Dear Senator Cotton:

One of the most recent national events which amplified the chasm between political party affiliations in the U.S. was the August 24, 2022 announcement by President Biden of a plan to wipe out significant amounts of student loan debt for tens of millions of low- and moderate-income Americans.

Sen. Tom Cotton (R, Ark) was on the rapid response team to counter the Biden announcement, saying:

There is no such thing as student loan forgiveness—this is a bailout, paid for by the large majority of Americans who never went to college or who responsibly paid off their debts. President Biden’s plan ignores the true culprit: bloated, self-serving colleges. I’ll be introducing a bill to hold these colleges accountable for debt, lower tuition, support non-college career paths, and save the taxpayers billions.”


Cotton’s comments strike me as purely partisan, at best, and likely incendiary and divisive.

Meanwhile, some on the ultra-progressive side have dismissed this initiative as ‘too little, too late’’, while others on the far right have said, ‘It’s just not fair to those who sacrificed to pay off their student loans; and to those who are more deeply in debt”.

I must confess:  I’m not convinced that broad-based blanket cancellation of student loan debt is an optimum solution to the real problem at hand.  But, based on current conditions in the world of student loans, it’s probably a necessary step toward creating a new paradigm for educating the future workforce in America.

My personal preference is to look at a problem not just at the surface, but right down to root causes.
[i.e., ‘I don’t like this situation. How can it be fixed?’].

So:  What is the real problem, and where do the root causes lie?

I am sympathetic with Sen. Cotton’s sentiment: ‘this plan ignores the true culprit: bloated, self-serving colleges’.

What Sen. Cotton fails to mention is that – beginning in the late 1950’s, and codified by the passage of the federal Vocational Education Act of 1963 — our elected officials created and sustained an environment which enabled an acrimonious socio-economic division between:

  • those who go to college to earn a 4-year degree, intending to pursue a ‘white collar’ career;
  • those who pursue the training, experience and credentials needed to become a ‘blue-collar’ professional (electrician; plumber; carpenter; auto mechanic; machinist; etc.); and today
  • those who opt into a ‘new-collar’ career in a middle-skill job which requires some tech skills, but not a 4-year degree. Some examples include: I-T support; coding; cyber security; and developing web applications.

Passage of The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 marked an expanded view of the value of ‘occupational education’ and the various pathways along career ladders in a wide variety of occupations which would likely lead participants to family wage jobs and careers. Missing from the 1996 legislation was a roadmap to help parents understand, encourage and support their children to pursue their dreams and passions within the framework of economic and financial reality.

Many parents continued to encourage their children to attend a 4-year college to pursue a college diploma in any major, including Art History; Religious Studies; Philosophy; Music Studies; Sociology; Archaeology; English Literature; Film; and myriad other fields, rather than pursue a potentially lucrative vocational education.

College degrees are important and admirable, yet they can result in credentials not valuable or important to employers.  From a potential income perspective, some majors are terrible for those who need to borrow – and subsequently repay — loans for tuition and ancillary college expenses.

Some simple interventions which might help transform our currently broken student loan system:

  1. Mandatory Financial and Economic Education: A critical and logical step to enhance Student Loan Debt Relief is to mandate successful completion of a comprehensive financial and economic education program prior to any student loan borrowings;
  2. Develop an income rating system informed by U.S. Department of Labor projections on salaries and future job openings which would limit the amount of eligible student debt based on major. (See addendum).
  3. Realistic oversight of private colleges and private lenders: The Financial Crisis of 2007 opened our eyes to private and unregulated ‘shadow bankers’ which originated predatory mortgage loans.  There is current evidence that our student loan crisis has been enabled by similar private, lightly regulated lenders which prey on uninformed borrowers, frequently those who are first generation college students and/or those who are enrolled in for-profit colleges.

Dear Senator Cotton: We have identified a few ideas which we think deserve deep and thorough investigation, hopefully leading to appropriate regulatory oversight: a truly honest and valuable use of your time and position.  Instead of offering partisan, incendiary and divisive commentary which serves no useful purpose at all, you are invited to use any and all of these ideas to embark on a positive and affirmative journey to make durable and favorable changes to our entire post-secondary system.

