Category Archives: National Debt

National Debt & the Deficit

Dick Sizing Contest

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My old friend Lido (“Lee”) Bruhl is a true believer in ObaMathematics-1-. “We never made any claim to fiscal responsibility, as your Republicans keep doing,” he said this morning after he praised the Senate Health Bill. “The Republicans left the largest deficit ever, even allowing for two wars in progress.”

That has so many holes, I just don’t know where to drive my 18-wheeler first.

Fiscal responsibility. “I will not sign a plan that adds one dime to our deficits, either now or in the future.” Must have been a famous Republican president who said that.

“My” Republicans: Heh. I have retracted the Goofy vote. I keep trying to join the Librarian party. Unfortunately, they all want to shush me.

Deficits: Deficits are not a dick-sizing contest.

Warning: the following couple of paragraphs include actual fact and even two definitions about counting on your fingers.

The annual “Deficit” is simply the difference between government receipts and government spending.

The ongoing “National Debt” is the total cash money the federal government (that’s We the People) owes to the people and businesses and countries from whom the federal government has borrowed. The government “sells” Treasury Bills, Notes, Bonds and Savings Bonds, and more to our lenders. About 25% of the total national debt was held by foreign governments in 2007. Mainland China holds about $800 billion in addition to the $1.4 trillion cumulative trade imbalance. Each and every one of us We the Peoples owes about $30,400 on the national debt right now. Each. Cash money.

“George Bush left the largest deficit ever,” Lee repeated.

That’s simple obfuscation. There is no deficit “carryover.” The real issue is the national debt.

The United States has been a debtor nation since 1776. We borrowed money to finance the Revolution before we were even really a country. National debt varied through most of the 19th century and began a steady growth about 1910. F.D.R. and Harry Truman had Depression-era social programs plus World War II to pay for. They borrowed to do so. On average, Eisenhower, Kennedy, Johnson, Nixon, Ford, and Carter grew the debt through 1980 at about the rate of inflation. In actual dollars, the national debt quadrupled under Reagan and George H. W. Bush and about doubled under George W. Bush although his early budget surpluses did decrease the debt from 2000-2002; it began to climb again with post 9-11 spending.

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A more telling piece of data than the billions of debt dollars is how that debt compares to how much we actually make.

The Gross Domestic Product (GDP) measures how much all the goods and services we make sell for in a year.

Let’s compare how the national debt rose against how the GDP rose.

By 1940, F.D.R.’s spending programs had raised the debt to more than 50% of GDP. Eisenhower inherited a debt over 90% of GDP but gave a debt of 56% of GDP to J.F.K. The debt hovered in the 30% range through about 1980 as the go-go economy grew. It was back over 50% of GDP by 1990 and 58% when G.W.B took office in 2000. Bush spending made half the new bump but the tanking economy and real GDP contraction made the debt jump from 65% to 70% by 2008. Now, after a year of ObaMathematics and a flat economy, the national debt is about 90% of GDP.

The 2010 ObaMathematics Budget will bump the debt another 10% to about 100% of GDP. It will remain there as long as real GDP growth (after inflation) actually happens. Since the consensus estimates from most analysts show much smaller growth in GDP, the debt will actually soar past 100% as ObaSpending continues. The CBO projects the debt to double again (to $20 trillion) by 2015. Other estimates take it higher.

Only one American President, Andrew Jackson, ever dropped the national debt to zero. That was on January 8, 1835. Every other president of every political persuasion has increased it.

“I guess you would rather have McCain who would have been amazing on international affairs, but even he admitted he had no ideas or platform for domestic recovery?” Lee said.

Under the circumstances, when the economic “recovery” programs created with ObaMathematics have created somewhere just south of zero new jobs and will run up the debt service We the People must pay to $700 billion per year (seven hundred billion dollars), “no ideas” for domestic recovery sounds like a pretty good idea. Or at least a cheaper one.

We should always choose a President who does nothing over one who does everything wrong.

-1-ObaMathematics is a combined arithmetic system in which “2 + 2 = 47,208” for very large values of 2 and after borrowing from the “4.”

ADD?

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Attention to Deficit Disorder.

The 800 pound gorilla put on a wee bit of weight last week when Congress added the G.R.A.F.T. Act to the TARP payments.

Now that President Obama has hit his bailout and stimulus balls right over the fence, he needs something else to do. See, the economy is fixed. People are back at work, the Iraq war is over, American highway bridges have all been replaced, and New Orleans is completely rebuilt.

The President announced his new goal of the week yesterday. He will cut the deficit at least in half by the end of his term.

We owe an eye-popping $10.8 trillion in gross national debt; that amount will sooner or later come due on our personal and corporate income taxes, half of which already pay solely for the military and the interest on the debt. According to the U.S. Department of the Treasury, the national debt has just about doubled since 2000. The AP reported that the $700 billion bailout alone will send the national debt over $11 trillion. The U.S. Government has never been debt free; we have owed money every year since 1791. In fact, only in the boom years of 1835-1836 has the debt been only $35,000 or so. Every other year but 1837 we have paid interest on millions, billions, or trillions of dollars of debt. I am not Carl Sagan, R.I.P.

NBC News reported yesterday that President Obama acknowledged there is a deficit and that it is as large as it has ever been. Mr. Obama’s budget outline, which he will release on Thursday, will include deficit reduction as a centerpiece in his plans to deliver national health care and national energy changes.

The mechanism to cut the deficit? No more spending in Iraq and higher taxes.

Oh, and by the way? We’re not cutting the actual deficit. We’re cutting the rate at which the deficit increases. You might say we’re sort of reducing how much we borrow. I guess the 800 pound gorilla is still in the corner after all.

My friend “Bob” suggested that we call this piece “DAD” for Deficit Attention Disorder. I would except that sounds so paternalistic. The Obama Administration would never be paternalistic, would it?

Change. It’s what we do™.

Andy Rooney talked about The Times US presidential rankings on 60 Minutes last night. “Democracy is a great idea,” he said, “but I have always thought we have a great president hidden somewhere in the United States and we’ve just never found him. Or her.”