Skip to comments.Comparing the Ryan and Obama long-term deficits and debt
Posted on 03/21/2012 10:09:48 AM PDT by PhxRising
In case you missed it here are the earlier posts in this series:
The lessons of this graph are:
Chairman Ryan proposes stable deficits of a bit over 1% of GDP, below the historic average deficit, followed by a gradual path to balance and eventually to surplus. Chairman Ryans plan would result in debt/GDP steadily declining over time.
President Obamas budget would result in deficits that are always greater than the historic average, and that would cause debt/GDP to increase again beginning about 10 years from now.
President Obamas proposed deficit path is unsustainable. Our economy can tolerate high and even very high deficits for a short time. High and steadily rising deficits like those described by the blue line cannot be sustained. Something in the economy will break.
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The divergent paths are even clearer here. Under both plans debt/GDP would increase this year and next, then begin to decline.
Chairman Ryans plan would result in debt/GDP steadily declining over time. It would take decades to return to a pre-crisis average.
President Obamas plan would result in debt/GDP stabilizing by the end of this decade, then steadily and forever growing. At some point, and no one knows when, that debt becomes unsustainable.
Again, please dont get too wrapped up in the point estimates I have shown for each plan for 2050. The point is that the Obama debt would eventually break 100% of GDP and keep climbing, and the Ryan debt would steadily decline over time. The gap between the two is significant and ever-increasing.
The red path is economically sustainable, the blue path is not.
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