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Politics : American Presidential Politics and foreign affairs -- Ignore unavailable to you. Want to Upgrade?

To: DuckTapeSunroof who wrote (36020)	7/19/2009 8:59:10 PM
From: TimF	Read Replies (1) \| Respond to of 71588

measured as percentage of GNP, same yardstick as we are measuring national debt against...) If debt doesn't go up as a percentage of GDP, the debt (all else being equal) doesn't become more problematic or unmanageable, even if it goes up in nominal or real dollars. Yes the debt it bigger if it grows in real dollars even if it shrinks as a percentage of GDP, but the absolute size of the debt isn't what's important its how affordable it is. In the short run changes in interest rates have more impact on that than changes in debt levels, but since we assume we won't have permanently low rates, the debt's percentage of the GDP (or other measure of economic production or wealth or income), and its growth compared to economic growth, are the most important long run factors. I wouldn't use nominal dollars for government growth, that state isn't very meaningful, more a measure of inflation than anything else except in periods where prices are very stable, but a real dollar increase in spending, or at very least a real per capita increase in spending, does mean bigger government (assuming it isn't shrinking some other way), even if the real dollar figure doesn't keep pace with economic expansion. Imagine that military spending had remained steady at the level of the Korean war (around 14%). Would we say that military spending wasn't a big issue since it "wasn't growing"? I doubt it. And I don't think we should. If the economy recovers and we produce more goods and services that doesn't imply a need for more government, if anything we would have less need for government programs. And leaving aside need, since that wasn't the initial subject, if the economy doubled, and real government spending also doubled, the government wouldn't be the same size, but rather much bigger.