A biased and accurate look at the national debt!

[Wild Cobra]

For starters, here is the national debt data from


HISTORICAL TABLES
BUDGET OF THE UNITED STATES GOVERNMENT
Fiscal Year 2008

Year National debt, in $millions
1940 ................. 50,696
1941 ................. 57,531
1942 ................. 79,200
1943 ................ 142,648
1944 ................ 204,079
1945 ................ 260,123
1946 ................ 270,991
1947 ................ 257,149
1948 ................ 252,031
1949 ................ 252,610
1950 ................ 256,853
1951 ................ 255,288
1952 ................ 259,097
1953 ................ 265,963
1954 ................ 270,812
1955 ................ 274,366
1956 ................ 272,693
1957 ................ 272,252
1958 ................ 279,666
1959 ................ 287,465
1960 ................ 290,525
1961 ................ 292,648
1962 ................ 302,928
1963 ................ 310,324
1964 ................ 316,059
1965 ................ 322,318
1966 ................ 328,498
1967 ................ 340,445
1968 ................ 368,685
1969 ................ 365,769 Last decrease in the national debt.
1970 ................ 380,921
1971 ................ 408,176
1972 ................ 435,936
1973 ................ 466,291
1974 ................ 483,893
1975 ................ 541,925
1976 ................ 628,970
1977 ................ 706,398
1978 ................ 776,602
1979 ................ 829,467
1980 ................ 909,041
1981 ................ 994,828
1982 ............... 1,137,315
1983 ............... 1,371,660
1984 ............... 1,564,586
1985 ............... 1,817,423
1986 ............... 2,120,501
1987 ............... 2,345,956
1988 ............... 2,601,104
1989 ............... 2,867,800
1990 ............... 3,206,290
1991 ............... 3,598,178
1992 ............... 4,001,787
1993 ............... 4,351,044
1994 ............... 4,643,307
1995 ............... 4,920,586
1996 ............... 5,181,465
1997 ............... 5,369,206
1998 ............... 5,478,189 Where is the surplus?
1999 ............... 5,605,523 Where is the surplus?
2000 ............... 5,628,700 Where is the surplus?
2001 ............... 5,769,881
2002 ............... 6,198,401
2003 ............... 6,760,014
2004 ............... 7,354,673
2005 ............... 7,905,300
2006 ............... 8,451,351
2007 estimate .. 9,007,765
2008 estimate .. 9,575,497
2009 estimate . 10,138,314
2010 estimate . 10,637,569
2011 estimate . 11,114,768
2012 estimate . 11,487,273

Now consider the inflation rates as well. Liberals like to cry about president Regan’s numbers, but he inherited a double-digit inflation. Interest on the debt alone kept him from coming close to a balanced budget.

Here is an interesting chart also:

U.S. Inflation; 1964 to 2006.

I put together some numbers:

Now since people like to give credit or blame to the sitting president, I will make note of a few things. FY 92 was the last budget president Bush (41) signed, and had a democrat congress. Cuts were made in the military to reduce future spending, but still had the cleanup of the Gulf war to contend with. The FY 92 budget had a 11.22% increase over the previous years while there was an 4.47% increase of inflation and population. The GNP grew by 5.28%. Good or bad? Hard to say. President Clinton’s 1993 budget only increased by 8.73% and the ’94 increased by 6.72% Not a bad trend, but if we are going to give president Clinton and the democrats credit, why did the budget still exceed the growth of population times inflation and GNP both? GNP was 5.92% and 5.18%. Population x inflation was 3.88% and 4.04%. Still spending too much. Could it be leftover programs from before? Maybe. Some last for 5 years, but not enough to account for not being able to bring spending growth under population times inflation. This high spending continues until 1998.

Republicans take control in 1995.

OK. Now the first budget by the republicans now is the FY 1996 budget. Budget increases by 5.30%, population x inflation by 4.13%, and GNP by 5.15%. Some improvement. FY 97… 3.62% budget increase, 3.58% population x inflation, and 6.31% growth in GNP. Awesome… This the first time in a while that federal spending increases less than the GNP! Almost a dead match for population x inflation as well!

By FY 98, the republican controlled congress has consistent numbers of spending growth being less than GNP growth, and the growth of population x inflation.

1998 2.03% spending increase, 5.40% GNP growth, 2.74% population x inflation
1999 2.32% spending increase, 5.82% GNP growth, 3.37% population x inflation
2000 0.41% spending increase, 6.30% GNP growth, 4.56% population x inflation
2001 2.51% spending increase, 3.58% GNP growth, 3.93% population x inflation

Yep, 9/11 took it’s toll on the GNP growth and we never really recovered on any of these indicators yet. Afterwards, rebuilding, Katrina, Military rebuilding and deployments… What is to be expected?

