Compared to the freerepublic, the forum this tract comes from seems almost childlike.
They start with one pottymouth that posts this plot of the national debt in current dollars with a title that holds the president responsible --giving congress a free pass. This is met with a reply post of bar graph in constant dollars, as if adjusting for inflation was all that was necessary. Yeah right. The decades go by with no change in population, wealth, technology, economic power.
When we get into this on a freeper thread, we've at least got the sense to use %gdp stats from the GPO's numbers (from Table 7.1). OK, not nearly as dramatic, but those of us who work for a living prefer reality during the day and drama with our evening's entertainment.
Here's the bottom line: debts are useful tools, be they national, credit card, or mortgages. Sure it's bad when idiots let things get out of control, but most adults are responsible. Let's get a grip. Our grandparents weren't bad people when they went into debt to defeat Hitler; they immediately paid it back to prewar levels. Same for our parents with finishing of the cold war. I know all the global-warmer types need their morning crisis to start their day, but reality is that the debt/%gdp is going down.
Compared to the freerepublic, the forum this tract comes from seems almost childlike. They start with one pottymouth that posts this plot of the national debt in current dollars with a title that holds the president responsible --giving congress a free pass. This is met with a reply post of bar graph in constant dollars, as if adjusting for inflation was all that was necessary. Yeah right. The decades go by with no change in population, wealth, technology, economic power.
I agree. In the world of current dollars, and even constant (inflation-adjusted) dollars, government debts, receipts, and spending invariably go up. However, if you look at receipts (and to a lesser extend, spending) as a percentage of GDP, you see much more stability. The first graph at http://home.att.net/~rdavis2/recsrc.html shows that, in all but one year since 1951, total receipts have ranged between 16 and 20 percent of GDP. However, the second graph shows that, in constant dollars, receipts have generally grown over that period. Why does the GDP tend to grow faster than inflation? As you said, major causes are increases in population, technology, and productivity.
The most immediate burden of the debt is the interest that must be paid on it each year. Since the receipts that pay that interest tend to grow with GDP, the debt that can be safely supported with that interest can likewise grow with GDP (assuming that interest rates remain the same). Hence, I think that the gross federal debt as a percentage of GDP is the most meaningful measure to look at. Your graph is looking at the public debt as a percentage of GDP which excludes the debt owed to Social Security and the other trust funds. Since the debt to Social Security is projected to be repaid as the Boomers retire, I think that the gross federal debt is the more meaningful measure. And unlike the public debt, which is decreasing slightly as a percentage of GDP, the gross federal debt is still increasing slightly.
In any case, the question of looking at the gross debt versus the public debt will soon become a moot issue. As the Boomers retire, the debt held by Social Security and some of the other entitlement trust funds will be repaid and likely replaced by public debt. Hence, you could say that all debt becomes public debt in the end. The following graph shows the public debt as a percentage of GDP, as projected in the most recent budget:
The actual numbers and sources are at http://home.att.net/~rdavis2/pro2008.html. As can be seen, the public debt is projected to reach 160 percent of GDP in the more optimistic case that Bush's mandatory spending proposals are accepted. This will surpass the peak reached during the Second World War. Unlike then, however, there will be no war to end, providing an immediate peace dividend to balance the budget.
