Reagan on the Debt Ceiling
Via WaPo (back in May): Dire warnings on debt limit hark back to Reagan
In a November 1983 letter to then-Senate Majority Leader Howard H. Baker Jr. (R-Tenn.), Reagan warned that without a higher debt ceiling, the country could be forced to default for the first time in its history.
Reagan wrote: “The full consequences of a default – or even the serious prospect of default – by the United States are impossible to predict and awesome to contemplate. Denigration of the full faith and credit of the United States would have substantial effects on the domestic financial markets and the value of the dollar.”
While certainly the fact that Reagan said such things doesn’t make it so (i.e., I am not making an appeal to authority here), but it is still interesting to note what he had to say on the subject given the position that many in his party are currently taking on this topic (especially given the degree to which they venerate Reagan).
h/t: Steve Benen
Why not appeal to authority?
He was certainly in position to know.
Maybe Reagan would sign bills today that could be called tax increases.
The Free Market Principle of Equal Justice Under Law suggests that special tax credits be repealed. Government cannot be in the business of subsidizing market activities that would otherwise be unprofitable, while taxing profitable industries at the full rate.
http://www.freemarketprinciples.com
Repeal of tax credits to certain industries might not technically be a tax increase. It could be called a spending cut. If it makes the democrats in congress feel better to call it a tax increase, we should be happy to accommodate.
With all due respect, selective tax credits for the politically favored is worse than tax cuts for no one.
We can eliminate all subsidies to industry and call it a tax increase.
The people who call themselves conservatives today do not give a rat’s ass about Reagan or what he stood for. All he is to them is a cardboard cutout they trot out when they are waving their teabags around and thinking of new and better ways to screw up our country.
@anjin-san: Anjin, all you ever seem to contribute is criticism about the conservatives in general and the Tea Party in particular. Maybe your world is filled with objectionable Tea Party people, but your sweeping condemnations suggest you are a crybaby and unserious thinker. Your criticisms could be construed as nothing more than “herd mentality” outreach for like minded nitwits.
Perhaps you could elevate your argument with more constructive criticism versus the infantile swipes for which you are so well known.
@Pete….
Yeah…if only Anjin wasn’t correct.
Reagan is irrevelant to any discussion of today’s so-called republicans. They have veered so far to the extreme in response to the moderate policies of Obama that Reagan would be to liberal for them to elect today. He’s a cardboard deity whose name they invoke, but whose policies they abhor.
Today’s radical Republicans see no need for complete purity in their icon. Reagan was then. And this is now.
Gee, anjin and norm would rather sling around insults than deal with topics. Gosh, color me flabbergasted.
Reagan’s letter was dated November 1983. Let’s put that in context:
From 1983:
Federal Debt: $1,377,200,000,000.00
GDP: $1,371,700,000,000.00
Percentage of debt to GDP: just under 40%.
More statistics:
Current Federal Debt: $14,353,719,330,930.18
2010 GDP: $14,601,000,000,000.00
Percentage of debt to GDP: 98%
Ya think that might make a wee bit of difference?
“Mr. Smith, would you mind if I gave you an injection with this little syringe?”
“I guess that’d be OK…”
“Mr. Smith, would you mind if I gave you an injection with this horse syringe?”
“Um, yeah…”
“Mr. Smith, would you mind if I gave you an injection with this oil drilling rig?”
J.
Here’s another data point: what would Reagan have thought about having a mutual defense treaty with Poland? Promising to defend them from attacks?
For those clue-impaired, during Reagan’s tenure, Poland was a member of the Warsaw Pact and a Soviet puppet state, with its Communist government run by the Soviet Union.
J.
@Pete: Republican intransigence is forcing a debt crisis, but the real problem is liberals like Anjin-san saying mean things about the Tea Party? This is exactly why the Republican party is in trouble. They can do anything…ruin the nation’s credit, even…and not only will their constituents look the other way, they’ll find some liberal to whine about instead.
Jay Tea – Reagan’s point was that failing to raise the debt ceiling would have a terrible impact on the United States. It had nothing to do with what number that ceiling represented.
Someone voted down “authority” above.
Think about the democratic process. If Presidents do not gain authority from the mandate, why not a lottery? Any random person can rule, because after all, no decision about ability was made.
