Economics, Part I The Impact of Presidential Direction

With three exceptions all presidents, Republican and Democrat, since World War II have done well in reducing the balance of debt to GDP. Those three exceptions are Ronald Reagan, George H. W. Bush and George W. Bush.

The policies of these administrations of a hands off approach to corporate America allowed corporate decision makers to radically bend the rules of fair business practices to their own advantage at the expense of working Americans.

1. Creative lending by the mortgage lending industry led to loans being issued to home buyers who could not qualify using standard lending practices.
2. The banking industry bought into these packaged loans with low front end interest rates and very high back end interest rates without foreseeing the disaster waiting to happen when homebuyers were not able to meet their mortgage payments.
3.  Investment institutions and individuals built schemes that fleeced investors of their money.
4.  Corporate officers at the highest levels were awarded huge financial packages unrelated to the performance of the companies that they headed.

This table lists the gross U.S. federal debt as a percentage of GDP by Presidential term since World War II. The current gross federal debt as a percentage of GDP (83.4% at the end of 2009) is currently the highest it has been in 59 years, reaching levels last seen in 1950-1951 in the aftermath of the world war.

The information below lists the starting and ending debt to GDP ratio, the increase in debt and the increase in debt to GDP ratio.
U.S. president, Party, Term years, Start debt/GDP, End debt/GDP, Increase debt ($T), Increase debt/GDP (increse in debt to GDP is highlighted in red)

Roosevelt/Truman, D, 1945-1949, 97.6%, 98.2%, 0.05, +0.6%
Harry Truman, D, 1949-1953, 98.2%, 74.3%, 0.01, -23.9%
Dwight Eisenhower, R, 1953-1957, 74.3%, 63.9%, 0.01, -10.4%
Dwight Eisenhower, R, 1957-1961, 63.9%, 56.0%, 0.02, -7.9%
Kennedy/Johnson, D, 1961-1965, 56.0%, 49.3%, 0.03, -6.7%
Lyndon Johnson, D, 1965-1969, 49.3%, 42.5%, 0.05, -6.8%
Richard Nixon, R, 1969-1973, 42.5%, 37.1%, 0.07, -5.4%
Nixon/Ford, R, 1973-1977, 37.1%, 36.2%, 0.19, -0.9%
Jimmy Carter, D, 1977-1981, 36.2%, 33.4%, 0.28, -2.8%
Ronald Reagan, R, 1981-1985, 33.4%, 40.7%, 0.66, +7.3%
Ronald Reagan, R, 1985-1989, 40.7%, 51.9%, 1.04, +11.2%
George H. W. Bush, R, 1989-1993, 51.9%, 64.1%, 1.40, +12.2%
Bill Clinton, D, 1993-1997, 64.1%, 67.1%, 1.18, +3.0% (*see note below)
Bill Clinton, D, 1997-2001, 67.1%, 57.3%, 0.45, -9.8%
George W. Bush, R, 2001-2005, 57.3%, 62.9%, 1.73, +5.6%
George W. Bush, R, 2005-2009, 62.9%, 69.2%, 2.63, +6.3%
note: The first three years of the Clinton administration were spent reversing the policies of the previous two presidents.

What will happen in the future is evident. In order to reverse the failures of the Reagan, Bush, Bush presidential years it will take massive amounts of tax revenue.

This has happened before in U.S. history from 1921 to 1929. The George W. Bush  failed to remember history. His policy of laissez faire has caused the United States problems before.

The presidencies of Warren G. Harding, Calvin Coolidge and Herbert Hoover ended in the disaster of the Great Depression of the 1930's

Harding started the era that marked the end of the Progressive era, Coolidge and Hoover followed suit. All three men were Republicans as was the Congress that all three dealt with.

All three men felt that government should be limited when dealing with business as their actions during their presidency reflected. During their terms business prospered, but ended in the disastrous Depression.

It should not be forgotten that the George W. Bush administration initiated the bailout of American businesses. barack Obama has made govern ment moneys available to certain portions of commerce and inductry to assist with the recovery. That money is not a gift it a loan that must be repaid.

Just as Franklin D. Roosevelt was blamed for running up the national debt with his policies,
Barack Obama is being blamed for running up the national debt when, in fact, the moves he is suggesting are the only appropriate road to solvency of the United States.