I’ve mentioned before that in terms of public debt, there’s more than one way to look at these numbers. I’ve been quoting recent CBO projections of – 13.1% for FY 2009 and – 9.6% for FY 2010.
The following looks at the same problem using a different set of criteria. The main thing is to compare apples to apples, so to speak. And I hope I’ve done that.
Debt-to-GDP ratios may not get a lot of public attention, but economists follow them closely as a good indicator of economic health.
The Truth-O-Meter Says:
Gregg has repeated one statistic over and over to make his point: that Obama’s budget plan would increase the national debt to 80 percent of gross domestic product.
“Seventeen trillion dollars worth of debt at the end of 10 years, $11 trillion at the end of five years,” Gregg said. “This translates into a debt-to-GDP ratio which we have not seen in this country since the end of World War II when we were trying to pay off the war debt. Basically, you take national debt up to about 80 percent of gross national product. That’s the public debt. Historically, it’s been about 40 percent.”
At 80 percent, Gregg has been fond of saying this week, the United States would be getting into “banana republic” territory.
Table 7. Major Accumulations and Decumulations of Government Debt
(as a Share of GDP, in Percent), Historical Episodes
Figure 10. Public Debt-to-GDP ratio (in percent), Selected Countries, 1875–2007
Check out the Debt-to-GDP ratio for Japan in Figure 10 (link above).
Japan’s debt burden, already the world’s largest, will probably spiral to 197 percent of GDP next year (2010), according to the Organization for Economic Cooperation and Development.
This is where I fear we’re headed.
I do applaud the efforts of Evan Bayh (D-IN) and Ben Nelson (D-NE) in reducing the Stimulus, voting against the Budget, blocking Cap and Trade for now and slowing comprehensive health care reform, again, for now, and hope that their coalition can slow the Obama agenda.
Reaction to the Obama proposal from Congress has been swift, fierce and bi-partisan. “This is just about economic suicide,” said Rep. Mike Rogers (R-AL), who predicted it would “kill manufacturers.” A coalition of 33 senators, including eight Democrats, sent a letter to Budget Chairman Kent Conrad (D-ND) and Ranking Member Judd Gregg (R-NH) urging them not to include cap and trade under budget reconciliation, a fast-track process which would require only 51 votes to pass, instead of the 60 needed to avoid a full public debate.
Setting forth the congressional budget for the United States Government for fiscal year 2010 and including the appropriate budgetary levels for fiscal years 2009 and 2011 through 2014.
(Sec. 201) Sets forth reconciliation instructions for the Committees on:
(1) Energy and Commerce;
(2) Ways and Means; and
(3) Education and Labor. Authorizes the House to direct the House Clerk to add at the end of a health care reform bill or an education investment bill, subject to these reconciliation instructions, the text of another such measure as passed by the House to form a single engrossed reconciliation bill. Title III: Reserve Funds –
April 12, 2009