I don’t either.

Ryan, Trump and McConnell: These were our leaders on January 20, 2017: Inauguration Day

Just because you and I don’t remember the 2020 Recession, that doesn’t mean it didn’t happen.

The official arbiter of recessions — the Bureau of Economic Research — says there was one.

When Donald Trump took office in January 2017, he inherited an economy in its 91st month of economic expansion following the end of the Great Recession in June 2009. That expansion continued into 2020, becoming the longest on record, peaking at 128 months in February 2020.

The National Bureau of Economic Research officially recognized the Recession of 2020 as the shortest on record at just 2 months, with the trough of that recession occurring in April 2020.

One milestone which helps to mark the 2020 recession is the price of oil. During the month of April 2020, the price of a barrel of West Texas Intermediate was absolutely erratic, actually closing Negative at (Minus $37/bbl) on April 20, 2020. [Was gasoline free that day? I don’t recall.]

Back to January 20, 2017, Trump’s Presidential Inauguration Day.

Paul Ryan, a Republican from Wisconsin, was serving as Speaker of the House.  Mitch McConnell, a Republican from Kentucky, was the Senate Majority leader.

Ryan was first elected to the House in 1998 at age 28. He developed a reputation as a no-nonsense deficit-hawk fully focused on reducing entitlements and reducing taxes. Ryan had been serving as Speaker of the House since 2015.

The 2017 Tax Cuts and Jobs Act (TCJA) was Paul Ryan’s swan song, eagerly supported by Trump and most congressional Republicans.

Unfortunately, it was exactly the wrong time to enact this complex piece of legislation, primarily because it relied on untested assumptions at a point in time when the U.S. was riding the tail end of the longest economic expansion in history. It created massive increases in our national debt; it favored investment increases in oil and related industries (which to some appeared to be a means to curtail pending increases in oil prices); and exuberant expectations that repatriation of corporate profits parked offshore would be used to create domestic jobs turned into a massive stock buyback across the market.

In early February 2018, Paul Ryan began to reflect on the true consequences of the TCJA. He tweeted, “Julia Ketchum, a secretary at a public high school in Lancaster, Pennsylvania, said she was pleasantly surprised her pay went up $1.50 a week. She didn’t think her pay would go up at all, let alone this soon. That adds up to $78 a year, which she said will more than cover her Costco membership for the year.”

In April 2018, Ryan announced his intention to retire from Congress on January 3, 2019 — the end of his current term — thus ending a 20-year career representing his constituents in Wisconsin — so that he could spend more time with his family.

Left to its own devices, the 2017 TCJA may have created an unchecked economic calamity.

Then came the Covid-19 Pandemic which turned into an unforeseen international societal and economic tragedy – and clearly was the trigger which caused the 2020 recession. Yet, the impacts of Covid didn’t begin to surface until 1st quarter 2020, so there is a 24 month period following the January 2018 introduction of the TCJA which economists are now examining to help create real context around current (mid-2022) economic uncertainties.

Even a neophyte like me can add the 2022 Russian invasion of Ukraine to: (a) the long-term economic damage created by the TCJA; (b) the Covid wild card; and (c) the economic devastation of Trump’s tariffs, particularly on our agriculture sector. When we spread the numbers, we can begin to see an almost perfect recipe created under Trump’s watch sufficient to decimate any economy.

Despite the open hostility and recalcitrance of elected Republicans currently serving in Congress, I must give Joe Biden and the Democrats a 5-Star rating for refusing to capitulate, and for keeping the ball moving forward.

Stock Prices, Inflation, Recession & Economic Cycles

Economic cycles – also known as business cycles — are a reality, and they can be tracked over time.  They generally are predictable, although not in precise time frames. Economic cycles consist of four identifiable phases or stages:  (a) Expansion; (b) Peak; (c) Contraction; and (d) Trough.