2002 7.43% spending increase, 3.29% GNP growth, 2.62% population x inflation
2003 9.06% spending increase, 4.17% GNP growth, 3.22% population x inflation
2004 8.80% spending increase, 6.41% GNP growth, 3.68% population x inflation
2005 7.49% spending increase, 6.65% GNP growth, 4.40% population x inflation
2006 6.91% spending increase, 6.41% GNP growth, 4.25% population x inflation

Now what’s amazing is having active military operations in two countries, we went above a 6% GNP growth again in 2004, and 2006 spending reduces near GNP growth again. Considering everything since 9/11, I’d say the republican congress and president Bush did pretty good. FY 2007 will be the last budget made by this last republican controlled congress. I’ll bet the trend holds. I’ll also bet that starting with the FY 2008 budget, the numbers will go the wrong way again, since congress controls the budget…

Some earlier reflections:

When president Carter was elected president in November 1976, inflation rates were 4.88 percent. The FY 1977 budget would already be in place, so FY 1978 would be his first budget to sign. In June of 1978, inflation rates broke 7%, and broke 10% in March of 1979. By March of 1980, inflation climbed to almost 15% (14.76%.) To finance the debt, congress enacted selling the 5 year EE series bond that doubled in value in five years. This set forth double digit increases in federal spending as well. It was some years before the EE series bond was reduced in payoff to the consumers. Congress was sitting fat and happy when the inflation rates came down again. The Reagan administration not only had to combat inflation, but by no fault of his own, had a national debt that doubled in five rears as well. From 1980 to 1995 the debt went from 0.9 trillion to 1.82 trillion. Another five years, 1990, almost doubled again to $3.2 trillion. All this brought to you by the democrats in congress before president Regan took office.

Note that a rate of 14.87% is where the principle doubles in 5 years. When considering the bond rates, population increases, and inflation. President Regan’s administration was perfectly normal for government spending.

[boutons_]

"we went above a 6% GNP growth again in 2004"

dubya is pumping 10s of $Bs in high-margin profits into MIC pockets. aka, the war economy, intended by the Repugs to enrich the MIC while grabbing Iraqi oil. So the US economy is running on a spurious war and sick people (health care @ World Champion 16% of GDP and rising).

The inflation and budgetary/money restrictions in industrial economies at the end of Carter's term and throughout the early years of St Ronnie's was due to the 1979 Iranian oil shock.

The collapse of the Soviet Union was due to their spurious war in Afghanistan bankrupting the country at the same time their main source of $$, Russian oil, saw its price collapse. St Ronnie had all to with collapse of the Soviet Union, another movement conservative Orwellian lie. And the CIA totally missed the collapse, also. What a bunch of offs.

Carter didn't cause or permit the Iranian revolution. That's just more bull Orwellian lies from the movement conservatives and the sheeple like WC, just like their lie that US was winning in VN but hippies stopped the war). The Iranian revoluation was reaction to Western meddling (CIA/US/UK oilcos) in Iran and the corruption of the Shah's govt. The Iranian people did their own revolution.

[ChumpDumper]

"and deployments."

Nice.

[Nbadan]

Hmmm....numbers seen a little off....

Tracking current levels of debt is a complex but rather straightforward process. Making future projections is much more difficult for a number of reasons. For example, before the 9/11 attacks the Bush Administration projected that there would be a $1.288 trillion surplus from 2001 through 2004 in the 2002 U.S. Budget. In the 2005 Mid-Session Review, however, this had changed to a projected deficit of $850 billion, a swing of $2.138 trillion. Table 7 in this latter do ent states that 49% of this swing was due to "economic and technical re-estimates", 29% was due to "tax relief", and the remaining 22% was due to "war, homeland, and other enacted legislation". Reasons for the inaccuracy of future projections include economic growth being different than projected and changes in fiscal policy (tax cut and War on Terror).

In extra, projections between different groups will sometimes differ because they make different assumptions. For example, an August 2003 CBO do ent projected a $1.4 trillion deficit from 2004 through 2013. However, a joint analysis put out by the Center on Budget and Policy Priorities, the Committee for Economic Development, and the Concord Coalition a month later stated that "In projecting deficits, CBO follows mechanical 'baseline' rules that do not allow it to account for the costs of any prospective tax or en lement legislation, no matter how likely the enactment of such legislation may be". The analysis added in a proposed tax cut extension, AMT relief, prescription drug plan, and increases in defense, homeland security, international, and domestic spending. This raised the projected deficit from $1.4 trillion to $5.0 trillion. Hence, the assumptions on which the projections are based are also very important.