I notice the whining from certain people when anjin-san writes certain things, and yet, I don’t see a peep out of these same people when someone like Tsar Nicholas makes much more sweeping generalizations about other groups…funny, that…the bottom line with Reagan is that it is true that many segments of the conservative coalition seem to revere him and yet, much of what he did would be derided as the work of a RINO by many of the same people who appear to hold him in such high regard…
@JTea…
I assume you realize most of that increased debt came at the hands of republicans. Now those same republicans dont want to pay the credit card bill.
The issue is the full faith and credit of the United States…not the amount.
“While certainly the fact that Reagan said such things… but it is still interesting to note what he had to say on the subject given the position that many in his party are currently taking on this topic (especially given the degree to which they venerate Reagan).
That’s because this analysis only focuses upon half of the problem caused by our national debt. When Reagan wrote his letter in 1983, US gross public debt as a percentage of GDP was less than 40%; now under Obama, we are quickly nearing 100%. (And this isn’t to cast all blame upon the current occupant of the White House, as others from both parties have contributed to this problem- he, however, rapidly increased the problem in little over two years in office).
The problem that we now face is essentially a “darned if you do, darned if you don’t” predicament: We can raise the debt ceiling in order to prevent a loss of our Aaa credit rating; however, if we do raise the debt ceiling as we continue to approach (and eventually exceed) 100% debt as a percentage of GDP, we will also likely soon lose our credit rating (in addition to suffering a prolonged weakened economy) in a different way, especially if we can’t get spending under control. Reagan didn’t face this predicament in 1983 when he wrote those words; Obama does. While it is true that Reagan in reality did not always live up to his own political principles, it’s misleading for some to suggest that modern day Conservatives are somehow hypocrites for desiring to apply his principles to a much different, severe problem imperiling our future.
And at any rate, Mr. Obama himself spoke out against (and voted against) raising the debt ceiling in 2006- all which goes to show that mere words- from politicians of both parties- sometimes mean very little in this discussion.
@john personna: I concur that Reagan would be an authority on the subject, given his office. However, just quoting someone who is an authority does not an argument make, which is what I meant.
@Jay Tea: Except the debt ceiling issue in terms of the impact of not raising was the same when Reagan was writing as now. The debt ceiling issue is not the number, per se.
Indeed, you seem to be making a mistake that is popular in some conservative quarters these days, which is arguing that not raising the debt ceiling someone means cutting the debt or the budget. It does not.
@Jay Tea: In re: the Poland example: the problem is that Poland in 1983 and 2011 are very different situations, while the debt ceiling is the same procedural issue in both times.
@Miscreant: You are making the same mistake as Jay Tea: misunderstanding what raising the debt ceiling does (and what it does not) and why it has to happen.
@Steven L. Taylor:
“@Miscreant: You are making the same mistake as Jay Tea: misunderstanding what raising the debt ceiling does (and what it does not) and why it has to happen.”
That’s reading in something that I didn’t say.
As for the claim that this, “…a mistake that is popular in some conservative quarters these days, which is arguing that not raising the debt ceiling someone means cutting the debt or the budget. It does not”: Many (but not all) Conservatives would accept raising the debt ceiling as a trade-off for present cuts (such as the current cuts in the Ryan budget), or at least significant “real” future cuts- IOW, not creative accounting. The president, however, is unwilling to accept these cuts- thus exacerbating the problem.
(Plus, there is some debate as to whether Mr. Geithner is being absolutely honest regarding his claims about doomsday scenarios. He issued dire warnings earlier in the year- and yet he somehow found legal ways to keep making payments. I’d like to see an independent evaluation of his claims about prioritization of payments).
Steven wrote:
No. Appeal to authority is valid, when authority is valid.
To quote from the Wikipedia page:
Given that a President is at the very focal point of national confidence, his analysis on the impact of default on that confidence should be given credence.
@JP:
Yes, it should be given credence, which is part of why I posted it. However, it is not sufficient to settle the discussion in the way that, say, appealing to a medical doctor on a medical question would be.
All I was saying was that I did was not deploying “Reagan said it, I believe it, that settles it” as a mode of arguing on this issue.
I think you are going down a hole in your argument there, Steven.
To take your medical example, some guy says “my doctor says I need surgery,” and someone else says “yeah, well I did a web search.”
Which would you go with, honestly?
More on topic, this default thing isn’t rocket science. Everyone, anyone, asked in abstract “does default impact a borrower’s future credit-worthiness” would answer “yes.”
That experts, presidents, concur isn’t surprising.
