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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: Kenneth E. Phillipps who wrote (504050)	12/5/2003 12:01:46 PM
From: Oeconomicus	Read Replies (3) \| Respond to of 769667

How long can we maintain a trade deficit of over $500 Billion? Unless ... tamed, the recovery is doomed. Were you whining just the other day about how the decline in the dollar meant we are doomed? ;-) As for the national debt, federal debt held by the public, as a percentage of GDP, is approximately where it was in the mid-1980s and the mid-1960s. Furthermore, OMB projections from July (the latest I found in a quick search) show it leveling off by 2005 at about 40%, well below the 1960 and early 1990s highs. aaas.org Now, factoring in debt held by Social Security and other gov't trust funds, we're a bit higher relative to historical levels and could pass early 1990s levels in a couple years, so I agree the deficit needs to be addressed, but I think you're being just a tad alarmist here. First of all, the national debt has never increased "over $600 Billion" in any year (FY2003's increase was $555B), so ignoring (for now) the misleading nature of using nominal figures instead of percent of GDP, you are overstating. Second, your use of nominal growth instead of percentage growth in the debt is blatantly misleading. The rate of growth in the national debt in 2003 was significantly slower than in any year but one from 1975 through 1992. It was also MUCH slower than in most years of the 1930s, never mind comparing it to ANY period of significant military conflict in the nation's entire history. Third, as a percentage of GDP again, the national debt went from 48% five months before the start of WWII to 120% by the end. It was 1957 before it went below 60% again (about the current level), but it got there and kept declining until the 1974 recession, when it was 33%. It peaked inClinton's third year at 67%, BTW, and was over 60% every year of his presidency until the last one. The point is that the current number is not particularly high when considered historically and can move around dramatically, depending more IMO on economic growth than anything else -except during war times, which tend to cause it to spike. Fourth, projections of budget deficits and national debt are nothing more than quasi-educated guesses. Both are dramatically impacted by GDP growth. Interest rates and financial market performance as well. Government projections of any of these things are notoriously unreliable. We can talk more about trade deficits later.