Thursday, September 11, 2008

The Bush Economy Part 2 - Govt Debt

I've been meaning to look up this info for some time, but thankfully somebody else has done the work for me... The Heritage Foundation (discovered via NRO) put together some info about the US debt & deficits.

The info on the debt-to-GDP ratio is a little misleading since they refer only to the public debt of $5.4 trillion rather than the gross debt in excess of $9 trillion. Heritage explains why they use public debt rather than total debt, but firstly, I disagree with that analysis, and secondly I can still make my point with the higher figure.

Still, the total debt as a percentage of GDP is not out of whack as compared to the 1990's. That's not to say that I like the debt being so high, or that I am uncritical of the percentage of foreign debt.

from Wikipedia:
US Debt

In the 2000 election season we heard about projected surpluses as far as the eye could see. That was based on NASDAQ bubble economics. Deficits would have occurred whether taxes were cut in the first Bush term or not.

And of course, the real killer is the $42.9 trillion liability for Social Security and Medicare over the next 75 years.

So how does the Iraq war fit in to all of this? Eh. Defense spending as a percentage of GDP is also low by historic standards.

From an economic growth perspective, not all debt is bad. It can often be good or benign, and paying down debt too rapidly can suck a lot of juice out of the economy. From a libertarian perspective, more debt is bad because it represents the power of the government to control our lives.

3 comments:

Anonymous said...

Why is the rise in debt so often associated with a Republican President? I can't tell exactly without a table but it looks like it rises through Reagan and Bush I and drops shortly after Clinton, then starts to rise for Bush II...

When you project the liability foor social security - is that in excess of revenue or just the total cost? If it's the total cost than how does it relate to the figures provided?

As for military spending - including Vietnam spending and cold war spending is probably at least somewhat misleading but whatever. Either way we've had a 1 GDP increase in military spending - what do we have to show for it now?
Matt

Sockless Joe said...

Either way we've had a 1 GDP increase in military spending - what do we have to show for it now?

This coming from the guy who used to gleefully watch the video feed from guided missiles as they found their targets? (Clinton bombing Iraq after some no-fly violations, as I recall? Or was it Bosnia?)

Not to be glib about it, but we blew a lot of stuff up, and it wasn't cheap. The policy debate is different from the economic debate, and on that front I think we could actually "afford" to fight in Iraq and Afghanistan with this level of intensity in perpetuity. (Again, not a policy proposal.)

Anonymous said...

Dude - it was cool looking (and just crazy what you can find on the internet) - and those were my younger days - now I'm all wizened. I'm pretty sure it was Bosnia - but I could be wrong...