No, the real question for our age is how anyone can pretend otherwise.
@ Miscreant…
“… Many (but not all) Conservatives would accept raising the debt ceiling as a trade-off for present cuts (such as the current cuts in the Ryan budget), or at least significant “real” future cuts- IOW, not creative accounting. The president, however, is unwilling to accept these cuts- thus exacerbating the problem…”
Obama is willing to agree to cuts…the discussion on the table is essentially 3:1 cuts to revenue increases. The so-called republicans are unwilling to even discuss revenue increases. Which brings us back to Reagan, who increased taxes, and a contemporary republican party unwilling to act in a similar moderate manner. Their extremism threatens the full faith and credit of the US…it’s all on them.
@Hey Norm:
Mr. Obama’s latest articulation of his plans last week (following the 97-0 rejection of his earlier budget proposal in the Senate) involved his desire to eliminate certain tax breaks (or “subsidies”, etc., however one wants to term them). Unfortunately, eliminating $4 B worth of “subsidies to oil companies”, ethanol subsidies, and the like, are minor drops in an ocean of debt. His previous plans depended upon supposed “cuts” decades down the road (built upon possibly unattainable economic assumptions). These are not serious proposals to address the immediate problem we are facing.
But it appears that your priority is to accuse others of being “extremists” (for planning on voting on the debt ceiling exactly the same way that the president did when he was a senator in 2006). Rather childish.
@john personna: The thing is, I am pretty sure we agree on the need to raise the debt ceiling so I am really not sure what the point is of this side trip on appeal to authority.
Oh, I just have a particular interest in the logical fallacies, as well as where they are not precisely applied.
Micreant…
On the table are $1T in revenue increases, along with $3T in spending cuts…hardly the drop in the bucket you describe. Republicans refuse to even discuss this. Keep in mind that if nothing is done the deficit disappears during Obamas 2nd term. It is the policies of the republicans, like extending the Bush tax cuts and repealing the ACA, that threaten to explode the deficit.
If a number of republicans wish to vote no to make a statement, when the outcome is assured, as Obama did – have at it. It’s called politics. The problem is that republicans seem only interested in politics, and not the hard work of governing.
@Hey Norm:
1). Remind me again- which president “extended the Bush tax cuts” in 2010??
2). So, the Democrats had both houses of congress and the presidency from 1/2009-1/2011, and during this time they could’ve easily raised whatever taxes they so desired, and yet their failure to do so is… the Republicans fault?
(The rest of your argument is largely unsubstantiated claims.)
Micreant…
Your arguments are nonsensical. Yes Obama extended the Bush tax cuts…in order to leverage additional stimulus from the republicans. What’s your point?
If having both houses and the presidency made it “easy” to pass anything why did it take a year to pass the ACA.
You keep shifting your talking points. It doesn’t show confidence in your stand.
@john personna: Perhaps the problem is that I don’t consider a politician to be an expert in the sense of being a final authority on a subject.
The grand irony, to me anyway, of this sub-discussion is that whole point of the qualifier was to simply point out that I do not think that just quoting Reagan in a way that supports my position qualifies as an argument. I was trying to avoid the criticism that I was just appealing to the notion that just because Reagan said it that it proved anything (and, indeed, I don’t think it does).
It does, however, underscore that the fantasy Reagan that some in the GOP venerate does not comport with the real one.
I’m just curious, what was federal debt as a percentage of GDP when Reagan left office in 1989? (I assume it was higher than 40%.) Also, what was the debt ceiling discussion like then?
@Hey Norm:
You brought up the Bush tax cuts- I was merely responding to your argument, and not changing any supposed “talking points”. (If you are going to raise an issue, you have to expect that somebody is going to respond to what you said).
You are also cherry picking in your ACA argument: Obama was able to get his stimulus passed extremely quickly, Dodd-Frank in a relatively short period, and so forth. The numbers were there for him. So evidently, raising taxes on high-earners wasn’t really a high priority of his.
If he really wanted to raise taxes, he should’ve gone for it when he had the best opportunity. It rings very hollow for his supporters to now attempt to blame Republican “extremism” for Obama’s failure to achieve his goal.
If I read between the lines then, Steven, you are trying to both reference Reagan on the debt ceiling, and signal your disrespect for Reagan, at the same time.
No wonder it came off contorted.
For what it’s worth though, returning to (a) elected Presidents, and (b) the nexus of national security within which they operate, I think it is entirely reasonable to accept his authority on this matter.
