Kick the can we cannot, according to Yoda and David Stockman at internationalman.com:
Today’s number is 41X, representing the change in the public debt since early 1981, when Ronald Reagan’s first fiscal challenge, ironically, was the unavoidable need to raise the ceiling on the public debt. That is, right out of the starting blocks he had been compelled to embrace the very bloated ogre he had campaigned against for more than two decades.
As it had happened, the Gipper inherited $930 billion of public debt as of December 1980, which in part represented the substantial additions during the Johnson, Nixon, Ford, and Carter years to which he had properly objected, and strenuously so. Still, the excesses of those years had not altered the post-war fiscal path, which was one of a continuously shrinking public debt burden on the national income (GDP).
In fact, when the GOP-Dixiecrat coalition put an end to the New Deal in 1938, the public debt stood at 52% of GDP – before the exigencies of WWII sent the ratio soaring to a peak of 120% of GDP in 1946.
Yet financing this enormous war debt had not been a complete financial disaster because wartime rationing and economic regimentation had caused the private savings rate to soar, thereby enabling much of Washington’s wartime borrowings to be financed by the public’s real money savings, not the fiat credits flowing from the printing presses at the Federal Reserve.
Thereafter, of course, the 12-million-man US military was totally demobilized, causing defense spending to plummet and Uncle Sam’s red ink to turn into nearly balanced budgets and actually intermittent surpluses. Accordingly, a growing economy returned to civilian control, coupled with the near absence of material budget deficits, triggered a 34-year march of the public debt ratio steadily downhill.