Every economic cycle includes a period of euphoria and exuberance marked by a sustained period of economic growth; followed by a period of uncertainty and lethargy linked to a period of economic decline.

When Donald Trump took office in January 2017, he inherited an economy in its 91st month of economic expansion following the end of the Great Recession in June 2009. That expansion continued into 2020, becoming the longest period of expansion on record, peaking at 128 months in February 2020.

We know that Donald Trump never fails to speak his mind.  During the campaign leading to the 2020 presidential election, Trump proclaimed, “If (Joe Biden) is elected, the stock market will crash!

[In 2018, Trump said, “When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win.” In late January 2020, Trump also said, “We have it (coronavirus) totally under control. It’s one person coming in from China. It’s going to be just fine.”]

Facts are facts:

  • The S&P 500 fell from 4,766 in late December 2021 to 3,900 today, a 20% loss;
  • We’ve seen the price of gasoline hit $5.00 per gallon, up from $3.00 just a year ago;
  • Case-Shiller recently reported a 34.8% price increase for housing in the Tampa Bay area (where I currently live) from March 2021 to March 2022;
  • The most recent CPI report reflects an annual rate of 8.6 percent through May 2022, the fastest rate in four decades.

What’s really going on?

There are a number of pieces to this puzzle, including:

  • The lingering effects of a Pandemic;
  • The Russian invasion of Ukraine;
  • Aftershocks (direct and indirect) from draconian tariffs enacted beginning in 2018;
  • Ongoing ripple effects from the 2017 Tax Cuts and Jobs Act (TCJA); and
  • Various supply chain issues, both domestic and international.

But, the root cause of our current intersection of inflation and stock market volatility likely traces back to 2010, when the Fed launched “QE2” – quantitative easing – essentially increasing liquidity in the domestic economy to stimulate economic growth. One of the outcomes from QE is a decrease in bond prices due to falling interest rates, combined with a run-up in stock prices as investors search for yield.

When the Fed announced its QE2 plan in November 2010, 30 year mortgages were at 5%; and the S&P 500 index was 1,200.  Over the course of the next few years, rates on 30 year mortgages dropped as low as 3.3%, and the S&P 500 index toward 2,010 (which it reached in September 2014).

Meanwhile, the CPI from 2010 to the end of 2020 remained relatively calm, reflecting the lagging effects of the economic recovery which began in mid-2009.

It is relatively easy to look into the rearview mirror now to observe that the Fed’s response to the impact of Covid on our economy helped to create an environment which fueled the inflation we are facing today.  In March 2020, in addition to a promise to inject a $ Trillion into the U.S. banking system, the Fed cut the federal funds rate to a range of 0% to 0.25%.

Those actions of the Fed likely saved our economy from implosion, but also helped to inspire a dramatic run-up in stock prices:  The S & P 500 index rose from 3,000 in early March 2020 to reach 4,700 in November 2021. (Stock prices were further affected by massive stock buybacks enabled by the 2017 TCJA).

While it seems convenient for some to blame Joe Biden for high gasoline prices; rapidly rising consumer prices; the stock market ‘meltdown’ — even for supply chain dysfunctions – history tells us there is a rather significant lag between the point when policy actions take place, until begin to see the results from those actions.

The Biden White House has pledged to fight against inflation and has stubbornly refused to blame the Fed for our current economic symptoms.

Although there are plenty of contributing factors, the real truth is over a decade of relying almost entirely on monetary policy to steer the ship brought us to this moment, not 18 months of Democratic control in the White House.

A few weeks ago, I shared some thoughts about our current President and his economic credentials.

Donald John Trump was one of 366 student members of the class of 1968 who was awarded a Bachelor of Science degree in Economics from the Wharton School of Finance and Commerce at the University of Pennsylvania.

Other than his bachelor’s degree and some experience working in the family real estate business, there is no evidence that Mr. Trump has pursued additional education, credentials or capabilities in the field of economics.

