06/18/2010 12:31 pm ET Updated Dec 06, 2017

Debt -- What Is it Good For? Absolutely Some Things


So, the Republicans want to make this year's elections about deficits and debt.

Republicans and regressives are actively promoting -- through commercials, talk radio, speeches, and their "news" network -- the idea that growing debt is the greatest problem facing the United States and so we cannot afford even a very modest health care program, moves away from oil and toward clean energy, and all other needed reforms (and, of course, vote out those dastardly Democrats who love to burden their grandchildren with massive debt).

Okay, let's talk about debt. The first point to understand is that, depending on the circumstances and reasons for incurring debt, it can be either wise or foolish. We need to distinguish good debt from bad debt.

Republicans are saying that the stimulus spending was unnecessary. In fact, without the additional debt over the past year and a half, we would be in a deep depression today. That was wise debt, good debt. And we still need more of that kind of debt to get out of the mess the current administration inherited.

Moreover, the largest contributor to the soaring national debt in the past decade was the Bush tax cuts for the super rich, who sucked in more and more of the nation's wealth while running the economy into the ground. That was foolish debt, bad debt.

Now the regressives are trying to use the debt scare to get back into power and resume their disastrous policies and plundering.

Don't get fooled again.

The brief look at the history of the national debt over the past seven decades provided in the graph above is very revealing.

Notice that the national debt has soared upward three times since 1940: to pay for World War II and during the Reagan-Bush years and the George W. Bush years. The first time it was done to pay the costs of a national emergency. The latter two times, it was done to provide lower taxes on the very rich.

In a national emergency it is essential to spend, even when the money has to be borrowed. That is wise debt. Running up the debt without a national emergency, for the sole purpose of making the rich richer, is foolish debt.

With the exception of Franklin Roosevelt during the wartime emergency, every Democratic president over the past seven decades through Bill Clinton, totally contrary to general perception, actually lowered the national debt relative to Gross Domestic Product.

It was when the economic philosophy that had prevailed in the 1920s and produced the Great Depression, which discredited that philosophy for a half century, was resuscitated under Ronald Reagan that the national debt began to soar. That trend was reversed under Bill Clinton and a budget surplus was bequeathed to George W. Bush, who promptly revived the Coolidge-Reagan approach and started the debt surging upward once again.

Debt -- what is it good for?

Absolutely some things.

But not others.

And, historically, it has generally been Democrats who have used debt for the things for which it is good and Republicans who have used for the things for which it is not good.

The red-state party has, since 1980, been the red-ink party when it comes to foolish debt.

The Republicans have no business whatsoever in lecturing us about controlling debt.

Historian Robert S. McElvaine is Elizabeth Chisholm Professor of Arts & Letters at Millsaps College. A 25th anniversary edition of his classic book, The Great Depression: America, 1929-1941, with a comprehensive new introduction comparing circumstances then and now, has just been published by Three Rivers Press, an imprint of the Crown Publishing Group.