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The Problem No One in DC Wants to Talk About
While the Beltway class hyperventilates over the latest political gaffe and jockeys for position in the 2018 midterms, there’s one subject they studiously avoid: our nearly $20 trillion debt. I wrote about it for USA Today, but my chart above shows the facts better than any op-ed can.
Because most graphs look like this, I created my own user-friendly debt chart focused on three big numbers: deficit, revenue, and debt.
It’s an imperfect analogy, but imagine the green is your salary, the yellow is the amount you’re spending over your salary, and the red is your credit card statement. Then tell your spouse, “Don’t worry, dear, I just increased our debt ceiling with a new Visa card!”
The chart is brutally bipartisan. Debt increased under Republican presidents and Democratic presidents. It increased under Democratic congresses and Republican congresses. In war and in peace, in boom times and in busts, after tax hikes and tax cuts, the Potomac flowed ever deeper with red ink.
Our leaders like to talk about sustainability. Forget sustainable — how is this sane?
I first created the chart in 2014 and update it every couple of years. And, every time, some on the right criticize it as being too harsh on the GOP while most on the left insist that debt doesn’t matter because … well, it just doesn’t, ok?
If anything, my chart is far too optimistic; I don’t mention future projections due to exploding entitlements. Instead of mocking cruel conservatives for cutting Big Bird’s budget, we should be yelling at them to cut more. Much, much more.Published in Economics
This is so true. And it will force our system into something new. I am far less sanguine than Kevin Williamson.
I wish you had made your chart biggifiable so I could read the X axis.
Any projections for what will happen thanks to the GOP repeal and replace plan?
There was no dot-com surplus. There was never a year in the 1990s (or 2000) when the public debt went down year-over-year. The last time it happened was 1956-1957. You can look it up and see for yourself:
Well, they do want to talk about it.
But they just want more red on the bottom.
I didn’t now that. So what is the basis for the claim that there was a surplus (also known as the peace dividend)?
No need to worry! The President’s proposed budget is deficit neutral!
The US national debt is growing at about 9% per year – or about 3.5 to 4.5 times faster than GDP.
This fact all by itself should destroy the growth through debt club, it should be obvious, but you can not borrow your way to prosperity, –Personally or nationally…
I think that’s a result of social security revenue being counted without the liability. Unfunded entitlment liabilities would increase the debt line by an order of magnitude.
I guess I knew this, but I still wish I hadn’t seen that chart.
If you don’t like this then everyone will really hate the ‘rest of the story’… unfunded liabilities.
Federal and state unfunded liabilities, according to Forbes in 2014, were approximately 127 trillion… more than double the world GDP.
So what actually happens when those chickens come home to roost?
Another word might be ” enbiggenable.”
Is there a reason this chart is using nominal dollars, instead of stating debt as a percentage of GDP?
At the time it was a ‘projected surplus’. Then they increased spending.
This is why there must be no new taxes that result in more revenue for the government. It will just make the problem worse.
It would be impossible for me to agree with you more. But just listen to people on the Left and on the Right howl like rabid dogs it you cut something they like. Even here on Ricochet, where I hope we’re all fiscal conservative wanna-be’s, we’ve already heard complaints about cuts to the Arts and to the Coast Guard, and probably others I missed. We’re just as bad as the Left, we just have other oxen we don’t want gored. “Oh no, we’re going to make two less F-22’s! Russia will destroy us now!” At least when we defend the Defense budget, we can point out the Constitution mentions it. The Ponzi schemes that we pour a boatload of our money into, Social Security and Medicare, have zero Constitutional justification.
Anyone who doesn’t think that every single department of the Federal Government can have its budget cut, at least a little, is lying to themselves. I refuse to give the Federal Government a raise (increase my substantial tax load) so Congress is going to have to start reducing spending, big time.
Step one? Outlaw Unions in the Federal Government. Follow Wisconsin’s lead on that.
People in the federal government have no idea how common it is in corporate America for a manager to be told, “cut 10% from your budget. You have two weeks to figure out how”. And they really have no idea how common it is for the same manager to hear the same thing the next year.
So, my bunker preps mocked my family were prescient.
FU world! Got it covered with rice, beans, spam, mre’s and solar panels to enjoy 21 Jump Street (show, not movies) for years to come.
Yeah, got that going for me.
Here’s the full size version.
I thought the dot-com surplus only referred to a current surplus over current spending, resulting in no addition to debt for that year. So debt was not reduced it just didn’t increase that year. No?
It happens in academia, too, even in public universities. Such as, “cut 4 percent from your budget for each of the next five years.” And give us a credible plan to show how you’re going to do it, so you can’t whine and drag your feet when the time comes. When the going gets tough, they really mean it.
Thank you. Are we allowed to redistribute it?
I like to think about the economies growth minus the debt and the amount needed to pay back the debt in the same amount of time.
So, the USA GDP in 2000 was about 10T$. It is now about 19T$. Over that time we borrowed about 15T$.
If we were to pay off the debt as quickly as we took it on, over the next 17 years years we would have to pay about .8T$ per year. Given that that is a change of borrowing .8T$(on average) a year to paying off .8T$ a year, I think we should consider our GDP as being 1.6T$ lower in reality than as calculated.
So, instead of going from a GDP of 10T$ to 19T$, I think we should consider our current economy as being only 17.4T$. (Note: these number aren’t quite accurate, but are representative of my argument)
So, lets recalculate the average growth. Instead of about 3.8% or about 1.8% taking inflation into consideration, we would get about 3.2% or about 1.2% taking an average 2% inflation.
Makes a big difference seems to me.
This calculation gives a 50% different average growth rate.
It also just makes sense. The economy is calculated by what is spent. Debt adds to this. The change from debt financing to paying debt off is twice the rate if done in the same time-frame so we are two time the deficit rate lower in realGDP.
Tip of the iceberg…
US Funded Liabilities 122 Trillion…
Good chart it shows that the Reagan tax cuts raised revenues but the Bush tax cuts reduced them because it gutted revenues from lower income folks to avoid the charge of tax cuts for the rich. Doing things to please the liberal press is a fools game Republicans have difficulty learning. We’re going to have to raise those taxes back, but mostly it’s clear we spend too much and this doesn’t even include unfunded liabilities. Add debt owed to foreigners which is the ultimate threat. Show the current account through the same period.
Nope. Follow the link. For example:
The last time there was a year-to-year decrease was in the 1950s.
Good luck collecting on the $61,175 that is my share of that debt, you bond-holding suckers!
Look, lets face facts. We are never going to pay that back. Not ever.
So if we are going to keep on racking up debt, and we are, lets at least get something tangible for the money. Fix the infrastructure roads ports, airports, bridges, fiber optic, military, etc etc. Then once the crash occurs we will have something to work with…