Letter: Tax cuts and wars led to high debt
Tuesday, July 26, 2011
As usual, Don Brunell’s July 12 column on the Business page, “Taxpayers should cut up Uncle Sam’s credit cards,” tells only half the story. He points out that, as a percentage of GDP, debt was 40 percent in 1936. He didn’t go further, even though by 1945, debt to GDP was 117 percent — that’s what a Depression and a World War can do. By the end of Jimmy Carter’s presidency, debt to GDP had dropped to 33 percent. Then came Ronald Reagan’s tax cuts, and by the end of the first Bush presidency, debt to GDP had risen to 66 percent. Bill Clinton’s tax increase in 1993 helped slow the rising debt and debt to GDP dropped to 56 percent and the government actually begin to run a surplus. Then came the second Bush tax cuts, and by the end of his 2009 budget, debt to GDP was 84 percent.
Taxes as a percentage of GDP this year will be about 14.8 percent, the lowest since 1950. Corporate taxes as a percentage of GDP are projected to be just 1.3 percent, about a third of what it was in 1950. Little wonder we are running such large deficits with two wars and the worst recession in 75 years.