Video Transcript On Debt and Deficit: McCain, Clinton and Bush By Ravi Batra

 

Video Transcript On

 

Debt and Deficit: McCain, Clinton and Bush

 

By

 

Ravi Batra

 

[video:http://www.youtube.com/watch?v=3M5Of0vdObc]

 

 

Hello friends. It is now well known that the federal deficit and debt have been getting out of hand over the last 30 years. It all started under President Reagan when he decided to slash the income tax drastically, while raising the tax rates on the middle class. The top-bracket tax rate fell from 70% in 1980 to 28% by the end of Reagan’s second term in 1988. At the same time the self-employment tax soared from a factor of 0.09 to 0.15.  Thus the self- employed small businesses saw their tax rate jump by 66%--yes indeed 66%. That is why, you see, Reagan transferred the tax burden from the wealthy to the middle class, because most small business persons belong to the middle-income group.

 

    Incidentally, the current Republican John McCain voted for the vast rise in the self-employment tax in 1983. This was his first major vote, and he used it to raise this middle-class tax by as much as 66%. I repeat this figure because I don’t understand how McCain did this and still claims that he has been a friend of small business people. If you don’t believe me, just look at federal archives for 1983. How can anyone raise your tax bill by 66% and still claim to be on your side?

    What did Reagan’s policy of tax-transformation do to the federal budget deficit and debt?  Of course, they both soared. Reagan and his advisers had foreseen a sharp fall in the deficit, but Reagan’s vice president, George H. W. Bush, who had earlier called such policy voodoo economics, knew better. His warnings came true. As the deficit soared, GDP growth fell below the historical norm, and poverty began to rise.

 

    Then came Bill Clinton in 1993, and he raised the income tax rate on high incomes to slash the deficit, which fell sharply, while GDP growth went up. So poverty figures began to fall under Clinton. The moral of the story is that when the income tax rate fell, the deficit and poverty rose, and when it went up, the deficit and poverty fell. History shows that high income tax rates cut the budget deficit, while high middle class taxes cripple small business and hence the economy.

 

     No government can live without taxes, but the Democrats tax those who can afford to pay them, while the Republicans tax the poor and the middle class. I prefer the Democratic way, because it is not only fair, it is also good for the economy.

 

    The current president George Bush repeated Reagan’s folly and cut the income tax rates again mostly for the wealthiest Americans. So the results are the same. While both the federal deficit and debt have soared, poverty is back to where it was under Bush senior. Please take a look at Table 1. From 1980 to 1988, the number of people living below the poverty line went up by 3 million under Reagan, and then  another 6 million by 1992 under Bush senior. Clinton slashed poverty figures by 6 million, and now George Bush has brought them up again by 5 million.

 

Table 1: Poverty Rise under Various Presidents; 1980-2008

 

President                       Jump in Poverty Figures

Reagan                                       3 million

Bush I                                        6 million

Clinton                                    - 6 million

Bush II                                      5 million

 

Source: The Economic Report of the President, 2008.

 

 

     To me, it is more than a coincidence that poverty rises whenever Republicans take over and falls under Democrats. First, poverty rises under Reagan and then again under Bush senior; it falls under Clinton, and finally it rises again under George Bush. So the record is quite clear that Republicans create poverty and Democrats reduce it. Vice President Dick Cheney says that Reagan proved deficits don’t matter. No! They do matter, because they create poverty.

    So now the federal debt and deficit are out of control. Please take a look at some charts. Figure 1 shows how it all started, how the deficit jumped from Carter to Reagan, then fell under Bill Clinton and now is sky-rocketing.

 

     Figure 2 reveals how our debt fell under every president from Truman to Carter, and then started to rise under Reagan, fell again under Clinton, and is now sky-rocketing. Finally figure 3 displays where our federal debt stands from 1940 till today. It has grown tall, taller and the tallest—at close to $10 trillion today. It cannot go on like this forever. The Bush borrow-and-spend policies must be reversed before the economy collapses. I request Mr. McCain to reconsider his support for Bush’s tax cuts.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Figure 1: Federal Deficits—Reagan, Clinton and Bush

 

 

Clinton

Bush

Carter

Reagan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


     Source: Global Policy Forum

 

 

 

 

 

 

 

 

 

 

 

Figure 2: National Debt since WWII

Source: zfacts.com, and The Economic Report of the President, various years.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Figure 3: Our Federal Debt Today

 

 

 

Source: MarkTaw.com