National debt near $7.4 trillion ceiling

Globe Newspaper Company ^ | October 5, 2004 | Leigh Strope, Associated Press

[Ed Current]

The government is poised to hit the national debt's $7.4 trillion ceiling this month, and yesterday the Bush administration told Congress again that it should raise the limit.

That would be a politically sticky move just weeks from the Nov. 2 elections.

Rob Nichols, Treasury Department spokesman, said the government is on track to reach the limit early this month. He said that the forecast is made "on a day-to-day basis" and that Congress would be notified.

The government can juggle accounts to stay under the limit through mid-November to avoid default, as it has in the past.

[Dead Corpse]

Read what FreeRepublic is about!

Hey Newbie... when you've been here anywhere near as long as I have... then you can re-rpint the mission statement for FR all you want.

If even HALF of our RINO's in Congress stood up for those same principles, we'd have a lot less to talk about and our Federal Spending would be MUCH lower than the percentage of GDP it is. The best that can be said of our current Congressional Republicans is that they only want to add half what the Dims do. And that is being charitable.

[Dead Corpse]

Because we won't HAVE A FRICK'N ECONOMY to worry about after Kerry raises taxes on S corporations that hire the majority of the people.

It's worse than that. Bush REALLY needs to get some de-regulation, some more tax relief, and a boat load of tort reform if our economy is to survive the BS it is being put through now.

Free market=real Freedom. The more free our associations and business dealings are, the more free we all are. Yes, there will be cycles. These are a lot healthier than the major crashes THAT WILL OCCUR under an over managed system. Like we have now.

[snowsislander]

The national debt on October 05: $7,414,553,180,295.70

What % of GDP? Compare that to the debt of the 80's it's a smaller percentage..

The current GDP is $11,657.5 billion.

The current percentage is 63.6%.

Historically, the nominal GDP from 1980 to 1989, the public debt from the same years, and the percentage of debt to GDP for those years:

Year	GDP	Public debt	Percentage
1980	2,789.5	930.2	33.3%
1981	3,128.4	1,028.7	32.8%
1982	3,255.0	1,197.0	36.7%
1983	3,536.7	1,410.7	39.9%
1984	3,933.2	1,662.9	42.3%
1985	4,220.3	1,945.9	46.1%
1986	4,462.8	2,125.3	47.6%
1987	4,739.5	2,350.2	49.6%
1988	5,103.8	2,602.3	51.0%
1989	5,484.4	2,857.4	52.1%

Figures for GDP and debt are in billions of dollars

The percentages for all years in the 1980s are less than the current figure of 63.6%.

The current figure of 63.6% is considered an indicator of moderate to severe indebtedness by objective standards, such as those published by the World Bank. (See my profile for more about this subject. The short version is our debt is too large, and we need to cut our spending.)

[danmar]

The government is poised to hit the national debt's $7.4 trillion ceiling this month

...this Month...with a GDP of $10.99 Trillions and growing economy, I would say it would be safe to say, that as long the investors think it is a OK to finance our debt, so be it.
It is how the financial markets work!

[remember]

According to the U.S. Office of Management and Budget, federal tax revenues more than doubled between 1980 and 1990 (the Reagan tax cuts were implemented between 1981 and 1983), from $517 billion in 1980 to more than $1 trillion in 1990.

The argument that the near-doubling of revenues during Reagan's two terms proves the value of tax cuts is an old argument. It's also extremely flawed. At 99.6 percent, revenues did nearly double during the 80s. However, they had likewise doubled during EVERY SINGLE DECADE SINCE THE GREAT DEPRESSION! They went up 502.4% during the 40's, 134.5% during the 50's, 108.5% during the 60's, and 168.2% during the 70's. At 96.2 percent, they nearly doubled in the 90s as well. Hence, claiming that the Reagan tax cuts caused the doubling of revenues is like a rooster claiming credit for the dawn.

Furthermore, the receipts from individual income taxes (the only receipts directly affected by the tax cuts) went up only 91.3 percent during the 80's. Meanwhile, receipts from Social Insurance, which is directly affected by the FICA tax rate, went up 140.8 percent. This large increase was largely due to the fact that the FICA tax rate went up 25% from 6.13 to 7.65 percent of payroll. Hence, the claim that the doubling of TOTAL revenues proves the effectiveness of tax cuts is including revenues which resulted from a tax hike to prove the effectiveness of a tax cut. This seems like the height of hypocrisy.