Trump’s paucity of bona fides in the world of economic theory and practice has not deterred him from taking an active role in testing new economic theories and concepts.

Below, I introduce a new chapter in my observations on Donald Trump’s economic strategy:
…………………….…………………………………………………………………………………………………………………………………..

July 31, 2019 (Wednesday):  Federal Reserve Chairman Powell reluctantly announced a 25bp cut in the federal funds rate, the first rate cut in over a decade (December 2008).  In his announcement, Chairman Powell cited, “implications of global developments for the economic outlook as well as muted inflation pressures”.  The Fed also referenced an apparent global economic slowdown; uncertainty around U.S.-China trade negotiations; and ‘stubbornly low inflation’.

August 1, 2019 (Thursday):  Donald Trump announced (in a series of tweets) that the U.S. would impose a new 10 percent tariff on certain goods from China beginning on September 1, 2019, following the news that trade talks with the China have failed to make sufficient progress.

These new tariffs will apply to the $300 Billion of Chinese goods which had not before faced a tariff. Another $250 Billion of Chinese goods will continue to be tariffed at a 25 percent rate.

This abrupt and unusual move roiled the equity markets, creating a major sell-off.

Since late 2018, the U.S. economy has been showing signs of slowing — bond markets are flaccid; GDP has slowed; new home sales are generally flat; and business investment is anemic, at best.

Virtually every main-stream economist agrees that Trump’s trade war is contributing to the domestic economic malaise, although it’s too early to determine by how much, and if the damage is permanent.

The Fed rate cut on Wednesday was accompanied by a caveat that one purpose was to help create a barrier to prevent Trump’s trade wars from toppling our domestic economy.

Thursday’s surprise announcement by Trump reveals a new, arbitrary, capricious and  unilateral decision by the White House which will result in higher taxes to Americans on imports; and further expand uncertainty for businesses which need significant time to manage their supply chains.

The agricultural sector in the U.S. – farms and ancillary industries, suppliers, manufacturers, etc – are already fighting the unexpected impacts of climate and weather on production.  Then, they were handed a potential death sentence by a White House which is guided not by strategy and planning, but by impetuous and arbitrary policy changes driven by Trump’s narcissistic compulsions.

If Trump’s Trade War battle plans were conceived within a coordinated environment (i.e. in concert with the Fed and the Congress) perhaps we would be able to see a pathway toward successful outcomes.

Trump is consistent in his bravado that he – and he alone – has the vision, wisdom and solutions to create equilibrium in the trade accounts between the U.S. and China.

According to a BBC analysis from May 2019, “Trump’s decision to take on China could lead to adverse effects for consumers in the US and in China, but also worldwide. An economic showdown between the world’s biggest economies doesn’t look good for anyone.”

Article I of the US Constitution vests the power to set tariffs in Congress, thus Congress has the power to stop this President from continuing his arbitrary and impetuous trade war.  The question remains:  Will elected officials in Congress wake up, do their job and use that power, or will they continue to abdicate legislative responsibilities to this President?

Donald John Trump was one of 366 student members of the class of 1968 who was  awarded a Bachelor of Science degree in Economics from the Wharton School of Finance and Commerce at Pennsylvania State University (Penn State).

Other than his bachelor’s degree and some experience working in the family real estate business, there is no evidence that Mr. Trump has pursued additional education, credentials or capabilities in the field of economics.

Trump’s paucity of bona fides in the world of economic theory and practice has not deterred him from taking an active role in testing new economic concepts.

From an economic perspective, the presidency of Donald Trump will likely be remembered primarily for his America First posture, which has influenced immigration, tariff and tax policies.

Immigration:  Trump administration policy decisions focused on immigration have dramatically hurt domestic agriculture, food processing, hospitality, tourism and other low-wage, entry-level service occupations.

Tariffs:  Tariffs imposed on imported goods and materials are nothing more than a tax paid by the end user, in many cases, the American consumer.

Tariffs can be effectively used as a component of a strategic long-term plan to reposition the competitive position of American manufacturers on the world stage.