Despite the drawbacks of making future projections, however, a responsible government must arguably make long-run projections so it can prepare the country for future possibilities. The federal government does provide long-run budget projection in Table 13-2 on page 209 of the Analytical Perspectives of the 2006 U.S. Budget. It projects that the federal debt held by the public will reach 249 percent of GDP in 2075. This is more than double the maximum reached during World War II and nearly four times its current level. Most of this increase is due to projected increases in en lement spending and the resulting interest on the debt. It is worth noting that this is a projection, not a prediction. This projection assumes normal economic conditions and that government policies will follow current law. The stress of a quadrupling of the debt would likely cause one or both of these items to change.

Wikipedia

[Nbadan]

They say it was Congressional Democrats. Not true. Had things worked out just as Reagan proposed and predicted, the debt still would have gone up 85% as much. But even this is deceptive. The reason his predicted savings did not materialize was not Congress. The reason was that he predicted much more economic growth from supply-side magic than actually happened. So he counted on taxes that were never collected to help his budgets. In fact a study by the House found that Reagan asked for $29.4 billion more in spending than Congress passed.

[Wild Cobra]

They say it was Congressional Democrats. Not true. Had things worked out just as Reagan proposed and predicted, the debt still would have gone up 85% as much. But even this is deceptive. The reason his predicted savings did not materialize was not Congress. The reason was that he predicted much more economic growth from supply-side magic than actually happened. So he counted on taxes that were never collected to help his budgets. In fact a study by the House found that Reagan asked for $29.4 billion more in spending than Congress passed.

Yes, president Reagan projected more money from the tax breaks than what occurred. Still, tax cuts work and the economic situation would have even been worse without the tax breaks. Tax breaks fail to give immediate results, but they do pay off after a few years.

What about the rest of the posting? You OK with it?

[Wild Cobra]

wc = no understandee the economics

Is that all you have? An idiotic statement to discredit me rather than any thing to back it it?

Put your money where your mouth is, or shut that pie-hole.

[xrayzebra]

Is that all you have? An idiotic statement to discredit me rather than any thing to back it it?

Put your money where your mouth is, or shut that pie-hole.

For those who weren't around or not a working stiff, as I
was in the Carter years, Reagan was a lifesaver. I remember
you couldn't sell a house or much of anything else with
interest rates running 21 percent. Inflation was at an
all time high and Carter was running around like a chicken
with his head cut off. Everyone I knew felt like we
had a new life after Reagan was elected and got the
economy under control. I just wished he was around
running Washington again. The MSM used to call him
the teflon man because he stuck it all the dimms ears
everytime the opened their stupid mouth.


Oh, and for boutons, the rich guys with bucks were getting
richer, , on a Money Market account you could get
10 percent per month at a credit union. Some banks
and money lenders were offering a of a lot more
than that. It was an unreal world.

[smeagol]

Is that all you have? An idiotic statement to discredit me rather than any thing to back it it?

I have been reading most of his posts and sadly, that is all he has.

[Ignignokt]

I thought it gonbe HE-MANN!!!!!!!!!!!!

[Oh, Gee!!]

I thought it gonbe HE-MANN!!!!!!!!!!!!

heady post

[smeagol]

a Money Market account you could get
10 percent per month at a credit union. Some banks
and money lenders were offering a of a lot more
than that. It was an unreal world.

I'd love T-Bills that yield 15%.

I'd quit my job tomorrow.

[ChumpDumper]

I just wished he was around
running Washington again.

Yeah, the good ol' days when we sold missiles to Iranians to fund illegal wars and cut and run when we got bombed in Lebanon.

[Ignignokt]

Yeah, the good ol' days when we sold missiles to Iranians to fund illegal wars and cut and run when we got bombed in Lebanon.

[xrayzebra]

Yeah, the good ol' days when we sold missiles to Iranians to fund illegal wars and cut and run when we got bombed in Lebanon.

There goes again, same old stuff. Get some new
material will you.

[DarkReign]

"A biased and accurate look at the national debt!"

Uh, dont you mean "unbiased"? Freudian slip?

[clambake]

There goes again, same old stuff. Get some new
material will you.

whats a matter ray? you don't recall irangate?

[xrayzebra]

Oh yes, and how the committee got their heads handed back to
them on a silver platter by a Col. from the Marine Corps.
Yeah, do I remember. Do you? Oliver North ring a bell.

[ChumpDumper]

@ ray. I guess I'd take his advice seriously if he didn't bring up Chappaquid in every other thread.

[2centsworth]

I wish this issue wasn't politicized. IMO and also according to most prominent Republcian and Democrat Economist, this is the biggest challenge facing this country. If nothing changes I predict in 15 years we will have another Depression.

[DarkReign]

....o boy...

[boutons_]

September 25, 2007

Op-Ed Contributor, NYTimes


Save the Day

By STEPHEN S. ROACH

Hong Kong

CURRENCIES are first and foremost relative prices in essence, they are measures of the intrinsic value of one economy versus another. On that basis, the world has had no compunction in writing down the value of the United States over the past several years. The dollar, relative to the currencies of most of America’s trading partners, is off about 20 percent from its early 2002 peak. Recently it has hit new lows against the euro and a high-flying Canadian currency, likely a harbinger of more weakness to come.

