Posted on 12/24/2015 9:01:16 AM PST by Citizen Zed
As of this writing, the U.S. national debt is over $18.7 trillion, or over $58,255 for every one of the over 321 million men, women, and children in America. Our government keeps adding to the debt by running deficits, as it has since 2001. Within that background, we present a bit of good news: the deficit for fiscal 2015 is the lowest since 2007. We only overspent by $439 billion in fiscal 2015, compared to a $161 billion deficit in 2007. The deficit was down to only 2.5% of the gross domestic product (GDP).
While we may be going in the right direction, we are still adding to an overall debt load that could reach unsustainability on its current trajectory. The total debt-to-GDP ratio is 73% based on federal debt that is held by the public. If you add intragovernmental debt - the money that the government owes to government trust funds like Social Security but has already spent on other things - to create a total debt number, the debt-to-GDP ratio rises over 100%.
Worse still, the baseline projection of the Congressional Budget Office (CBO) shows that by 2039, the debt-to-GDP ratio based only on the debt held by the public will top 100%, closing in on the record debt-to-GDP caused by the spending necessary to fight World War II. It is unlikely that the Social Security trust fund will have been replenished by then given the retirement of the large baby boom generation, so the total debt-to-GDP ratio is likely to reach uncharted territory.
At least at the moment, the debt load is not rising as much as it could because of extremely low interest rates. It cost 1.3% of GDP just to service the debt load in 2015, compared to 1.7% in 2008. Eventually interest rates must rise, compounding the overall debt problem.
Unfortunately, during a presidential election season, it is difficult to find a candidate that looks at a balanced budget as a priority. Those who do truly believe in fiscal restraint, like Rand Paul, are getting crushed in the polls. Republicans who are focused on shrinking the size of government are all for cutting spending, but they are also for creating tax cuts that add to deficit spending without extremely optimistic growth assumptions. Democrats are for raising taxes on the wealthy but typically use that funding to increase spending.
The Wall Street Journal correctly identifies the issue � deficits have fallen generally because of increased revenue instead of decreases in spending. Government spending increased by 5% last year and is still higher than any value between 1993 and 2008 as a share of GDP.
The winner of the 2016 presidential election will be in a difficult position with respect to the budget. Non-discretionary spending on items like Social Security and Medicare benefits are crowding out other opportunities to cut expenditures. The Office of Management and Budget appropriations numbers for fiscal 2015 showed that just over 70% of expenditures are either mandatory spending or interest on the accumulated debt.
Arguably, too many of the remaining cuts have fallen on areas like research and infrastructure - not to mention education. It could be worse - remember that we are still under sequestration for defense spending, which is keeping overall military spending down from what it could be.
Let's enjoy what good news we have on spending while we can. Based on most economic projections and candidate promises, this may be as good as the news on the deficit front will get for a long time.
match with the statement:
the deficit for fiscal 2015 is the lowest since 2007. We only overspent by $439 billion in fiscal 2015, compared to a $161 billion deficit in 2007.
Maybe you could say that the deficit is lower than during the fiscal crisis, but not lower than before the crisis.
No, Your Honor, I have good news. I didn’t kill 24 people, only 23! Does that mean all is forgiven now?
I like articles with such enormous short circuits. Their own “reasoning” destroys their point.
The only way what they allege is possible is if the deficit is less of a percentage of the GDP now than it was in 2007. But then it is stupid to throw out the statement “$439 billion in fiscal 2015, compared to a $161 billion deficit in 2007”. With those numbers I have to check if the assertion the deficit percentage of GDP really is less for 2015.
The latest 2015 budget deficit is -$439B and in 2007 it was -$161B. OK, so that’s “lower” but not in the way we want. The latest def/GDP has 2007 at -1.1% compared to 2014 -2.8%. I guess they made up some nice big number for the 2015 GDP, a fantasy that could generate a super low number for 2015.
Annual deficits since 2007:
2007 $161B
2008 $459B
2009 $1413B
2010 $1294B
2011 $1299B
2012 $1100B
2013 $680B
2014 $492B
2015 $439B
2016 $474B (proj.)
(http://www.davemanuel.com/history-of-deficits-and-surpluses-in-the-united-states.php)
--but 2015 still isn't done yet, that's why we can make up what ever number we want.
Wait until interest rates return to historical levels. Our debt servicing costs will soar exponentially. Silly analysis.
The sequester caps contained the deficits, The Omnibus Bill removed the caps. The era of big spending is beginning anew.
2007 deficit to GDP is 11%. So the deficit/GDP percentage is less in 2015.
But that is just one tree in the forest. These people get stuck staring at one tree until they are so cross-eyed they think that fuzzy thing they are looking at is the whole forest. There are a lot of trees in the forest of problems created by 18+ trillion in debt.
Trump is THE ONLY candidate talking about the debt.
1.1% sorry!
I think they might have divided the 2015 debt by the 2015 deficit, that is about 2.5%.
. . . but given the wealth of this nation, absolutely criminal that we have them on a regular basis.
Then again, perhaps the point has been passed that the debt is so large that it will destroy the nation and the society no matter what so we might as wil\\ell pile it on and get what we can for today because there is no financial tomorrow or rather tomorrow, when it comes, is financial extinction.
The deficit percentage of the debt or of the budget or of the economy is no longer relevant. It is deficit.
He was a gun grabber but he had the balls to make that and free trade the center piece of his campaign.
Doesn't the fiscal year for the US run from 10/1 to 9/30?
What would it have been if interest rates were, say, 2%? Don’t expect the MSM to report on that.
The total debt-to-GDP ratio is 73% based on federal debt that is held by the public
Our debt is presently somewhere between 110% and 120% of GDP.
In Korea, the finance ministry is presently sounding the alarms because they are concerned that their national debt may rise from 30% to 40% of GDP in the next several years. They say that would structurally damage the economy and are calling for spending cuts and fiscal austerity.
Korea’s problem is minor compared to what Obozo has done to us.
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