There is no known evidence that tariffs have ever brought any long-term value-added when arbitrarily and capriciously applied.

Trump administration subjective tariffs on imported steel and aluminum (justified as a means to “protect our country and our workers”) have proven to be a financial burden on several high-wage value-added U.S. industries, including: Automotive; Aerospace; Construction; and Manufacturing.

Tax Cuts:  The signing of the Tax Cuts and Jobs Act in December 2017 was lauded as landmark legislation which would: (a) lower taxes on businesses and individuals; (b) stimulate higher wages and more jobs; and (c) result in a larger and more dynamic economy as a result of dramatically increased domestic business investment in plant and equipment.

Almost two years after the passage of TCJA, it seems clear that some near-term economic stimulation was achieved, but the long-term impact on gross domestic product (GDP) will be modest, if at all. The impact will be smaller on gross national product (GNP) than on GDP because the law generated net capital inflows from abroad that must be repaid in the future.

The expectation touted by elected officials in their frenzy to pass the TCJA envisioned some $4 Trillion being repatriated, generating new and potent investment and jobs in the U.S.

Most recent estimates reflect $3 Trillion (or more) in profits that U.S. companies have left parked overseas, with about $465 Billion in “repatriated” cash returning to the U.S. to enjoy a tax rate of 15.5% (vs. the 35% prior tax rate) on profits returned to the U.S. from overseas.

A good outcome?  Sure, in the short term.  Capital investments? Plant and equipment? Not so much.  There is virtually no evidence that any of the repatriated cash was invested in job creation.  It was invested in executive bonuses; stock buy-backs; debt repayments; and some dividend enhancements.

Please stay tuned, there is more to come…..

Mueller Report

May 29, 2019

Several of my friends have wondered:  What part of “… this report does not conclude that the President committed a crime, it also does not exonerate him” supports the “No Collusion, No Obstruction” response from the Trump White House.

My theory is based on a variety of academic studies over the past 2 decades which have determined that an ‘average American adult’ reads at (or about) the eighth grade level.

The reading skills of American adults are significantly lower than those of adults in most other developed countries, according to a study by the Organization for Economic Cooperation and Development based on a sample of 160,000 people from two dozen developed nations.

The Mueller Report is an academic treatise written at a level which clearly exceeds the abilities of most American adults to engage; read; analyze; and conclude.

The ability to read fluently, critically and for understanding— to be able to learn from text— may be the most important foundational skill for U.S. adult citizens’ health, well-being, and social and economic advancement.

Critical reading skills are the gateway to lifelong learning, education, and training.

The internet and social networking currently operate through the written word, thus reading literacy provides access to an infinite and readily accessible library of the world’s knowledge, as well as the ability to communicate with friends, family, and employers.

The digital revolution provided access to information which is the foundation for an informed society — except for those adults who continue to struggle to read and/or comprehend.

We have a crisis in America.  The Mueller Report is written at a level which exceeds the skills of the majority of Americans — including many of those currently serving in Congress — to understand, analyze and arrive at critically informed conclusions.

The Pew Research Center recently reported that adults with a high school degree (or less) represent the majority (37%) of U.S. adults who report not reading books in any format in the past year.

I have to wonder – and I hope you will join me —  How many of these 37% of adults who don’t read books (and perhaps don’t read critically?) are members of the Trump Base?

 

 

 

 

 

Trump-en-omics

May 13, 2019

Trump has formally signaled his mastery of global economics and some of the ways he believes U.S. trade policies will help guide the world economy toward optimum performance.

Some have said our president seems to be really out of control, that he must have skipped all of the courses on economics and finance when he was in school (he did go to school, right?).

I believe some further research is in order.

Although Trump continues his infatuation with Twitter where he openly shares classified information with the world, he also has his thumbs on the Tariff Buttons.

Most alarming?  He apparently has the nuclear codes.

Meanwhile, since mid-April, the actions of our president have cost me a significant amount of my accumulated and hard earned savings.  And, it could be worse!  If I was fully invested in traditional equities, it would have been even more painful!

