During this administration, you have doubtless heard about our national debt more than once. Clinton started out talking about how the debt has grown "in the last 12 years" at the very beginning of his term in office. He also said that he was going to be the first president since Truman to reduce the deficit three years in a row. "When was the last time you heard any president talk about reducing the deficit?" he said. The Republicans have come up with a plan to balance the budget in seven years...only by that time the national debt will doubtless be more than $6-trillion!
It has been astonishing to see how many politicians on both sides of the aisle talk about the debt and the deficit as if they were the same thing. It has been astonishing to see how fervently they can talk about reducing the deficit and turn right around and pass another new bill for spending $2.7-billion, or another $12-billion, and think nothing about the lies they just told you!
Very often the Beltway Domos get in heated discussions about whether to use the figures of the Congressional Budget Office or the one for the executive branch, as if one is better than the other. The director of the C.B.O., Dr. June O'Neill, was questioned in a recent (April, 1996) Senate hearing about the practice of "borrowing" funds from the "trust funds" of Social Security and several of the other trust funds for certain accounts, and then using the borrowed money in other accounts. "Do you show that debt to those trust funds in the budget?" she was asked. No, was the reply. Why not? "Because it makes the deficit look better." Senator Hollings was aghast! A Republican senator opined that if that practice was used in the private sector, it would probably be considered fraud. The deficit, without those "borrowed" funds being shown is $144-billion. Showing the debts causes the deficit to become $206-billion, a difference of $62-billion.. If the C.B.O. is supposed to be the most reliable source, what can we expect from the other budgeting office? With deficit figures which are $60-billion too low, what difference does it make if the deficit is reduced 3 years in a row? It's a lie anyway!
The debt has been the subject of debate for more than 30 years...I almost wrote serious debate. But of course nothing has been done to reduce the debt in all that time, so the debate couldn't have been too serious. It did sound good, though, and it did properly impress the voters. As a teacher in the sixties, I made up a chart to show the debt in a way so my students could understand it. The liberals argued that it was okay; it was only like the right hand owing the left hand some money. And if you divided the debt by the GNP you could see how solvent we were. That's the way I set my chart up. The term deficit spending was in wide use in those days, but almost no one mentioned the deficit. I suppose it must have been a term too hard to explain...or maybe it wasn't mentioned because no one in the Congress knew what it was themselves.
The source of my figures is the Statistical Abstracts, the statistical history of the nation as recorded by the Commerce Department. It is supposed to be a very reliable source for doing historical research. I had heard much said about the origin of the debt being in Roosevelt's New Deal. Sure enough, the debt in 1932, before Roosevelt took office, was only $19.5-billion. (Say what? Clinton gave away more than that "bailing out Mexico"!) In 1933, when the New Deal was being installed, using deficit budgeting techniques, the debt immediately started growing. From 1933 to 1996, the budget has been balanced only 6 times! And the debt has grown from $19.5-billion to $6.3-TRILLION! Blame whichever president you want, but presidents only propose budgets; Congress makes the budgets! More especially the House of Representatives. And the Democrat Party has had a majority in the House all but 8 years in the 63 years since 1933. (Not counting the 105th Congress.) Think about it: the House makes the budget, and it takes a majority to pass the budget. If the Democrats had the majority 55 years, how can the Republicans be blamed for any of this humongous debt?
But wait a moment. Let's set some ground rules before we continue. First of all, the debt is the accumulated amount of money owed over the years. The deficit is the new money borrowed in the current budget year to cover the appropriations made for which there is not enough money. It is a budgetary term applying only to the current budget year. This year's deficit will become a part of the debt next year. Here is one that really bugs them! When the deficit is reduced, the debt goes up! So when a politician gets up and tells you he is reducing the deficit, and expects you to thinks that's good, he either doesn't know he's lying, or expects you to be too stupid to understand he's lying.
The fact is, the deficit had been reduced 7 times from 1970 to 1993. And, as a matter of fact, Richard Nixon was the last president to have a balanced budget, in 1969. And further, Nixon shows three years (‘72-'74) in which the deficit was reduced for three years in a row! And the fact is that 2 of those 3 years Truman was supposed to have reduced the deficit, Republicans had a majority in Congress! Are you still listening to the big mouthed politicians?
When you divide the debt by the GNP you get a percent...ah...well, you get a percent. Of what? Oh, let's say a percent of solvency. What the heck. So now the percent has a name. The higher the percent is, the worse it is. The Democrats used to brag on Kennedy so much, his best percent of solvency was 52% in 1963. And in the eighties, the Democrats got on Reagan so badly about running the debt up...his worst percent of solvency was 53% in 1988. But the man with the best percent of solvency in the last 60 years was Richard Nixon. It was down to 33% one year, 34% two years, and 36 and 37% 2 other years during his term in office. Do you suppose that's why a third rate burglary like Watergate was turned into cause to have him impeached? Hmm. Nixon broke with the Bilderbergers in late 1971, and Watergate happened in June, 1972. Isn't that interesting! What is even more interesting is that Nixon won reelection in ‘72 by one of the biggest landslides in our history! If Watergate was all that important, why wasn't it used to defeat him that year? Is that something worth thinking about?
