Updated since the original publication 4-18-2011 on 11-11-2015, on 9-01-2017, and on 5-08-2023.
Roosevelt reinvented fiscal lying with the New Deal. There were other “fiscal liars” who preceded him. And I am not judging him here. Perhaps he had to do what he did. He certainly believed in what he did. But it was a lie. We could not afford what he came up with, but we’ve continued forward with the same original sin/lie since day one of the New Deal.
You’ll note that whenever we need to be “saved” as in the Great Depression and now, the only way out is by deceit. Even Reagan created a massive amount of debt with Democratic help, so he was just one more “fiscal liar” in regard to lowering our Federal debt and gold went down in dollar terms due to interest rate policy, not due to Reagan’s horribly unbalanced budgets that led to a multi-trillion dollar debt (about 3 trillion dollars) by the time he left office shown HERE.
Reagan ran based on fiscal responsibility, but was far from it (see comments posted below). Some say he “wanted to balance the budget,” yet he passed the bloated budgets of the Democrats. He also did not solve the Social Security or Medicare issues. Can you guess that I’m an independent? ; )
During Reagan’s first term, it was the Fed that did the work to stem inflation, not the executive and legislative branches. Fed Chairman Volcker hiked rates to squash inflation until mortgage interest rates hit 18% and one CD I bought back then paid 15%! It is of interest that 3 different Fed members have been talking about either raising interest rates or lowering QE2 by 100 billion or more over the last few days. Even a hike to a 2.5% Fed rate could cause gold to drop from 1420 to 1300 in a heartbeat and it could correct much more and stocks would fall initially as well.
The spending by both political parties has continued whenever our economy was “in trouble,” more recently due to bad decision making in the housing and banking sectors in the “Great Recession.” Presidents G.W. Bush and Obama sent our debt through the roof. On 11-09-2015 our debt was officially: $18,614,769,216,712.84. That’s 18.6 trillion dollars per Treasury Dept. figures.
Now after massive spending by both Trump and Biden, who sent out many checks to people that did not need them during the pandemic, our national debit has risen to $31,461,381,356,392 or 69% higher than in 2015. (The website that tracks it is HERE.)
Americans love to lie to themselves, so they elect other Americans that lie to them from both parties. So let’s be honest about Reagan. Reagan was as much of a fiscal liar as Carter and Johnson were – the numbers never added up and they all knew it.
The trickle down theory of tax cuts for the rich (better named the “Tinkle Down Theory”) Reagan sold was a lie, because our prosperity was paid for with trillions of borrowed money.
The same bogus “Tinkle Down” theory was used under G.W. Bush and Trump to lower taxes primarily on the wealthy. It has now failed THREE TIMES to produce enough additional tax revenue from the growth it induces. That’s three strikes, and you are out!
Nixon was about the worst fiscal liar in our history, not as much by the dollar amount of his deficits, but by ending the US dollar gold standard and instituting wage and price controls – the latter is the ultimate in fiscal lying – “it should cost more, but we’ll pretend it doesn’t.” It failed! But at least he didn’t leave us with trillions of dollars in debt. Reagan with both Republican and Democrat support started that trend as a joint venture in the 1980s.
Don’t you think it’s time for the truth? But it will only happen when the voters stop lying to themselves. We vote our own consciousness into office. That is the nature of politics.
The irony for self-deceiving Republicans out there is that Clinton balanced the budget more than any recent President had for the first time in years (despite the Social Security fudge mentioned by a reader in the comments and in the cited article; this has been a tradition among both parties). Clinton had some help from the robust economy partially driven by an internet stock market bubble, but we can admit the budget was balanced. He lied to his wife, but not in fiscal policy. Sure, we can argue about how he did it, by raising taxes, but minus the usual fudging mentioned we cannot say he did not do it, at least much more so than Reagan or the Bushes. That would be lying!
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Note: This article was originally written in response to a post on gold, the link for which is not currently working.
I wrote at the time of publication: “My rough calculation says gold is not a great value compared to cash flow producing companies and other sources of income that carry pricing power (it’s the reason Warren Buffett prefers buying whole companies that generate cash and have pricing power vs. buying gold).”
See the latest Market Timing Analysis: HERE
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David, the only issue I have with your comments is your statements about the lying Presidents. Congress runs the budgets. If you go back and look at the Reagan budgets you will see they were balanced. This is where the term Reagans Budgets were “DEAD ON ARRIVAL.” Tip O’neal and gang made two promises, one was for a $1.5 spending cut vs. $1 Tax Reduction and the second was a $2 Spending cut vs. $1 Tax reduction. I agree Reagan signed them and he should have learn the “fool me once shame on you line.” We see the same fiscal problems with the Clinton years, the Bush years and now the Obama years. Follow what Congress did and you will normally see the problems arise.
I agree this is a two party problem, but the American people have historically never cared unless it hit there pocket. Soon, it will not just hit their pockets, but will rip the pants clean off.
Thank you for that Robert. Yet my point is exactly what you meant by writing “I agree Reagan signed them.” If a President wants to stand for the truth, s/he’ll have to take it to the final veto or I won’t buy it as truth. Truth is one thing and convenience in politics is another. Reagan also added massive amounts of military spending to the budgets, which some claim resulted in the end of the Cold War. Debating that one is fruitless. Reagan did have his way in communicating with the Russian leaders once threatening in jest (supposedly) to bomb them while his microphone was inadvertently on. He was a character and as I said, I admired his spirit. The point is that at some point, we’ll have to balance our budgets and the buck will have to stop sliding into the arms of our children and grandchildren, or the Chinese and Japanese and our other creditors will balance it for us, by denying us further capital to fund our massive interest payments on the national debt. We need open and honest leaders now more than ever.
I use the term liar, not to inflame, but to allow for discrimination. We seem to allow subtle forms of dishonesty in our leaders as if the truth does not matter and as if the people cannot stand the truth. That may be true, but is sure is NOT leadership to simply vote the party line and perpetuate the lack of workable solutions. This is true for all parties.
My suggestion is that if our Congressmen/women vote entirely along party lines, we should work to find replacements who stand for the truth, not the party line, and throw the liars out – gently but firmly telling them “Thank you for your service, but we are sending you home now. We have someone honest to take your job and secure our future.”
Best regards, Dave
I agree with your analysis of the above facts except for the part of Clinton. I do not understand how any of these discussions can even be taken at face value when we are not willing to state that Clinton’s “balanced budgets” were done using the social security fund payments. The ponzi scheme of social security should not be added to anything. Take the money from those payments and put it away to pay the benefits. All of us are fools and Bernie Maddoff looks like a common pick pocket in comparison.
Thanks for your comment Brad. I agree that fudging the numbers should not be tolerated. So let me clarify my comment on Clinton and say that he came the closest to balancing the budget of all recent Presidents! It’s all about telling the truth in the end. Pretending that our budget will be paid by “trickle down” economics is just as bad as that fudging. Reagonomics was a scam that Republicans continue to praise mindlessly. It didn’t work and we are the ones been “trickled” upon by our government. And it ain’t Fuji water that is trickling down on us! Reagan had his virtues and I admired him for many reasons, but balancing the budget was not his forte. Let’s admit that – about both sides of the aisle. And let’s all vote for candidates who are not about voting the party line, but about truth in leading our nation to a bright economic future.
Dave