Thursday, July 7, 2011

Reagan Debt Limit VS Obama Debt Limit: Politics at its Best

I recently spent some time researching the federal limits on our national debt.

I found an excel spreadsheet called "Statutory Limits On Federal Debt: 1940-Current" which displays all of the debt limit increases from 1940 to the present.

Some interesting figures:
  • The debt limit (DL) jumped from $49 billion in 1940 to $300 billion in 1945.
  • The DL went down over the next decade to the low of $275 billion in 1957.
  • During the late 1970s (1978-1979), the DL was reverted to $400 billion three times (from an average of about $800 billion during those same years).
  • During the Reagan era the DL went from almost $1 trillion to almost $3 trillion.
I think this information is extremely important (among other information) in trying to understand how volatile our national economy is and how this politicking effects our economy in various ways.

The first bullet just shows how much money was spent (and made) during the great FDR years of growth and middle class perfection (at least that's how progressives see it).

The second bullet point shows how decreasing the debt limit led to growth in our economy (after all, the 50s-70s are often called are golden era (at least a correlation).

The third bullet point shows just how volatile the economy was during the late 70s (Carter's years). Why would anyone invest in an economy where Congress would raise the debt limit by 100% and then lower it again by 50%? and then repeat this two more times???

Finally, the fourth bullet shows just how "conservative" Reagan was during his reign. Regan increased the debt limit by $2 trillion (200%) while Obama has only raised it about $4 trillion (about 40%).

I will try to look up more info regarding this time period in the next few days.

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