Even if he had been elected without a clue, he would have been surrounded by Treasury Secretaries and Fed Chairmen who were making their expert opinion known.
We might have individual differences with some of those, but when the entire stack of them agree on an issue it is very much less the “appeal to authority” as fallacy. In the fallacious form, you say “x is an expert, and so x is right about everything.”
The more x, y, and z experts you have, the less you have the fallacy.
See also the IPCC
(There are nitwits who will claim accepting the IPCC report is an “appeal to authority” fallacy, and they are wrong for the same reason.)
@john personna:
Methinks you need to re-read between said lines. I am not sure how one could decide whether I respected, did not repect, or was neutral on Reagan. My only criticism, such as it was, was that people who venerate Reagan in the now are espousing a different position than Reagan did then.
And, as noted in a comment above, I think Reagan was right. And, further, I think you and I agree on the debt ceiling issue.
In regards to appeal to authority, I do not accept a President, qua President as an expert on the matters on which he pronounces. More informed: yes. And expert? Often not. I do not see a President as the same as the IPCC in the expert category. Perhaps we can just agree to disagree on this one, as it strikes me as a dead end. I simply do not find a pronouncement on a subject by a president to be a complete argument, even if it is a pronouncement with which I agree.
Indeed, he was blackmailed by the GOP into extending all of the Bush tax cuts as the price to extend the tax cuts for the middle class…as for raising taxes, it is obvious that will be a necessary part of fixing the budget mess, spending cuts alone won’t solve the problem…
@An Interested Party:
“Indeed, he was blackmailed by the GOP into extending all of the Bush tax cuts as the price to extend the tax cuts for the middle class”
No, he wasn’t. He willingly sought out the deal after the mid-term elections, and he signed off on the extensions. And if it’s so “obvious” that taxes should be raised from your perspective, then he should have shown real leadership when he had the numbers in Congress and used his political power to get it done (and he and his party should have been honest about calling the individual mandate a “tax” – as his attorneys are now terming it in court- when it was being debated on the floor).
Ultimately, Mr. Obama didn’t feel it necessary in his actions to raise income taxes (and remember, this was slightly over half a year ago), so I don’t either. As the saying goes, “You snooze, you lose”- the opportunity to raise taxes in the near term is over.
Time to acknowledge what really happened- and time to stop attempting to use your opponents as convenient punching bags.
Oh, pardon me, he “compromised” on the tax cuts in exchange for extending unemployment insurance and cutting the payroll tax…and it isn’t just obvious to me that tax hikes will have to be a part of any budget deal…how much of Social Security, Medicare, Medicaid, and Defense will most people stand to be cut to balance the budget without any tax increases too…
@An Interested Party:
You still are evading my central point: If raising income taxes is so crucial from the left’s perspective, then why didn’t Obama make the effort and use his bully pulpit to do so when he had an extremely favorable political climate, instead of taking the risk that Congressional numbers would change (as all the polls from 2010 were saying they would), and waiting until then? (He was effective in getting many other key pieces of legislation passed, after all).
I’m pretty sure I know the real answer to that question, but I certainly don’t want to put words into your mouth. So, why don’t you address the question?
Perhaps the President felt that tax increases were a non-starter in Congress, that he couldn’t even get enough Democrats to vote for them? By the way, some may think of the President as some hideous creature of the “left” but he really hasn’t governed that way, as numerous disappointed people on the left will tell you… raising revenues is crucial to balancing the budget, period, and that isn’t just a “left” perspective, as sensible conservatives around here have even admitted that tax increases will have to be part of any budget deal…
@An Interested Party:
“Perhaps the President felt that tax increases were a non-starter in Congress, that he couldn’t even get enough Democrats to vote for them?”
Ok. So, assuming arguendo, if it was a non-starter with a Democrat-controlled Congress (which included a super majority in the Senate for part of the time), then why should anyone be placing blame upon Republicans now for refusing to do what a fair number of Democrats evidently thought was a bad idea? Republicans, and if we accept your argument, a number of Democrats agreed in a bipartisan fashion that income taxes should not be raised; thus, it is the far left that is being partisan here (some of the left might even term such partisanship “extremism”).
Because the main focus at that time was stimulating the economy and getting people back to work…the main focus now for many in addition to the economy is the deficit…real extremism is talking about fixing the deficit only through spending cuts without any tax increases…