The national debt is not as dire as it's being portrayed (Vanity)

My letter to the editor of every major paper | October 21, 2003 | Peach

[Peach]

Despite the barrage of negative press regarding the national deficit, a little research reveals the news is far less dire than it is being portrayed.

The gross domestic product (GDP), which forecasts the amount of money taken in through taxes by the government versus the amount of government spending, is best looked at in percentages as the nation's economy continues to grow each decade. According to the Office of Management and Budget, a comparison of administrative deficits for the last 20 years is as follows:

Reagan 1983 $208 billion deficit 6% GDP

Bush 1992 $290 billion deficit 4.7% GDP

Clinton 1993 $255 billion deficit 3.9% GDP

Bush 2003 $374 billion deficit 3.5% GDP

What the majority of articles bemoaning the national deficit do not remind people is that the terrorist attacks of 9/11 cost our economy a minimum of $500 billion including $150 billion in reduced GDP. This does not include the cost of fighting the war on terrorism. The cost for that is approximately 3% of GDP versus approximately 10% GDP during the height of the Cold War. Considering two years ago our nation endured its largest attack at the heart of its financial center, as well as an expensive war on terrorism, two tax cuts and numerous corporate scandals,

A 3.5% deficit in GDP does not seem unreasonable and on a percentage basis is still lower than we’ve seen in 20 years.

In addition, the record deficits in California continue to have a negative impact on our national economy. California is the world's fifth largest economy and their breathtaking social experimentation in recent years has resulted in a state dangerously close to needing a national bail-out.

The majority of economists have attributed the recent strength in consumer spending to the Bush tax cuts. We have already seen tremendous growth in the last quarter, and most of that has been attributed to people having more money to spend.

Contrast the Bush tax cuts with the money the Democrats would spend if they had the majority. In the last 3 years, The Democrats, who say they want to reduce the deficit, have tried to add nearly $2 trillion in budget bills, more than all of Bush's tax cuts combined.

[Peach]

We'll see if the mainstream press can handle a little honesty and integrity when bemoaning the "record breaking deficit".

[Peach]

A shameless ping.

[jd777]

2003 isn't over yet

[CPT Clay]

Mainstream press does not want to get this right.

[Peach]

Those are numbers taken from the Office of Budget and Management and published in USA Today (today). If it's good enough for them, it's good enough for my editorial.

Regardless, you can see that thus far, the deficit as it relates to GDP is lower this year than any time in 20 years. I think since we've had the worst attack on our country in our history, a war on terror, two major tax cuts and corporate scandals - that's a pretty good number and deserves to be trumpeted.

[Peach]

They probably won't accept the letter but I've used the contacts here and some of my local papers to send it in.

We can't depend on the lamestream press to do what's right but if they hear from enough people, perhaps they will feel forced to print some GOOD news for a change. (hope springs eternal)

[RedWing9]

2003 isn't over yet

In case you didn't know, the Federal gov't is on an Oct 1 to Sep 30 fiscal year. 2003 is most definetly over...

[k2blader]

Where exactly did you find your deficit and GDP data? Thanks in advance.

The chart at the top of this page shows the current (?) budget deficit at 4.2% of GDP.

Also note the chart at the very bottom of the same page illustrating "The Real Fiscal Danger: Shortfalls in Medicare and Social Security, along with debt held by the public, pose genuine fiscal challenges that must be confronted."

[Ramius]

The other thing to drive home, and I rarely see it done, is that there was NO SURPLUS budget ever seen in the 90's. There was a "projected" surplus in the "out years" (unbudgeted years) but since the bubble burst in the stock market and the economy tanked at the end of the Clinton regime, those "projected" surpluses evaporated.

[Peach]

I got the information from USA Today which annotated that it got their information from the Office of Management and Budget.

[Tennessean4Bush]

Peach, you are absolutely right. While debt is never something to be desired, a little perspective is what is needed. $87 Billion is peanuts to what a major terror attack over here will cost us. And right now it looks like a bunch of the terrorists are flocking into Iraq to take the fight to us there instead of flocking here.

Bush could solve this real quick by merely holding the rate of growth in non-defense related items to 2% instead of 4%.

[Peach]

Excellent point(s). If I write more letters, I'll include that little tidbit!

[k2blader]

Ah, thank you.

[Peach]

Rumsfeld a month ago or so talked about these numbers as well and made your exact point - that spending $87B to fight the war on terror is peanuts compared to the $500B the 9/11 attacks took out of the economy.

Hey - Rummy - is that you?

[Peach]

You're welcome. I'd expect the number to perhaps go higher next year, but I don't think on a historical comparison basis that it's quite the big deal the media is making it out to be.

[Willie Green]

Expressing the deficit in terms of GDP is an irrelevant and misleading statistic.
It totally ignores the magnitude of debt that has already been accumulated by the federal government, as well as debt that has been accrued by state and local governments in addition to private sector and individual household and consumer debt.

It is more appropriate to look at what proportion of federal revenue must be allocated to servicing the interest on the National Debt. The last I looked, that figure was approximately 18%. The federal government should NOT be accumulating more debt when it is already devoting nearly 1 out of every 5 tax dollars it collects merely to make interest payments.

"I am one of those who do not believe that a national debt is a national blessing, but rather a curse to a republic; inasmuch as it is calculated to raise around the administration a moneyed aristocracy dangerous to the liberties of the country."

-- President Andrew Jackson - (1824)

"Think what you do when you run into debt;
you give another power over your liberty."

-- Benjamin Franklin (1706 - 1790)

[tet68]

Every time I hear about "the Deficit" I am heartend by part of a story by james Fenimore Cooper entitled, "The Crater".
A great story with a lot of universal truths to it but in this instance , the story is set in the late 1700s,early 1800s two of the main charactors are arguing about the deficit and how it's going to be the ruin of the country and how shocking it was with it at $180,000.
After that I ceased to worry about it.

[Flyer]

there was NO SURPLUS budget ever seen in the 90's

Not to mention that a surplus means we are being over taxed. I NEVER want Government to have a surplus.

[k2blader]

Well, I like what this chart shows (straight from the OMB website)!




...And just to (hopefully) spark some interest, here's the other chart I referenced:

[annyokie]

Re #5

Damn right!