oldreliable67 said:
Iriemon,
Repeating bits and pieces that I have previously posted...
The single best measure of US debt, IMO -- and the measure that I see most often quoted by analysts (and has the Alan Greenspan seal of approval -- see the note, below), is the amount of annual surplus or deficit relative to annual GDP.
I know that is a measure frequently used. But it only shows how the deficit is for any given fiscal year. A deficit in one particular year is not a problem or even necessarily bad, depending on your view of economics. But big deficits year after year result in a lot of debt -- that is where you get the problem.
Aside from the economic aspects, IMO there is a moral aspects of expecting future taxpayers to pay for what the current Govt expends.
"Future generations shouldn't be forced to pay back money that we have borrowed. We pay back money that we have borrowed. We owe this kind of responsibility to our children and grandchildren" President Bush 3/3/01
www.senate.gov/~budget/democratic/charts/2003/debtpacket040803.pdf
In other words, it is a measure of our capacity to service our debt, not the absolute size of the debt.
It is the
relative size of the debt, not deficits, not the absolute size of the debt, that is important. But even the relative size of the debt in isolation does not tell the whole story. I'd be a lot less bothered about the debt increase if we weren't facing baby boomer retirement and the massive govt expenditures that will entail.
But if we are talking about capacity to service the debt, isn't the most relevant measure the size of the debt relative to the Govt's revenues?
Year Revenues Debt Debt/Revenues.
1962 99.7 303 3.0
1963 106.6 309 2.9
1964 112.6 317 2.8
1965 116.8 321 2.7
1966 130.8 329 2.5
1967 148.8 345 2.3
1968 153.0 358 2.3
1969 186.9 368 2.0
1970 192.8 389 2.0
1971 187.1 424 2.3
1972 207.3 449 2.2
1973 230.8 470 2.0
1974 263.2 492 1.9
1975 279.1 577 2.1
1976 298.1 654 2.2
1977 355.6 719 2.0
1978 399.6 789 2.0
1979 463.3 845 1.8
1980 517.1 930 1.8
1981 599.3 1,029 1.7
1982 617.8 1,197 1.9
1983 600.6 1,411 2.3
1984 666.5 1,663 2.5
1985 734.1 1,946 2.7
1986 769.2 2,125 2.8
1987 854.4 2,350 2.8
1988 909.3 2,602 2.9
1989 991.2 2,857 2.9
1990 1032.0 3,233 3.1
1991 1055.0 3,665 3.5
1992 1091.3 4,065 3.7
1993 1154.4 4,411 3.8
1994 1258.6 4,693 3.7
1995 1351.8 4,974 3.7
1996 1453.1 5,225 3.6
1997 1579.3 5,413 3.4
1998 1721.8 5,526 3.2
1999 1827.5 5,656 3.1
2000 2025.2 5,674 2.8
2001 1991.2 5,807 2.9
2002 1853.2 6,228 3.4
2003 1782.3 6,783 3.8
2004 1881.1 7,379 3.9
Source: CBO.gov historical data for the revenues, BEA data for GDP.
In 2004, the debt was 3.9 times greater than revenues, the
worst since 1962.
As you can see from the chart below, the current percentage is well within the zones of historical experience (figures for 2005 and beyond are CBO estimates).
Largely because the history of deficits sucked for most of the last 25 years, except the late 90s.
As you can see from the chart, we are still well above the levels seen in the mid-1980s. In fact, much better than expected tax revenues have helped stabilize the situation of late. So while I conclude that we presently still have adequate capacity for additional debt, it is not inexhaustible.
What do you conclude of your data in light of the fact that we have untold trillions in unfunded liabilities right around the corners as the boomers start to retire?
And you are absolutely right to be concerned, IMO, about the future impact of entitlements (SS and medical care). I give Bush credit for having the political nerve to bring SS up and put forth something that was sure to be controversial. I hate it that he has been so silent on the subject of late. It doesn't have to be done tomorrow, but it has got to be addressed, and sooner better than later. It will take someone with political skill and courage to do so. I don't see anyone like that around just now.
If the @#$% politicians stopped stealing *our* SS trust fund assets to feed their freaking deficits, we'd have much less of a problem. It doesn't take political skill and courage to say "hey we got a problem" when it is your freaking government running deficits which are stealing the assets that were supposed to be there to fix the problem!!!
SS
surplus tax receipts have been about $150 billion a year for the past few years. We should have over $1.5 trillion so far built up in assets to deal with the boomer retirment. Instead it is
all gone, spent on the g*ddamn deficits, replaced with meaningless IOUs
Note: according to Greenspan:
"In general, fiscal systems are presumed stable if the ratio of debt in the hands of the public to nominal GDP (a proxy for the revenue base) is itself stable. A rapidly rising ratio of debt to GDP, for example, implies an ever-increasing and possibly accelerating ratio of interest payments to the revenue base. Conversely, once debt has fallen to zero, budget surpluses generally require the accumulation of private assets, an undesirable policy in the judgment of many. "
http://www.federalreserve.gov/boardd.../testimony.htm
So?
BTW, I re-read some of your previous posts on this topic on a couple of other threads. Good stuff.
Thanks. Sorry if I get carried away.