Now let's examine the chart a bit. Notice that the debt and the deficit increased more than $40-billion in 1975. What could have caused such a jump? It so happened that in 1974, there was a Budget Reform Act which took away the president's right to impound, simply not spend, budgeted funds he thought excessive. Short of the veto power, that was the last means by which the president could actually control congressional spending. That has to be considered an accelerator to the debt. In 1971, Nixon signed into law a bill which took us off the international exchange gold standard. That made our currency a fiat currency because none of it was backed by specie (gold, silver, etc.) any more. Roosevelt had taken us off the gold standard in 1933 for domestic money. Silver certificates had been done away with by Johnson. So our currency, our legal tender, was no longer being backed, or redeemed, by specie, and it is the official means of paying debts, so our currency became fiat currency.
When currency is redeemable by gold or silver payments, the amount of currency in circulation cannot exceed the amount of gold or silver available for redemption. That means inflation will not become a problem, but the money supply cannot easily be expanded or contracted. Our central bank, the Federal Reserve System, cannot effectively expand or contract the money supply without having a fiat currency. Need some more money? Just go print some more. No problem. Only there is a problem! Inflation becomes a fact of life when more money is printed without backing. It becomes too easy to get excessive amounts of money into circulation with fiat currency.
To give you an idea of what that means, an automobile purchased in 1989 for about $12-thousand sells today for $20-thousand! A home which sold for around $13-thousand in 1958 if now worth more than $100-thousand, even though it is nearly 40 years older!
Back to the seventies. We have seen that Nixon took us off the international exchange gold standard in 1971, and that was an accelerator to the debt. The Budget Reform Act of 1974 took away the president's right to impound budgeted funds and was also an accelerator of the debt. Something else happened in the seventies; at some time during that decade we started borrowing money to pay the interest on the debt, yet another accelerator to the debt. And, indeed, the debt increased by 46% in the last 4 years of the seventies...Carter's administration. You may liken the $40-billion jump in 1975 to ignition and liftoff for the skyrocketing national debt, which has risen like a space rocket, gathering momentum all the while.
At the end of the Carter administration, the debt had risen to just under a trillion dollars. Interest rates were at 21%, inflation was at 14%, and unemployment was near 9.9%. Imagine paying 21% interest on a trillion dollars; and 14% COLAs on the government payroll, and the loss of revenue with 9.9% unemployed. That was also an accelerator to the debt. Then, in 1981, Reagan signed into law a bill which allowed our Treasury securities to be sold to foreign investors. Now they own about 60% of our debt! And finally, the S&L scandal broke in the eighties, which cost the government - no, it cost you and me , because the government used our tax dollars to back the FSLIC - more than $300-BILLION in unbudgeted funds, certainly another accelerator to the debt! The debt has been growing exponentially (That means in leaps and bounds.) since the mid-seventies. Notice that the percent of solvency in 1991 rose to 64%, then to 69% in ‘92, and in FY'93 it was up to 74%. That's almost like owing $3 for every $4 the economy is producing. If you had figures like that on your balance sheet, you couldn't qualify for even a give-away credit card!
Our currency is redeemable on the full faith and credit of the United States government...only in 1995, the value of the dollar had fallen from around 385 yen in the early fifties to 87 yen. Some European nations dumped $100-billion worth of the U.S. securities they were holding on the market. Does that sound like some folks are beginning to lose confidence in our currency and securities? Currently, the dollar is up to about 107 yen, but that is still not what one might describe as ‘strong'. Hold your hats, folks! Or should I say ‘wallets'?
Then to make matters worse, multinational corporations in this country have been given tax incentives to move their production operations out of the country, and sell the products here without paying duty on them. Senator Hollings, when he was commenting on his opposition to the G.A.T.T., (1994) made the statement that in the last 20 years or so, we have lost more than 3.5 million good-paying industrial jobs, and that the average family income has been reduced gradually, but steadily, in that same time frame from just over $300 to just over $200 per week. You frequently hear messages that we work until the middle of May every year for the government; the money we earn in that period is paid to the government in taxes - federal, state, FICA, and local taxes. Representative John Boehner of Ohio made the statement on the floor of the House a couple of years ago that we actually work until July 3 to pay our taxes, including sales taxes, and excise taxes. When you look at the gross figures for incomes, (that's before taxes) you would think we are doing very well, but when you look at the net income, we aren't doing as well as we did 20 years ago. Prices on automobiles are so high, we have to lease them now, for 3 years, instead of buying them. And we even get to pay all the taxes on those leased cars, plus very high interest charges, or fees, or whatever they can call those charges to keep you happy. Should you decide to buy a car, you will very likely be caused to include the cost of extended coverage insurance (which is high enough itself) in the financing of the car, which means you pay not only very high extended coverage insurance costs, but additional interest on those costs by including it in the sales contract.
