US went from being the world's largest international creditor to the largest debtor nation

http://www.washingtonpost.com/ac2/wp-dyn/A26402-2004Jun8?language=printer

Economic Legacy

Reagan Policies Gave Green Light to Red Ink

By Jonathan Weisman
Washington Post Staff Writer
Wednesday, June 9, 2004; Page A11

The line is not likely to make this week's eulogies to Ronald Reagan, but when Vice President Cheney allegedly declared, "Reagan proved deficits don't matter," he summed up an enduring argument from the former president's economic legacy.

In late 2002, Cheney had summoned the Bush administration's economic team to his office to discuss another round of tax cuts to stimulate the economy. Then-Treasury Secretary Paul H. O'Neill pleaded that the government -- already running a $158 billion deficit -- was careering toward a fiscal crisis. But by O'Neill's account of the meeting, Cheney silenced him by invoking his take on Reagan's legacy. snip

The fiscal shift in the Reagan years was staggering. In January 1981, when Reagan declared the federal budget to be "out of control," the deficit had reached almost $74 billion, the federal debt $930 billion. Within two years, the deficit was $208 billion. The debt by 1988 totaled $2.6 trillion. In those eight years, the United States moved from being the world's largest international creditor to the largest debtor nation.

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Might want to mention this to any Republican acquaintances when they bring up the deficit. I imagine they would like us to forget this.