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Originally posted by Gattigap
I didn't realize the graph would throw you so badly. Sorry. Balt is right that it is a snapshot of the national debt, and where it came from, as of a certain period in time (today, and projected as of the end of the Bush presidency).
I found it interesting because one of your side points was about the irrelevance of old debt, but let's not let your confusion take us away from my main question. Let's focus on the AGGREGATE DEBT.
Here, let's look at the background data to see if the graph is right. The OMB's official data is presented in a nifty chart here ... let's see ... in 2005 the gross national debt is estimated to be, as a percentage of GDP, .... holy shit! 65.7 percent! And 2010 projections from the OMB? 70 percent!
The graph was right. The horror. The fucking horror.
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I never questioned the accuracy of the aggregate debt (as a percentage of GDP). What I questioned was
1) the percentages seem to imply that the majority of todays national debt comes from the presidents prior to Bush II - which I know is innacurate because most of the recent debt was derived Bush II. In addition, it shows that twenty percent of today debt comes from WWII which I also know is not true. Therefore, proper diagram would show that most of the debt is derived by Bush II, which would reinforce my point that it is not long term debt that is the problem but is recent deficits.
2) In the alternative, (if the percentages are not demonstrating what I stated in #1) then the diagram seems to imply that Bush II has grown the debt to a higher percentage of GDP than all the Presidents since WWII. Which has led to your conlusion that 67% is really high. But as I pointed out that is innacurate because the deficits during WWII (not the debt - meaning not the entire debt but just the deficit for one year) were as high as 140% of GDP. So the debt in the past has been much higher than 67% of GDP or 70% of GDP.
Therefore I reject your assumption that 67% of GDP is some drastic number. Most western developed countries (inclusing Germany and Japan) have much higher debts (higher percentages of GDP). And they have not been fighting wars.
So either way you read this chart it is innacurate (unless you have some theory on how to read it that I have missed).
The last problem with your assumption, is that, as I have said before, the predictions about future deficits are always too low in a recession and too high in an expansion. Remember last year's deficits predictions were too high (and Ty was implying it was intentional manipulation on Bush II's part). However, we were in an expansion (not even that strong of one) and the deficits were much lower than predicted. It turns out that growth right now is really strong, and higher than predicted, so the deficit is going to be a lot lower this year than any one predicted (of course Ty will again blame this on manipulation). If the economy keeps growing at its current rate we will be out of our deficits by 2009.
The miracle about this whole thing is that we just went through a recession and a war and our aggregate debt is only 67% of GDP. And we are still at war and the deficit is starting to drop. That is unprecedented.
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Originally posted by Gattigap - We've discussed before the laughable notion that we'll start balancing budgets tomorrow (or in the near future) so that your enthusiastic economic argument will come to pass. In that light, please examine the above graph for me, which demonstrates that debt as a percentage of GDP is in the 60%+ range right now, and is expected to rise to about 70% before the end of Bush's term.
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- As I said there is nothing catastrophic about a 70% GDP debt. But with the way the economy is growing we won't come close to 70%. Not only does a growing economy bringing in more tax dollars reducing the deficit, but a growing economy makes the pie bigger, making the debt percentage of that pie even smaller.
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Originally posted by Gattigap Even acknowledging that SOME debt is just dandy, what's your magical percentage of GDP where the debt just painlessly evaporates in the face of an ever-expanding economy? 60%? 80%? 20%?
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The problem with the Clinton expansion was that it took seven years into the expansion before we balanced the budget. We only had a few years of balanced budgets before we hit a recession again. If the economy keeps growing under Bush it may take as long if we don't start cutting spending. But if Bush can get the budget under control sooner then we can start cutting the deficit sooner.
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Originally posted by Gattigap
If 70% evaporates in less than a generation, then Ty's original comment wouldn't seem to apply. If it takes more than that, please elaborate.
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If you run a balanced budget for twenty years then seventy percent would drop to like fifteen percent (maybe more). So what is the issue?
To give you an idea of the magnitude I think our entire budget debt in 1980 was around one trillion dollars. Last years budget deficit prediction was 400 billion. So one year of deficts in 2004 equals forty percent of GDP for a 1980 budget. It was just take three years of those deficts to get you to 120% of debt. At a deficit of 300 billion per year it would take just four years.
In 2030, if we are in a recession, our deficits will well exceed a trillion dollars. If they are as high as todays deficts they will be from two trillion to three trillion dollars.
