As the first year of the last decade of the 20th century draws to a close, there is no longer any question whether the country is in a recession; there is only the question, how bad will it get, how long will it last?
If history is any guide -- the history of the eight previous recessions which have occurred in the 50 years since the onset of World War II -- the current economic downturn will not reach the depression-level of the 1930s, and it will last somewhere between six and 16 months.
But while history may be a guide, it is no predictor, and there are aspects of the present recession which make it different from others which have occurred on average every five or six years.
The chief difference, of course, is the staggering load of debt which the country carries into the recession. No one better summed up the spirit of the Reagan decade than Sen. Daniel Patrick Moynihan, who said: "We borrowed a trillion dollars and threw a party." But Moynihan spoke to soon, and missed the mark by a trillion. We borrowed two trillion dollars during the Reagan years.
The result is, when the Social Security tax payments are removed from fiscal picture, more than $1 out of every $4 that Americans pay in federal income taxes goes to pay the interest alone on the federal debt. Moreover, the nation continues to borrow to pay the interest on previous debt. That which is a pretty good working definition of bankruptcy.
As bad as it is, the federal debt constitutes only a third of the total debt under which the country labors. Add to that private debt, corporate debt, and state/local government debt, and the total now tops $10 trillion -- or $40,000 for every man, woman and child in the country. And just as one out of every four federal dollars are going to pay interest, it is reasonable to extrapolate that one out of every four dollars of private income is likewise going to pay for private interest. And that is money, of course, which cannot be used to pay for housing, for education, for medical care, for roads and bridges, or any other service or commodity which might improve the quality of life.
It is already established that not only is the average American family standing still in economic status, but may actually be slipping back. For the first time in the country's history, the pattern of upward mobility may be stalled; the next generation may be worse off, economically, than the preceding one.
These are ominous circumstances indeed. To rephrase the question we raised at the outset, there is no longer any question whether we are in a recession; there is only the question of whether, in the words of the respected British journal the Economist, George Bush will become "Ronald Reagan's Hoover."