The national debt is not as dire as it's being portrayed (Vanity)

My letter to the editor of every major paper | October 21, 2003 | Peach

[Peach]

Despite the barrage of negative press regarding the national deficit, a little research reveals the news is far less dire than it is being portrayed.

The gross domestic product (GDP), which forecasts the amount of money taken in through taxes by the government versus the amount of government spending, is best looked at in percentages as the nation's economy continues to grow each decade. According to the Office of Management and Budget, a comparison of administrative deficits for the last 20 years is as follows:

Reagan 1983 $208 billion deficit 6% GDP

Bush 1992 $290 billion deficit 4.7% GDP

Clinton 1993 $255 billion deficit 3.9% GDP

Bush 2003 $374 billion deficit 3.5% GDP

What the majority of articles bemoaning the national deficit do not remind people is that the terrorist attacks of 9/11 cost our economy a minimum of $500 billion including $150 billion in reduced GDP. This does not include the cost of fighting the war on terrorism. The cost for that is approximately 3% of GDP versus approximately 10% GDP during the height of the Cold War. Considering two years ago our nation endured its largest attack at the heart of its financial center, as well as an expensive war on terrorism, two tax cuts and numerous corporate scandals,

A 3.5% deficit in GDP does not seem unreasonable and on a percentage basis is still lower than we’ve seen in 20 years.

In addition, the record deficits in California continue to have a negative impact on our national economy. California is the world's fifth largest economy and their breathtaking social experimentation in recent years has resulted in a state dangerously close to needing a national bail-out.

The majority of economists have attributed the recent strength in consumer spending to the Bush tax cuts. We have already seen tremendous growth in the last quarter, and most of that has been attributed to people having more money to spend.

Contrast the Bush tax cuts with the money the Democrats would spend if they had the majority. In the last 3 years, The Democrats, who say they want to reduce the deficit, have tried to add nearly $2 trillion in budget bills, more than all of Bush's tax cuts combined.

[Elliott Jackalope]

"California is the world's fifth largest economy and their breathtaking social experimentation in recent years has resulted in a state dangerously close to needing a national bail-out."

Yes, let's reward the idiots who have bankrupted that state by bailing them out. Then, when the other 49 states start getting tired of tightening their belts, they too will instead follow the brilliant example of California by spending themselves into bankruptcy to obtain their federal bailouts. It is pure genius! Bankrupt yourself to prosperity!

[WhiteGuy]

The congress is still spending the Social Security surplus every year.

Social security goes broke in a few years.

The national debt has risen every year, including the "surplus" years.

Our elected government officals spend far more than they have the right to.

It is our money.

To me, this is why the "record breaking deficit" is a critical problem to be solved.

[WhiteGuy]

The congress is still spending the Social Security surplus every year.

Social security goes broke in a few years.

The national debt has risen every year, including the "surplus" years.

Our elected government officals spend far more than they have the right to.

It is our money.

To me, this is why the "record breaking deficit" is a critical problem to be solved.

[Koblenz]

The % of GDP is going to go over way too many people's head. Another way to make this argument is to make an analogy to Gone With the Wind. It's the biggest grossing movie of all time if you adjust for inflation. Otherwise, in raw dollars, it's Titanic.

[ChadGore]

Good post! Here's a thought:

Could the proper title for this thread be:

"The national debt national deficit is not as dire as it's being portrayed"

Deficit being the overspending in each year.
Debt being the total acrued debt we owe.

[Brian S]

And you fail to mention the $400 billion which will actually be $1.4+trillion, prescription drug program being promoted and pushed by "our" current Administration.

Search on "medicare" for current FR updates...

[Tennessean4Bush]

Expressing the deficit in terms of GDP is an irrelevant and misleading statistic. It totally ignores the magnitude of debt that has already been accumulated by the federal government, as well as debt that has been accrued by state and local governments in addition to private sector and individual household and consumer debt.

You have a point, but it still does not preclude Peach's point, which is merely a relativistic one that argues for perspective. Look, I would love it if Bush would institute a rigid austerity and hold the rate of growth in non-defense to that of inflation (or less) instead of the 4% he trumpets. I mean, they gore him about the 4% not being enough, would they make it any tougher if he held it to 2%? That would represent a real reduction in the size of government and a fiscal legacy of which to be proud.

[Peach]

Oh sugar. I wish I'd posted before I sent those letters out!

Thanks for the correction. Regards, Peach

[annyokie]

Yawn. I have been hearing this canard since I was 16-----30 years now!

[Peach]

Loved the analogy. And couldn't agree with it more. That Titanic was awful - walked out.

[Peach]

Thanks - hope those projections are right!

[Peach]

Great story. That's why people need to look at the percentages and not the #'s (which you've obviously known for years).

[WhiteGuy]

Canard?

Which of my points did I lie about?

[WhiteGuy]

Don't remind me.

I'm in denial, if I actually belive that our socialist congress would do such a thing, I'd go mad...........

[Ramius]

Expressing the deficit in terms of GDP is an irrelevant and misleading statistic. It totally ignores the magnitude of debt that has already been accumulated by the federal government, as well as debt that has been accrued by state and local governments in addition to private sector and individual household and consumer debt.

Sorry Willie, but you're wrong about that. Expressing the deficit and debt (two different things, by the way) as a percentage of GDP is the ONLY meaningful way to compare them across decades. To compare such amounts over different administrations ignores not only the relative size of government, but also the time value of money.

I hope you don't believe that the "national debt" includes state and local as well as consumer debt. It doesn't.

[annyokie]

No one said you lied, but the idea that SSI will ever be defunded is so much bullstuff.

2.1 % increase next month (eg: average $19 a month) would be an indicator.

[Peach]

Yes - I thought of that lower interest rate payback after I sent my letters.

Perhaps I'll revise them. Thanks for the suggestion.

[WhiteGuy]

A canard is a lie.

defund social security?

the alternative is confiscatory taxation to the point that it doesn't make sense to "work".

We were warned about this during the Reagan administration, (which was probably before your time young lady!)

And the problem worsens daily.

We have been fed one "crisis" after another for 15 years, as we rush headlong toward the end of the republic.

[Willie Green]

Sorry Willie, but you're wrong about that.

Horsepucky.

Expressing the deficit and debt (two different things, by the way)

No fooling, gunga din. The National Debt reflects the cumulative obligations accrued by years of deficit spending.

as a percentage of GDP is the ONLY meaningful way to compare them across decades.

If you want to discuss National Debt as a percentage of GDP, I may be more open to the comparison. But calculating the deficit as a percentage of GDP is irrelevant. A bank doesn't lend money to ANYBODY without consideration of how much is already owed.

I hope you don't believe that the "national debt" includes state and local as well as consumer debt. It doesn't.

Of course not. That's exactly why I pointed it out. It's irresponsible to even discuss the National Debt's relation to GDP without recognizing all the other forms of debt obligations that must ALSO be serviced by domestic economic activity.