Sunday, August 23, 2009

Two Perspectives: U.S. Public Debt

Any questions?

I confess to not having read Keynes. I have merely looked at the 11 recessions since World War II, as well as the Great Depression. In that data, there is zero evidence that government spending helps, and some evidence that it hurts...

...Bush's average level of debt was a hair below average, at least up until the beginning of this recent recession. At the end of 2007 it stood at 36.8% of GDP, pretty much where it had been for the previous several decades.

If you want to get really picky, Bush inherited a debt of 35.1% of GDP from Bill Clinton in 2000, and left Obama a debt of 40.8% of GDP in 2008 (per the CBO). There you have it -- the smoking gun! An extra 5.7% of GDP in federal debt held by the public. But most of that came in 2008, a full year of recession.

Per [the Keynesians], President Bush should have spent a lot [more] in 2008. It's the only way to get out of a recession...

...the deficit was $459 B in 2008, the largest in history up to that point in nominal dollars.

Now here is where it gets fun: Obama steps in. The very first year under Obama, 2009, the deficit is expected to be about $1.84 trillion. Here are some fun facts regarding Obama's budgets from 2009 through 2019.

* Obama's first-year deficit, the largest in history, is over four times bigger than George Bush's last deficit, which had been the largest in history up to then.
* Obama's first-year deficit is more than Bush's first seven deficits combined.
* The smallest deficit predicted under Obama's budget from 2009 through 2019 is $658 B, or 43% bigger than Bush's largest deficit, the largest in history up to then.
* Under Obama's budget, deficits exceeding one trillion dollars will occur in four years: 2009, 2010, 2018 and 2019.
* The 10-year cumulative deficit (2010-2019) under Obama's budget will be $9.3 trillion, or an average of almost one trillion per year, more than doubling what it would have been under the laws left by Bush.
* The debt held by the public in 2008, or that left by Bush for Obama, was 40.8% of GDP. In just one year under Obama, after 2009, it will be 56.8%, or the largest since 1955. By 2019 it will be 82.5%, the largest in our history except for the three years of 1945-47, the end of World War II.
* From 2000 to 2008, or the Bush years, the debt held by the public went from 35.1% of GDP to 40.8% -- a 5.7% of GDP increase. By 2016, or a similar period under Obama's budgets, it is expected to reach 77.5% -- a 36.7% of GDP increase.
* Under Obama's budget, the debt held by the public will reach 82.4% of GDP in 2019. That is more than double the average level since 1960 and more than double what Bush left in 2008...

Worse yet, these numbers ignore the "off-the-books" entitlement deficits that, by some estimates, are nearing $100 trillion.

This reckless administration and this reckless Congress are bankrupting the country and endangering the American way of life for our children and grandchildren. The "Stimulus" was a failure. The "special budget appropriations" were a disaster. The Clunkers program was a catastrophe. Health care? Should they get their hands on 20% of the economy, I think we can predict what will happen.

There is no valid, rational argument to explain Democrats' behavior. Think about that statement for a moment. And wait for 2010. Every Democrat must go.

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