Hence, what evidence there is suggests there to be a correlation between lower taxes and LOWER revenues, not HIGHER revenues as suggested by supply-siders. There may well be valid arguments in favor of tax cuts. But higher tax revenues does not appear to be one of them.

You can find a longer analysis of the effect of the Reagan tax cuts on revenues at http://home.att.net/~rdavis2/taxcuts.html.

[remember]

The percentages for all years in the 1980s are less than the current figure of 63.6%.

The current figure of 63.6% is considered an indicator of moderate to severe indebtedness by objective standards, such as those published by the World Bank. (See my profile for more about this subject. The short version is our debt is too large, and we need to cut our spending.)

I agree. The graph and tables at http://home.att.net/~rdavis2/debt05.html similarly show that debt as a percentage of GDP was much less during the 1980s than it is now. It did reach a recent high of 67.3% of GDP in 1996 but it was paid down to 57.5% of GDP by 2001. It's now on the way back up. Of course, the debt did reach the much higher level of 121.7% of GDP in 1946, at the end of the World War II. However, we then paid it down to a low of 32.5% of GDP by 1981.

If we could look forward to a repeat of the post-war period, then our current fiscal situation would be manageable. The problem is, these are likely the "good times" budget-wise. Within ten years the Boomers will start to retire and the debt is projected to explode. As the following graph shows, the debt is projected to top 400% of GDP by 2080! The numbers come from Bush's most recent budget and can be seen at http://home.att.net/~rdavis2/pro2005.html.

[FesterUSMC]

if you think the economy was better under Jimmy Carter your a moron, likewise if you think Reagan's tax cuts didn't pull us out of Jimmy Carter's morass of the 70's you need some mental help.

[USA_Soccer]

I find it amazing that conservatives here are OK with the reckless spending.

[FesterUSMC]

yea yea like Kerry would reign in spending please... The main non defense spending was the medicare bill, which was supported by the democrats also, Kerry voted for it. We need growth.

[remember]

if you think the economy was better under Jimmy Carter your a moron, likewise if you think Reagan's tax cuts didn't pull us out of Jimmy Carter's morass of the 70's you need some mental help.

If you're going to call people morons, I suggest that you at least get your spelling right. In your statement above, I think you meant to say "you're a moron", not "your a moron". Likewise, you might want to change the "your an anvil" in your signature to "you're a anvil".

In any case, the graph at http://home.att.net/~rdavis2/realgdp.html shows that it wasn't real GDP growth that was a problem under Carter. The problem was inflation. However, the graph at http://home.att.net/~rdavis2/cpi_m2.html shows the increase in inflation began before Carter and closely followed the increase in the money supply. It was likely the high spending on the Vietnam War and/or Johnson's Great Society that let to that growth.

In any case, that is all off the topic. My prior message dealt strictly with the false notion that Reagan's tax cuts caused revenues to grow. I've given the analysis at http://home.att.net/~rdavis2/taxcuts.html to numerous supply-siders and am yet to run into one who can contradict it. Can you find any error or do you have any specific disagreement with it?

[FesterUSMC]

Likewise, you might want to change the "your an anvil" in your signature to "you're a anvil".

Point taken on the grammar, I admit English class was my worst subject. I'm proud to say in high school I had more class time in English than anyone other student 4 years of English during the year, then 4 years of summer school for English, and I still can't get it right. Maybe I should have taken the subject more seriously.

[remember]

Point taken on the grammar, I admit English class was my worst subject. I'm proud to say in high school I had more class time in English than anyone other student 4 years of English during the year, then 4 years of summer school for English, and I still can't get it right. Maybe I should have taken the subject more seriously.

Mixing "your" and "you're" is a common mistake so it's no big deal. The real moral of the story, I think, is just not to call people morons. In any case, if you have any specific disagreements with the analysis at http://home.att.net/~rdavis2/taxcuts.html, feel free to post them.

[FesterUSMC]

I don't care tax cuts coupled with restraint in spending is the way to go.

[FesterUSMC]

I don't care tax cuts coupled with restraint in spending is the way to go.