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The Back Fence: Art Perry And Emory Kesteloot Debate The Debt

This article first appeared in the St. Louis Beacon: When it comes to politics, Art Perry leans to the left; Emory Kesteloot to the right. The two are neighbors and friends in St. Louis’s Central West End and started our series of Back Fence columns in which  friends, relatives and neighbors disagree agreeably about issues in the 2012 campaign. Recently they exchanged e-mails about America’s debt problems.

Emory: This was the email I received recently, that I talked with you about at our recent coffee. It reflects an easy to understand status of our revenue/debt.

Food for thought!

Lesson # 1:

* U.S. Tax revenue: $2,170,000,000,000
* Fed budget: $3,820,000,000,000
* New debt: $ 1,650,000,000,000
* National debt: $14,271,000,000,000
* Recent budget cuts: $ 38,500,000,000

Let’s now remove 8 zeros and pretend it’s a household budget:

* Annual family income: $21,700
* Money the family spent: $38,200
* New debt on the credit card: $16,500
* Outstanding balance on the credit card: $142,710
* Total budget cuts so far: $38.50

Art: You’re right Emory this is a great illustration, but we must remember that the operative term is let’s “PRETEND.” Since the family did not participate in the credit card purchases they should not be held responsible for the DEBT.

Emory: Although it is a “pretend” example, since our government is a “signatory” on all of our “credit cards,” we do indeed owe what they spend! Whether we pay it, or our children/grandchildren do, is what keeps me up at night!

I don’t think we are better off than four years ago (23 million looking for work, declining median household income, 47 million people getting food stamps, higher healthcare costs, $5 trillion more in debt, lower GDP growth each year). But  you might have a different take. What do you think?

Art: In order to come from under the assigned debt it is incumbent for all households to understand how they arrived in such a situation. That’s what I meant in my response. Bush, Cheney, and Rumsfeld, et al. created the debt and that’s what needs to be understood first. How to avoid another miniature oligarchy from repeating such a circumstance is our greatest responsibility.

Emory: While a bit tricky to assign the level of the debt to specific presidents, one way to look at it would be as follows:

During the 12 years of Reagan and the first Bush- Debt on January 1st 1981 was 1.028 trillion, and on January 1st 1993 when Clinton took over it was 4.177 trillion.

For the eight years of Clinton ending January 2001 the debt increased to 5.943 trillion

For the eight years of George W ending January 2009 the debt increased to 10.7 trillion

For the four years of Obama ending January 2013 the debt will stand at 16.3 trillion

So, one observation is that under Obama, in four years, the debt will have gone up more than under the eight  years of mismanagement of George W ( 5.6 trillion vrs 4.8 trillion) – not a reassuring trend!!

So, however badly managed Bush’s eight years may be, the policies of Obama over four years are producing debt increases at twice the level of the previous administration, with plans to add another 4-6 trillion of debt over the next 4 years.

Our households do need to know this and decide whether we can sustain the same policies going forward from a fiscal/ debt perspective.

Art: I definitely agree with the last line, all households do need to know the source of our enormous debt. Clinton’s eight years ended with a projected surplus of more than a half trillion dollars. Bush’s household budget gave all the legacy children an enormous tax cut and started two serious expensive out of town wars on credit cards and never made a payment on any of these expenditures. When Obama came in no budget adjustments had been made to correct the continuing spiraling debt.

That’s what I understand.

Emory: Other than the “projected surplus,” I have no quarrel with your analysis of the Bush years, or the lack of budget adjustments when Obama came into office. This leaves the question of what Obama did with the then existing situation- and that is what I think voters are focusing upon. If there is not a plan to reverse the annual deficit going forward, we end up with a 20-22 trillion debt by 2016, and this is what the voters want to understand. Who is focused on reversing this trend??

Maybe that is where I come out on Romney and you on Obama – what do you think?

Art: On one of my business trips to Indianapolis, Mitch Daniels was there and we had a pleasant open discussion with him. You recall he was the Chairman of the Office of Management and Budget for Bush for 2 1/2 years. He said that if he had an inkling that the big tax cuts were going to cause such deep and lasting problems for the nation and business, he would not have gone along with that process. In the recent Wall Street Journal (10/26), about 80 top Fortune 100 companies believe it’s time to reverse the tax cuts and cut a new path — one that is similar to what the president has presented over the recent 2 years. Even Romney, says his best projections and unknown plans would take eight to 10 years. As mentioned in a prior communication, for about two years prior to the president taking office, the loss of the U.S. economic footing was sliding downward whereas most indicators for the recent years show a template of slow steady growth.

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