They sustained massive deficits from the early 90's until today and yet their country has not collapsed. The idea that deficit spending was going to collapse the country within a limited time frame has been proven to be totally incorrect.
It was Reagan who started the era of mega budget deficits with his Build Up program and the construction of a 600-ship Navy during the Cold War.
Until the Reagan administration, public debt was under control, but after him, the era of mega deficits began and never ended, with intervals between Democratic presidents who implemented some fiscal austerity.
This trend of overspending and astronomical public deficits, resulting in the reckless increase in public debt, is due to the Reagan administration; the president definitively initiated an era of mega deficits.
To give you an idea of what has been highlighted, in 1941, public debt was reduced to 45% of GDP. In the following year, it rose to 48%, and the following year, it jumped to 70% of GDP, all before D-Day. In 1944, the percentage rose from 70% of GDP to around 91%, and by the end of the war, it reached 114%, peaking in 1946 at around 119% of GDP.
From then on, the trend declined during Dwight Eisenhower's impressive term, with public debt falling from 68% of GDP at the beginning of his term to 52% of U.S. gross national product.
The Republican administration was also marked by the only one to achieve a fiscal surplus since the end of the war; since the end of the war, all Republicans have run fiscal deficits, with the exception of Eisenhower. The decline in public debt reached 31% of GDP in 1981, at the beginning of Reagan's term, and he handed over the country in 1989 with the country owing 50% of GDP, a 19% increase in total debt. An impressive feat.
Since the 1980s, the only presidents who have shown any decency in budgetary and fiscal matters were:
Bill Clinton - 1993/2001
Having campaigned promising increased spending, healthcare reform, and more social policies—the US was still reeling from the effects of the 1991 recession—Clinton, as soon as he took office, faced a problem similar to that faced by Tony Blair: distrust in the financial markets.
Expecting that the Democratic president would deliver on his campaign promises, and with Congress controlled by Democrats eager for more spending, including the intention of reforming the US healthcare system to make it more progressive, investors reacted accordingly: they began dumping US government bonds, selling them in large volumes.
Consequently, yields on 10-year bonds jumped from 5.2% to 8% (an exorbitant rate by American standards).
Beset by this loss of credibility -- an episode that became known as the "bond vigilantes" -- and with greater difficulty in financing his deficits, Clinton made a surprising shift in his economic policy: under the guidance of Robert Rubin (one of the best Treasury Secretaries the US has ever had), Clinton began to demonstrate an enviable -- and to this day unmatched -- fiscal austerity:
he was the only American president since the 1950s to present a budget with a nominal surplus.
When Clinton took office in January 1993, government spending was equivalent to 22.1% of GDP. By the time he left office in January 2001, it had fallen to 18.2% of GDP.
And the American economy, during the Clinton years, enjoyed enviable prosperity, growing above 4% for five consecutive years, with unemployment falling from 8% to 4%, and with a record number of people employed relative to the total available workforce.
Barack Obama - 2009/2017
Do you know when the American economy began to recover after the 2008 financial crisis? Exactly when the government lost its effectiveness. In practice, the Obama administration ended in 2012, when he was reelected without a majority in the House. From 2013 onward, his administration was completely paralyzed. The federal government entered gridlock. With Congress gridlocked, with no new spending approved, the government budget showed a fantastic improvement, going from a deficit of 12% of GDP to a mere 2.5%.
Since 2012, what has Obama done? Nothing. Absolutely nothing. In terms of legislation passed, there was only Obamacare in 2010, already on the verge of being repealed. But from 2010 to 2016, he passed no other legislation. He never managed to pass another law. His long-awaited healthcare reform stalled completely, and no other interventionist measures were passed. The most Obama managed to do was change the name of a mountain, give interviews to comedy talk shows about his White House routine (whether he makes sandwiches or walks around in his underwear), and express frustration at his inability to impose stricter gun laws.
I don't need to mention George W. Bush, Biden, and Trump. These three need no introduction.
