I was reading a book about the building of the SS United States-the last ocean liner built in the USA. Because (even in the 1950s) passenger liners were often unprofitable, the US Government provided a subsidy to defer the operating cost. This subsidy came from two things: anticipated use (as a troop carrier), in time of war, and a post office subsidy (in return for carrying the mail). At the time that the ship was being planned, President Truman was balking at the amount of the proposed subsidy (all of $200,000/year!) We now have a Federal Government that flings money around like water-deficits of hundreds of billions are the order of the day. what made the Government such a spendthrift? And why don’t we elect presidents like Truman?
Ronald Reagan.
Bad premise. It is not fiscally responsible to balance your budget in the middle of a recession. Or a war. The goal of government should be the maximum good of its citizens, not zero deficit.
Agree with Voyager, and note that the US government underwrote $50 million of the construction cost, approximately $500 million adjusted for inflation.
That kind of money for carrying mail and possible future use carrying troops is a lot.
The OP could well have taken the other side and asked how come we’re not as spendthrift as past governments that funded things like SS United States.
Agreed. Telling people that it was their patriotic duty to pay less in taxes was a masterful piece of political bullshit.
I wouldn’t say we’ve completely lost the idea of fiscal responsibility, but we won’t eliminate the deficit in just one budget cycle either. We just need to get time on our side and keep electing those who actually reduce the deficit rather than just talk about it.
Ronald Reagan created a disconnect between spending and taxation. Prior to Reagan, everyone knew that if you wanted a $200,000 subsidy for something, you had to raise $200,000 in taxes or cut $200,000 in spending. While even in Truman’s day that was small potatoes, let enough of that stuff slide and before you know it you’re taxing people as much as they are willing to take and you still haven’t done Medicare yet.
The reason the government now spends money on anything they deem even slightly worthy is because there is no short term consequence. Democrats like it because it means no more hard choices on spending and Republicans like it because it means they can promise to cut taxes every election. and when the bill comes due they’ll just all blame the bankers for being predatory. They should have known they were lending to an entity that couldn’t afford it!
Don’t blame Reagan…blame Johnson. when Johnson was contemplating a massive troop surge in Vietnam (1965), his Secretary of the Treasury (Henry Fowler) warned that such massive spending (without tax increases to pay for it) would set off an inflation. Fowler (of course) was right…Johnson didn’t care.
Oh, there were always departures from responsibility that were brief, such as war spending, but war spending was always regarded as an exception to the rule. We ran huge deficits for WW1 and WW2 and Korea as well. Recessions could also cause a spike in deficits, but in general deficits in the 20th century were small assuming normal conditions. Reagan is when that changed and deficit spending became the norm. Even the balanced budgets of the 90s didn’t really change the mentality.
The only way to control spending in the 21st century is to slow growth down to below the growth in the economy, because the government is going to shower money on pretty much any cause that seems worth promoting, because for 40 years now we’ve been conditioned to expect that if something is good then we’ll show our “concern” about it by spending money on it.
1980, in case anyone doesn’t know when Reagan was elected.
Another turning point was when GW Bush decided the prospect of a federal surplus justified a massive tax cut. That a surplus during a good economy should be preserved as a cushion against the inevitable bad economy was poo-pooed by his wealthy supporters, who, while making huge profits at the end of the 20th century, decided they could make even more if their taxes were cut.
Using Google, compare Federal spending as a percentage of GDP in 1981 versus today. Compare tax revenue. Using Google, discover where government spending goes. “definition:mandatory” and “definition:discretionary” are Google search terms that will help identify spending types.
After you complete this assignment, come back and post a brief essay discussing you earlier ignorance and subsequent enlightenment.
The most recent fiscally responsible president was, of course, Clinton. You may not recall this, but in 2000 there were discussions of what to do with all that surplus. W solved that problem: cut taxes and start two wars.
If you’re going to answer your own question, why ask it in the first place?
Reagan redefined fiscal irresponsibility. Kennedy, Johnson, Nixon, Ford, and Carter weren’t doing a great job, they could have mitigated the problems they created and/or inherited, but Reagan sent us into a spiral we may never recover from. We will be paying off debt and maintaining a high tax rate for a long time to come without receiving anything like a reasonable return for our investment. Reagan opened the treasury doors and made the mistakes of past administrations look like wasted paperclips.
While pre-Reagan the US ran annual deficits a lot, they weren’t all that huge most of the time. E.g., the last budget Carter submitted to Congress was balanced (making certain idealized assumptions).
One thing that helped in the 70s was inflation-bracket creep. The tax brackets weren’t adjusted for inflation so as wages went up people’s tax burden got higher and the feds got more money.
With Reagan, things just went nuts for a while. Some saner stuff happened with Bush I and Clinton. Then things went really nuts and haven’t returned to anything reasonable. The beginning of having to pay a share of SS and Medicare out of the Federal Budget is just starting which will really make things bad for the foreseeable future.
Note that the saner years and the crazy years straddle party lines a bit.
Totally incorrect. Reagan did cut taxes, and tax revenue surged (as he predicted). then the Congress went wild with spending, which overwhelmed the revenues increase. This was also true of the military budget…for some strange reason, the (Democratic) California delegation did not want to close redundant military bases in California (like the Presidio-which hadn’t had a legitimate purpose in 180 years). It was (apparently) something to do with “pork”.
You can sorta blame who did what and when and whose to blame and under who did it really get bad…
On the flip side (with some hindsight) and knowing how the two major parties and politics in general behave IMO you could have almost guaranteed the current outcome.
The ONLY thing that would have prevented this is not being able to borrow like a muther fucker in the first place.
Well… not really. In a democracy or republic, the goal of government is whatever the people say it is.
That, I think is why there’s a big debate and disconnect on things like universal healthcare, etc… Some think the goal is maximum good for citizens, and others think the goal of government is to provide some minimum set of services and to stay the hell out of the way. Others think it’s something else entirely from the previous two.
So in some people’s minds, the idea that it’s ok to rack up debt in the pursuit of betterment of the citizens’ lot, while others think that concept is atrocious, as the idea is to provide a minimum set of services, stay out of the way, and let people keep most of what they earn.
That’s the fundamental disconnect here.
That said, the really big deficits did start under Reagan. Whether or not it was worthwhile is really a topic for another discussion though. I will note however, that the House was solidly Democratic during Reagan’s two terms in office, so it’s somewhat sketchy to blame it solely on Reagan, when the House has to originate and pass all spending bills.
Tax revenue did not “surge”.
Congress did not go wild. The actual difference between budgets submitted by Reagan and what Congress passed is a very small fraction of a percent. Blaming Congress for adding to the deficit woes in that era is absurd. (Outside of letting Reaganomics get thru.)
Closing military bases is such small change compared to the amount of money given to rich people via tax cuts that it is barely noise in the calculations.
Please read the whole section on Reaganomics effects here. (Link goes to summary.) Note especially that the public debt nearly tripled during those years and accounting games with the SS trust fund helped hide some of the damage.
If you gave me a 1.4 trillion (1980s) dollar credit card, I could have done an amazing job with the economy in 8 years.
Since Reagan it’s been Republican dogma that cutting taxes will always raise revenue. No one likes paying taxes, and it’s an ongoing debate about what level of service the government should provide and how to pay for it. But telling people that their personal greed will help pay our collective bills, that was genius-level bullshit.
Oh, and in addition to the Presidio budget being pocket change on a federal level, it hasn’t been an Army base since 1994, and was closed by Congress at a time when Democrats held the majority of both houses.