Lets talk about economics. I can almost hear the rumble of eyeballs rolling back in dozens of heads as folks prepare to tune this out. I know. Talking about vile acts of TEAbuggery is much more interesting, but this is too important not to know and understand. Day after day we hear Republicans and the media droning on and on about how government is burying America in a mass of debt that will soon crust the economy. Everyone knows that, right? In fact, that isn’t true at all.
…There are two national deficits, and both are in good if not excellent condition. Every day that the House has debated the public debt limit, President Barack Obama has cited this fact. No opponent pays any attention.
The first of the two deficits owed by the U.S. is the cumulative debt racked up over many years, the public debt. Today this structural debt has ballooned to $18.7 trillion as of September 30, 2013—but its percentage of what the country actually earns remains essentially the same. The figures have “ballooned,” but the percentages are unchanged. Thus the debt is currently 77 percent of Gross Domestic Product (the aggregate worth of what the nation produces each year), and that percentage is presently stable. With tax revenues increasing by 15 percent in 2013, bringing more money into the Treasury, the structural deficit is projected actually to drop this year to $16 trillion by the end of 2013, according to Bloomberg.
For comparison, in Japan the public debt to GDP ratio is one of the highest in the world, at 214.3 percent. The key European countries are much lower—the U.K. stands at 88.7 percent, France at 89.9 percent, Germany 81.7 percent. All are higher than the U.S. and rising. Italy is the laggard at 126.1. These figures are from the CIA World Factbook 2012.
Our second national deficit is the current budget deficit, the one most of the political arguments are about. This is the annual increase or decrease in revenues over spending. These deficits are dropping significantly in Western Europe, thanks to current austerity programs.
But the most important decrease is being registered in the United States! This is thanks to increased revenues and enforced spending cuts such as the sequester. The U.S. budget deficit has literally halved in the last two years. Today it stands at 4 percent of GDP. The figure is projected to shrink to 3.4 percent next year. This is close to the 3.3 percent average maintained over the past 30 years.
In Europe, a 3 percent deficit is held as the optimum budget target for all members of the European Union. Only Germany has now managed to come in under that figure. The U.K. and France are struggling to come under 5 percent. Many European countries’ deficits are around 8 percent, and their governments envy the U.S… [emphasis added]
Inserted from <Truthdig>
I took a chunk from the middle of an excellent article. Click through for the rest.
America does have a spending problem, but the problem is how we spend, not how much.
Welfare for billionaires and corporate criminals is hot helping our economy at all. Instead of using it to create jobs, these people using the money to move American jobs to third world economies to increase their own profit. They are using it to speculate in markets making the goods we consume more costly. They are stashing it in offshore tax havens to evade paying their fair share of taxes on their profits. The people, who Republicans call job creators are not creating jobs. They are creating only more wealth for themselves.
Instead, we need to support programs that create jobs. Investing in infrastructure puts Americans to work and provides the physical environment business needs to excel. Investing in education puts Americans to work by giving them job skills and provides business the skilled workers that business needs to excel. Investing in research puts Americans to work by providing business opportunities to create the jobs of the future here. Otherwise some other nation will get those jobs. And as we put more Americans to work, they will spend on goods and services, creating jobs for even more Americans and success for even more businesses. This will further reduce the deficit by lowering the need for the safety-net and increasing tax revenue from additional workers.
This is what Republicans are lying about and most media isn’t telling you.
15 Responses to “Some Truth About the Debt and Deficit”
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I appreciate this article. No one wanted to listen to President Obama when he stated these facts. He is doing everything in his limited power to reduce spending in the right areas. As long as the "News" programs report whatever they want, Americans will not know what is truly happening.
I long for the days of True Journalists. We have far too few of them. The few we have are ignored for the most part. People don't like to hear the truth if it doesn't agree with their biases.
Patty, we no longer have journalists on tv, we have paid models who read the scripts given to them by the corporatons who own their stations.
With few exceptions, like Ed, Chris, Rachel and Lawrence. I agree with Edie.
Excellent article TC – many thanks. I was most interested with the comparisons of debt between the country – and utterly astonished to see that the legendarily fiscally prudent Germans have a national debt of 81.7%! That comparison makes things a little more clear – and you are right, it is not that there is a financial problem but the problem is how and what the money is spent on – it should be spent on the people not the 1% billionaires!
Just as FDR got America out of the Great Depression by a fiscally wise programme of creating government works to employ people and benefit the nation – the jobs the government gave the people enabled them to spend money to feed, house and educate their families – which passed money round their communities. Now money is given to billionaires who don't need it – and they spend it taking jobs from established industries and moving them abroad to almost slave labour conditions – and this isn't just happening in America!
Thanks!
That is what Obamna has tried to do, but Republicans have blocked.
Big numbers are not understood by the average person, nor are they understood by the below average Republicanus/Teabagger. Simply stated, they are just too big and non relational. And that scares the crap out of people! It`s a psychological thing!