So be aware that the astronomical debt we have today is not the responsibility of the last 2 Republican administrations. It is the responsibility of more than 60 years of unbroken deficit spending which had only 6 balanced budgets. Yes, it does appear to have increased since 1980 at a greater rate, but that's what happens when you begin borrowing money to pay the interest on the debt. Just last year (1995) the interest on the debt was $298-BILLION, the second largest item in the budget! And that money doesn't pay for even one saltine cracker for a kid on welfare! By the way, who gets that money? You learned earlier that about 60% of our debt is owned by foreign investors - central banks of foreign countries. That amounts to about $178.8-billion being due to foreign investors owning our debt last year. But that isn't considered foreign aid, you know.
The debt situation is so complex as to make it almost impossible to explain it in simple terms. Very likely, that's why it is so complex - we are not supposed to learn about it. But folks, it's OUR money! All those securities are paid off with our tax dollars! I saw a film clip of a controversial political figure of the thirties not long ago, Huey Long of Louisiana. He had a very folksy mannerism when he spoke. He said, "Now, Mr. Rockeefeller and Mr. Maugin (J.P. Morgan)done took the vittles right off'n our tables, and I'm gonna see to it Mr. Rockeefeller and Mr. Maugin put them vittles back on our table as soon as possible." Or words to that effect. He made that statement in the worst years of the Depression, and the implication was that Rockefeller and Morgan had been responsible for causing the Depression. And we have learned they did indeed have something to do with causing the Depression to happen to their own advantage!
What do we have to show for all that debt? First and foremost, our constitutional republic has almost been replaced with a socialistic government. In the best Fabian tradition, Roosevelt's installation of the New Deal was the beginning of the transformation, and in a little over 60 years, they have brought on us the notion that the Supreme Court and other federal courts can issue edicts with the force of law. Our public education system was probably the best in the world 30 years ago, and is now no better than 13th in the world. The welfare system has expanded more than $5-trillion since 1965 and we have more on welfare now than we did then. Illegitimate births are up 30% since 1965. Our "educational system" is graduating kids from high school who can't read their diplomas. When I was teaching in this area 30 years ago, 4 public high schools regularly produced more than 120 national merit scholarships a year, and today if there are 25 in the whole system I would be surprised. And the huge increase in federal aid to education has produced kids with no Spanish or Mexican background who know a lot about Cinco de Mayo, and who know nothing about George Washington, Abraham Lincoln, or our Constitution. Kids aren't taught to read; they are taught inventive spelling; they can't do simple arithmetic, and know nothing about the history of this country.
Once, our immigration laws required that prospective citizens had to have a sponsor, or the promise of a job before they came here. They had to be in good health, and have skills with which they could become contributing citizens right away. They were required to be registered with the immigration people at all times during their trial period (5 years), and they had to learn to speak and write English, and know something about our history and traditions, including memorizing some of our more famous historical documents. They had to take written and oral tests after five years to prove their capability to become citizens here. None of them were allowed to get welfare of any kind. At the end of the five years, and the successful completion of their tests, they had to renounce all previous loyalties and pledge allegiance to the United States. Those people were proud to become American citizens!
Now, illegal aliens come here and get free health care, are taught in their own language in our public schools at taxpayer expense, and have to do nothing to show their intention to become a citizen; they don't learn our language, they don't learn our history, and they don't learn our traditions. Yes, you are very correct if you think this writer does not like that! Too many good, sincere people have come here, forsaking everything they had in the Old Country to become Americans, to see life in this great country cheapened by the presence of illegal aliens who want only to live on our welfare.
It is time everyone took an interest in the affairs of our nation. As the Old Fella said, "If you don't stand for something, you'll fall for anything." It makes no difference if a politician is a Democrat or Republican, if he isn't trying to get us back to the principles of our Constitution, which was written with common law - God's law - as its basic premise, he is not doing what we need done. The Constitution was the most succinctly written document of government ever written, but more importantly, the Constitution was the first document of government ever written which placed to power of government in the hands of the people. And as fine a document as it is, it was not accepted by the people until there was a written guarantee of those rights we had fought the Revolution to achieve. The amendment process was used to include ten amendments guaranteeing our rights; our Bill of Rights. We have allowed our government to wander far afield from both the terms of the Constitution, and our rights as well. The uncontrolled debt is just one of the indications of how far away we have come.

Note: Though this article was written in the mid-nineties, it still has validity. Neither of the major parties have done a very good job of controlling the debt. (It is now in excess of $7.2-trillion. You can get up to the minute figures from www.publicdebt.treas.gov/opd.) Approximately 1/3 of the registered voters today are registered as independents, as I am. We can actually control who gets elected if we vote as a unit to restore the principles of the Constitution, and not the party platform of any party heading in another direction.
Robert C. Wallace)