.5% under Reagan), while the bottom rate was cut from 14% to 12%.

It is also wilding wrong to believe that deficits cause inflation, as G. W. Bush recently proved with the the largest deficit every and inflation hitting it's slowest since the great depression.

 

Adding Up the Debt

  The method for adding up the $12 T Republican debt, is simple. Just add up the dollars and don't make any fancy economic adjustments. Is that the right way? I have chosen this method because it's based on the Republican approach to debt and because it's simple. It seems fair that they should be judged by their own rules.

From Reagan's first speech as President: "A trillion dollars would be a stack of thousand-dollar bills 67 miles high. The interest on the public debt this year we know will be over $90 billion, and unless we change the proposed spending for the fiscal year beginning October 1st, ..."

Well he changed it all right, and when he left office the stack of $1000 bills was 191 miles high.

So what did Reagan tell us about calculating his debt? (1) Start on October 1, 1981, and (2) Don't forget the interest costs of the debt.

October 1, 1981 is the beginning of his first budget year (fiscal year). He's right. He is not responsible for Carter's last budget year that runs until Oct. 1. But Reagan is responsible for his own last budget year, which ran until Sept. 30 1989. That's eight years, which is right for two terms. Reagan was right and fair about this, and that's what the spreadsheet above does.

And, like he said, the interest on the debt matters. And since he and Bush-I left us $3.4 Trillion of extra debt when Bush-I's last budget year ended on Sept. 30, 1993, that debt started collecting interest, and it still is. Clinton, G.W. Bush and Obama are not responsible for that interest. So the spreadsheet actually over-states G.W. Bushes debt because quite a bit of that was interest on the Reagan-Bush-I debt. But shifting that responsibility to Reagan-Bush (as the graph shows) does not affect our total for Reagan and the Bushes.

G.W. Bush took control of the budget on Oct. 1, 2001, when the debt was $5.8 Trillion and his last budget year ended Oct. 1, 2009, with the debt at $11.9 Trillion. During that last year, Obama got a stimulus bill passed, but that's the only significant change he was able to make in federal spending. (You can see it subtracted above.) Spending the stimulus money was slow, so only $36 Billion ($0.036 Trillion) contributed to Bush's deficits. So instead of raising the debt $6.10 Trillion, he only raised it $6.06 Trillion.

About $0.2 Trillion is still left from WWII, and Obama has $1.25 Trillion that's his. Of course half of that is from the Bush-II tax cuts and most of the rest is because of the Great Recession.