Think about it. Tell someone that the country has a debt of $18.7 trillion, and it is freak out time because there are too many zeros. But tell them that the country`s debt is 77% of the GDP (the aggregate worth of what the nation produces each year) and means that the country has covered its obligations, well that is a much different story. Of course the Republicanus/Teabaggers use the big numbers in addition to their lies to keep the American public confused and angry.
Put it in perspective with personal finance. A person owns a house worth $150,000 and has a mortgage of $100,000 as well as a car loan of $15,000. Their salary is $65,000 per year. That means that their debt is 177% of their income (their GDP). Not so scary in smaller numbers.
Absoluting everything is relational. But the Republicanus/Teabaggers have made the debt a flash point. Mr Obama has indeed brought down the debt, a debt that was years in the making by previous presidents, primarily St Ronnie Ray-gun and Baby Bush. Not only that, if fair taxation is instituted and taxes on those making $1 million or more raised, the money available to repay the debt will increase. That will result in a lower debt to GDP ratio.
Now to get the Republicanus/Teabagger vermin out of Washington and state capitals so there can be some sound financial policies to spur growth.
Good article.
Thanks. You did an excellent job of illustrating what I said to make it more clear to less educated readers.
Thank you TC,
FCINO's – Fiscal Conservatives In Name Only
Regan increased the Debt 189%
Dubya Bush increased the Debt 86%
George H.W. Bush increased the Debt 55%
Bingo, Richard!
Thanks for the graph, TC, I shared it on Facebook, trying my best to get unfriended again tonight. If the tv networks would report this honestly, and we know they won't, the American people would not be so frightened.
LOL Edie! That graph is most unfriendly to the head-in-rectum set.
You say:
Welfare for billionaires and corporate criminals is hot helping our economy at all. Instead of using it to create jobs, these people using the money to move American jobs to third world economies to increase their own profit.
Can you think of why it's so unprofitable to invest in our country? Can you think how to turn it around? Can you think of any reasonable way to keep business alive if you are constantly losing competition? Do you think that demonizing best entrepreneurs would attract them? Do you think that you can make country richer and more prosperous by driving rich people out and demonizing them?
As about markets – you have no idea what you are talking about. Markets are much more serious business. They are blood and soul of healthy economy and prosperity. You suffocate, demonize them – and country will be destroyed in no time.
– stashing it in offshore tax havens to evade paying their fair share of taxes on their profits – Can you think of why they do that? Or might it be something wrong when they are forced to go to that length about taxes rather than about growing business? Why our corporate taxes have to be second highest in the world? May be if they would be lower, country will have much higher business participation, “they” would not “stashing it in offshore tax” and consequently country will have higher tax revenue?
– The people, who Republicans call job creators are not creating jobs. They are creating only more wealth for themselves – This is so novice, noble idea! Oh wait, I read it before in Marks (look in “Capital”), Lenin (“3 sources and 3 completing parts”), Stalin books! Word – to – word! Trust me on this if you are not eager to read those lies. (I can’t blame you – it’s a delirium, waste of time.) I had to pass exams about those “great ideas”. I was in school and could not stomach to listen how grown people have to repeat this delirium with straight face. But I knew: their alternative was prison, Siberia, horrible death. Trust me again: I grow through this horror. I study, analyzed, saw how all this horror progresses and why it was possible. The root of all of it is in one phrase: “The people, who Republicans call job creators are not creating jobs. They are creating only more wealth for themselves”. This “little innocent” phrase is the root of misery, factual slavery, russian concentration camps. It attracts weak people, searching for easy betterment. Then they are used by charismatic leaders as a brut meet and next they know they are in the misery, they never could immerging in their worst dream. I analyzed whole process: the end is inevitable crash.
I can analyze every sentence of yours, but it has no stop. Nobody can read so much. Just keep in mind: I’ve been there. Smart people do not need to repeat horrible mistakes of others when there are already plenty of documents to understand “cause – result” phenomena. We do not have to repeat this cruel experiment. If you want it for your self – Russia will be very proud to accept you.
I sincerely hope and pray for the soul and prosperity of this country, that reason will prevail and successful people will be in style again.
Welcome Pat. 🙂
I'm all for successful people, and your argment that I an pusing Lenin and Marx is pure hogwash. Business needs good roads, bridges, and other infrastricture to thrive. Business needs and educated workforce trained in the skills they need. And business enjoyed far more growth, when the top marginal tax tate wsas 97% then there is now.. I'm for tax breaks to reward behavior that's good for the country, like creating jobs here.
BTW, before you try to come off as an expert, it's Marx, not Marks, and he and Engels wrote Das Kapital, not Capital. I have read it and disagree with them.
Bravo!!!!
Thanks Edie. I don't attack them, but confronted with someone who argues facts, they seldome come back for more.