But, enough about me.

The most recent abrupt and unjustified increase of U.S. tariffs on $200 Billion of Chinese goods from 10 percent to 25 percent triggered a response from China which predictably exacerbates continued economic damage to the U.S. agricultural sector, and compounds spillover impacts to related industries.

The Trump Trade War has been extremely harsh on farmers.  Over time, our farmers learned to deal with unpredictable weather; wind storms; disease outbreaks; hordes of locusts; crop loss during storage; and wildly fluctuating prices of both inputs and crops.

It seems clear they never anticipated having a White House which would use them as sacrificial pawns to engage in quixotic battles against imaginary foes.

Longer term and behind the curtain, tariff increases on Chinese imports will drive up domestic prices on a broad array of consumer products, finished goods, and intermediate goods – even some raw materials used in basic manufacturing in the U.S.

The good news:  the effects of these most recent tariff increases probably won’t show up for 90 days, or so.

The bad news:  the costs of the these tariff increases will be fully borne by U.S. consumers, and the effects of tariff increases will result in price increases which will temper domestic economic growth while concurrently sending signals of an increase in core inflation, likely resulting in interest rate increases by the Fed.

And, it just gets worse from there…..

Dear President Trump:

It has been reported that you don’t want to see any additional federal aid directed to Puerto Rico.

The government debt crisis in Puerto Rico started in 1973 when the government began to operate on a deficit budget (i.e. spend more than what it collected). To cover the annual budget shortfall, the government issued bonds.

The impact of that decision had long range impacts, beginning with reduced capital spending resulting in deferred maintenance of public sector infrastructure (roads, bridges, public utilities, hospitals, electric power grid, ports, airports, etc.).

The practice of deficit spending in Puerto Rico continued for 4 decades!

In 2014 three major credit agencies downgraded several bonds issued by Puerto Rican government entities to “junk status” after the government was unable to demonstrate that it would be able to pay its debt from sustainable current cash flows. That action precluded Puerto Rico from access to the public debt markets, and forced them into the shadowy world of hedge funds and high-yield debt issuers.

I think you are punishing Gov. Ricardo Rosselló — and the people of Puerto Rico — for a situation which they inherited.

Meanwhile, there is a long-term lesson to be learned from the current Puerto Rico situation.

Fiscal responsibility requires discipline. In times of economic expansion, all eyes should be on reducing debt without creating abrupt changes in revenues or spending.
 
No responsible government should plan to operate on a deficit budget during times of economic expansion (prosperity).
 
The real job of our federal government is at a strategic level — looking into the future to create and support programs and policies which will help support a positive foundation for future Americans at the state and local base.
 
President Trump: I believe your fiscal priorities need to be revisited and carefully evaluated through an honest and open strategic filter.

The Amazon Conundrum

March 5, 2019

While New Yorkers continue to debate the loss of Amazon from a site in Queens, the discussion seems to have lost sight of what Amazon contributes to the long-term well-being of our society.

Amazon is not a friend to America, has contributed very little if anything to our overall economy. The stock is currently grossly overvalued with a P/E ratio in excess of 80x.

Jeff Bezos, the founder of Amazon, has an estimated net worth of $165 Billion, primarily as a result of a business model which has dramatically changed the U.S. retail sector.

Most egregious? Amazon paper earnings for 2018 are $11.2 Billion, and early reports indicate that they will pay $0 in federal income taxes on these earnings.

(Amazon reported $5.6 Billion in U.S. profits in 2017 and paid $0 last year.)

Amazon creates jobs? True. Good jobs? False.

Economic scholars generally agree that a ‘living wage’ in the NY Metro area for an adult with one child is $31/hour, with 2 children $41/hour.

Amazon announced in early October 2018 that it would raise the minimum wage to $15 an hour for its U.S. employees.

Meanwhile, much like Walmart, Amazon has created a business model which effectively eliminates competition and destroys small business.

