[expat_panama]

My own belief is it will be even lower because the economy is growing much faster than expected. Last week, the U.S. Commerce Department reported that, for the first three months of the year, the economy was growing at an annualized 3.8 percent, instead of the 31/2 percent they initially reported.

The comparison of the budget to the size of the economy is more important than flat numbers. George Washington had a deficit of about one 10 millionth of what we have today, but they were close to default because the US economy back then was so tiny.

The debt burden has gone down over the past decade even though revenue dropped more than spending.   The reason is that the economy grew so much.

[Brilliant]

$100 billion off what, though? They've been saying this for some time. Is it a new $100 billion, or the old $100 billion?

[expat_panama]

For them that likes good news this should go well with the morning coffee and donut.   Them that doesn't will always be able to figure out how this proves we're doomed.

[Brilliant]

The Founders were actually in default. They eventually made good on the debts one way or another, but creditors had to wait, and that means they were in default.

[Lee'sGhost]

Could you explain that chart a little more, please.

[Mase]

In 2003, the projected deficit was $500 billion. In January 2004, the projected deficit was $413 billion. Now I read in your article that the deficit could be as low as $300 billion this year.

Is this the kind of news that could motivate congress into making permanent Bush's tax cuts? The evidence that tax cuts stimulate growth, and revenue, is unequivocal.

I remember many scoffing at supply side champion, Jack Kemp, when he predicted this would happen last year. The supply siders have always been right and this article supports their claims.

More Kemp from last year:
Looking ahead to the next four years, our goal should be economic growth rather than reducing deficits per se. If growth is the goal, then tax increases, trade restrictions and nationalized health care are the wrong choices. If long-term growth is our goal, then we will reject tax-and-spend redistributionist policies masquerading as fiscal discipline; and, if long-term growth is our goal, we will continue to pursue lower tax rates on all Americans, free trade, less regulation, tort reform and entitlement reform. Those are the right choices.

[savedbygrace]

This seems to show a different picture:

The Debt to the Penny

This seems to show that, since 9/30/04, we've added $463 Billion to The National Debt.

[tm22721]

The Dow/Gold ratio says we're going into the third major downturn since 1929.

There's nothing we can do about it the die is cast.

http://www.kitco.com/weekly/paulvaneeden/jul042005.html

BUMP

[remember]

The debt burden has gone down over the past decade even though revenue dropped more than spending. The reason is that the economy grew so much.

You're wrong. The following table shows the items that you're looking at plus the deficit:

       DEBT, DEFICIT, RECEIPTS, AND OUTLAYS
                 (percent of GDP)

          Gross   Public    Total    Total  Unified
  Year     Debt     Debt Receipts  Outlays  Deficit
---------------------------------------------------
  1992     64.1     48.1     17.5     22.1     -4.7
  1993     66.2     49.4     17.6     21.4     -3.9
  1994     66.7     49.3     18.1     21.0     -2.9
  1995     67.2     49.2     18.5     20.7     -2.2
  1996     67.3     48.5     18.9     20.3     -1.4
  1997     65.6     46.1     19.3     19.6     -0.3
  1998     63.5     43.1     20.0     19.2      0.8
  1999     61.4     39.8     20.0     18.7      1.4
  2000     58.0     35.1     20.9     18.4      2.4
  2001     57.4     33.0     19.8     18.5      1.3
  2002     59.7     34.1     17.8     19.4     -1.5
  2003     62.4     36.1     16.4     19.9     -3.5
  2004     63.7     37.2     16.3     19.8     -3.6
  2005*    65.7     38.6     16.8     20.3     -3.5

          Gross   Public    Total    Total  Unified
AVERAGES   Debt     Debt Receipts  Outlays  Deficit
---------------------------------------------------
Clinton
 94-01     63.4     43.0     19.4     19.5     -0.1
Bush
 02-04     61.9     35.8     16.9     19.7     -2.9
 02-05*    62.8     36.5     16.8     19.9     -3.0

* projected
Source: 2006 U.S. Budget, Historical Tables 1.3 and 7.1

The averages appear to pretty much agree with the averages that you plotted. On average, the public debt was 43 percent under Clinton and 36 percent under Bush. However, the average deficit was nearly zero under Clinton and 3 percent under Bush. What gives?

A closer look at the debt shows that Clinton inherited a public debt of 49.4% of GDP and, during his term, it came down to 33% of GDP. Bush then inherited that 33% of GDP debt and it is projected to rise back up to 38.6& of GDP this year. What you have shown is that, if a President inherits a debt level that is 16.4% of GDP below that inherited by his predecessor, the debt is likely to average a lower percent of GDP even if he runs significantly larger deficits. Bush's policies have helped cause receipts to drop from 19.8% to 16.8% of GDP and outlays to rise from 18.5% to 20.3% of GDP. As a result, his tax-cut and spend policies have caused the balance to drop from a 1.3% of GDP surplus to a 3.5% of GDP deficit. This, in turn, has caused the public debt to rise from 33% to 38.6% of GDP and the gross debt to rise from 57.4% to 65.7% of GDP. No surprises there.

The flaw in your reasoning is that you are basically comparing apples and oranges. The debt is a result of the receipts and spending under all previous presidents. The only thing that is effected by a specific President's policies is NEW debt, that is deficits. How can you blame Clinton for the high level of debt that existed when he took office? Likewise, how can you credit Bush for the less debt (as a percent of GDP) that existed when he took office? The answer, of course, is that you can't. If you want to judge the effect of a President's policies, you need to look at the DEFICIT, not the DEBT.

[MattinNJ]

BTTT