From: Larry Shade
Columbus
From 1900 to 1980, America was engaged in two World Wars, the Great Depression, Korean War, and the Vietnam War. Yet in 1980, the country’s debt was less than $1 trillion. But in the years from 1980 to 2000, the national debt increased to about $5.6 trillion. But this increase was held lower by the Clinton administration having four years of budget surpluses. But in the next 22 years, from 2001 to 2022, the national debt exploded to $30.9 trillion as the country was hit with a wave of costly events. It started with the terrorist attacks of 9/11, followed by the wars in Afghanistan and Iraq, the 2008 financial crisis, COVID health pandemic, and the Ukraine War.
Congress is the legislative branch of government. Its many duties include declaring war, creating and changing laws, and establishing an annual budget for the federal government. They are responsible for passing laws in attempting to balance government spending with tax policy to provide sufficient revenue. But with all the numerous events that added to expenditures in 2001-2022, the challenge was monumental. With the polarization in our politics, very little happened. But what Congress did made the situation worse. With the deficit now so huge, they needed to not only reduce spending, but also find more revenue.
But in 2001 and 2003, Congress passed two George W. Bush tax cuts. The Congressional Budget Office (CBO) reported that the tax cuts had an accumulated effect of adding to the deficit without significantly boosting growth, and that the tax reductions mostly benefitted the rich.
Donald Trump in 2017 also made huge income tax reductions. They lowered the top individual tax rate from 39.6% to 37.0%. It lowered the corporate income tax rate from a maximum 35% to a flat rate of 21%. The Congressional Budget Office reported that the 2017 Trump tax reductions were skewed to the rich, would be very expensive for the government, and failed to deliver on its promise. Under the law, the top 1% taxpayers would receive an average tax reduction of more than $60.000. Compare that to an average tax reduction of less than $500 for households in the bottom 60%. Tax cuts in 2025 will average $61,000 for the top 1%, and the top 0.1% will see a tax reduction of $252,300. Trump also doubled the Estate Tax Exemption from $11 million to $22 million, enabling the super wealthy to become more wealthy.
America’s huge debt level has not only become a threat to our economy, but a threat to the global economy. Democracies around the world believe that America’s reputation as the world leader in promoting a free society is on the decline. They believe that other democracies around the world fear that without a strong America, authoritarians will be bolder in attacking their free political system.