The hot topic today is the talk of ‘Democratic Socialism’ being portrayed by some pundits as a death threat to American democracy.

The real threat to American democracy is the proliferation and exponential growth of a few family-controlled and vertically-integrated oligarchies which are capable of re-creating the Feudal System which characterized medieval Europe during the Middle Ages.

“Those who fail to learn from the lessons of history are bound to repeat the outrage of history.”

National Emergency

February 13, 2019

Yes, we are facing a national emergency, and it’s not along our southern border.

Our real national emergency is our National Debt.

Let’s first agree that when the U.S. federal government runs a deficit, or spends more than it receives in tax revenue, the U.S. Treasury Department borrows money to make up the difference.

Next, let’s agree that our national debt is the amount of money the federal government has borrowed through various means, including: (1) by issuing bills, notes and bonds which are bought by investors (domestic and foreign), including the public, the Federal Reserve and foreign governments; (2) through intra-governmental debt, essentially money borrowed from trust funds used to pay for programs like Social Security and Medicare.

The great majority of economists and economic and fiscal analysts tend to agree that the significance of national debt is best measured by comparing the debt with the federal government’s ability to pay it off using the debt-to-GDP ratio, simply by dividing a nation’s debt by its gross domestic product.

Various sources have estimated that a healthy debt-to-GDP ratio is in the 40% to 60% range.  A longitudinal study conducted by World Bank economists published in 2010 estimated that in highly developed countries, 77% was a ‘tipping point’ where productivity and potential economic growth was constrained by adding additional debt without addition of incremental revenue.  (In emerging economies, they estimate that 64% is the tipping point.)  In either case, potential for default begins to increase once the tipping point has been breached, thus putting upward pressure on borrowing costs.

The first instance when U.S. debt-to-GDP ratio exceeded 77% was toward the end of World War II.  In the post-war years, our national debt shrank in comparison to the booming post-war economy, and the debt-to-GDP ratio fell as low as 24 percent in 1974.

Recession and rising interest rates during the Carter administration put upward pressure on the debt-to-GDP ratio, and once the tax cuts enacted during Reagan’s first term combined with increased spending on both defense and social programs, the debt-to-GDP ratio reached 50 % in July 1989.

Economic growth in the ‘90s, combined with tax increases under both Presidents George H.W. Bush and Bill Clinton helped keep the debt load in line, and by the end of December 2000, our national debt was about 55% of GDP.

Following the terrorist attacks on 9/11/2001, U.S. military spending spiked, yet tax cuts enacted in 2001 and 2003 during the George W. Bush administration combined with a mild recession in 2001 and the Great Recession beginning in 2007 caused significant decreases in tax revenues. By the time Barack Obama took office in January 2009, the debt-to- GDP-ratio reached 75%.

Deficit spending is one of the key tools available to stimulate economic recovery, and by the time of Obama’s 2nd inauguration in January 2013, the U.S. debt had grown to $16 Trillion – a debt-to-GDP ratio of 101%. By that time, it was clear that the economic stimulus of deficit spending had worked, evidenced by an expanding U.S. economy; signs of ending the wars in Afghanistan and Iraq; resurgence of the U.S. stock market; continued job growth; and other positive economic indicators.

All of these positive signs at the beginning of 2013 pointed to the need to rein in government spending and to strategically increase revenues (i.e. raise taxes).

Yet, the Congress has stubbornly refused to deal with the reality that our U.S. debt-to-GDP ratio has remained above 100 percent since 2013.

In early 2018, an analysis by the nonpartisan Committee for a Responsible Federal Budget concluded that the Tax Cuts and Jobs Act signed into law in late 2017 will push the U.S. national debt to $33 Trillion — 113 % of GDP — by 2028, a ratio not seen since immediately after World War II.

The Tax Cuts and Jobs Act is a sham (and a scam) which created a situation exactly opposite of what responsible elected officials should have supported.  The sooner it is  amended, repaired or repealed, the sooner the American people will be transitioned into a less dangerous and more stable and sustainable economic environment.