Sadly, none of this is surprising. Because Americans haven’t been saving in sufficient amounts, the United States must import surplus savings from abroad in order to grow. And it has to run record balance of payments and trade deficits in order to attract that foreign capital. The United States current account deficit the broadest gauge of America’s imbalance in relation to the rest of the world hit a record 6.2 percent of gross domestic product in 2006 before receding slightly this year. America must still attract some $3 billion of foreign capital each business day in order to keep its economy growing.

Economic science is very clear on the implications of such huge imbalances: foreign lenders need to be compensated for sending scarce capital to any country with a deficit. The bigger the deficit, the greater the compensation. The currency of the deficit nation usually bears the brunt of that compensation. As long as the United States fails to address its saving problem, its large balance of payments deficit will persist and the dollar will keep dropping.

The only silver lining so far has been that these adjustments to the currency have been orderly declines in the broad dollar index averaging a little less than 4 percent per year since early 2002. Now, however, the possibility of a disorderly correction is rising with potentially grave consequences for the American and global economy.

A key reason is the mounting risk of a recession in America. The bursting of the sub-prime mortgage bubble strikingly reminiscent of the dot-com excesses of the 1990s could well be a tipping point. In both cases, financial markets and policy makers were steeped in denial over the risks. But the lessons of post-bubble adjustments are clear. Just ask economically stagnant Japan. And of course, the United States lapsed into its own post-bubble recession in 2000 and ’01.

Sadly, the endgame could be considerably more treacherous for the United States than it was seven years ago. In large part, that’s because the American consumer is now at risk. Consumption expenditures currently account for a record 72 percent of the gross domestic product a number unmatched in the annals of modern history for any nation.

This buying binge has been increasingly supported by housing and lending bubbles. Yet home prices are now headed lower probably for years and the fallout from the subprime crisis has seriously crimped home mortgage refinancing. With weaker employment growth also putting pressure on income, the days of open-ended American consumption are likely to finally come to an end. That will make it hard to avoid a recession.

Fearful of that possibility, foreign investors are becoming increasingly skittish over buying dollar-based assets. The spillover effects of the subprime crisis into other asset markets especially mortgage-backed securities and asset-backed commercial paper underscore these concerns. Foreign appe e for United States financial instruments is likely to be sharply reduced for years to come. That would choke off an important avenue of capital inflows, putting more downward pressure on the dollar.

The political winds are also blowing against the dollar. In Washington, China-bashing is the bipartisan sport du jour. New legislation is likely that would impose trade sanctions on China unless it makes a major adjustment in its currency. Not only would this be an egregious policy blunder attempting to fix a multilateral deficit with more than 40 nations by forcing an exchange rate adjustment with one country but it would also amount to Washington taxing one of America’s major foreign lenders.

That would undoubtedly reduce China’s desire for United States assets, and unless another foreign buyer stepped up, the dollar would come under even more pressure. Moreover, the more the Fed under Ben Bernanke follows the easy-money Alan Greenspan script, the greater the risk to the dollar.

Why worry about a weaker dollar? The United States imported $2.2 trillion of goods and services in 2006. A sharp drop in the dollar makes those items considerably more expensive the functional equivalent of a tax hike on consumers. It could also stoke fears of inflation driving up long-term interest rates and putting more pressure on financial markets and the economy, exacerbating recession risks. Optimists may draw comfort from the vision of an export-led renewal arising from a more compe ive dollar. Yet history is clear: no nation has ever devalued its way into prosperity.

So far, the dollar’s weakness has not been a big deal. That may now be about to change. Relative to the rest of the world, the United States looks painfully subprime. So does its currency.

Stephen S. Roach is the chairman of Morgan Stanley Asia.

[Wild Cobra]

"A biased and accurate look at the national debt!"

Uh, dont you mean "unbiased"? Freudian slip?

Nope. I figured I may as well be honest about my preference to conservative policies over liberal ones.

I liked president Reagan. What can I say.

Besides, if I claimed I wasn't biased, it would have been pointed out that I was. Notice I still kept things factual.

[DarkReign]

Nope. I figured I may as well be honest about my preference to conservative policies over liberal ones.

I liked president Reagan. What can I say.

Besides, if I claimed I wasn't biased, it would have been pointed out that I was. Notice I still kept things factual.

Fair enough.

[jacobdrj]

The fact is, not 1 of our presidents was an economist. It would be interesting to see what a president would do with the economy when he was actualy (himself, not his henchmen) trained in the science of economics... It wouldn't even matter which of the 2 major economic schools of thought they were trained it... just that they had a formal education in the subject they will affect (domestically) the most.