Deficit and Debt Burden Watch, March 2008

No balanced budget in sight yet, but the deficit (1.5% GDP) is low enough to keep the debt ratio essentially in balance (debt ratio = debt/GDP). 

Nothing from any of the candidates about that, of course, because during an election year, dollars of debt accumulated by the "bad guys" is always the headliner.  Nothing about our ability to service debt, nothing about the size of the economy, nothing about debt incurred by the government being the same thing as credit extended by the lenders—just dollars of debt.  Single-entry accounting, in other words.  It's financial nonsense, but the scare factor nonetheless makes it a political goldmine. 

I suppose it's time for some election-conscious journalist to calculate which planet all those debt dollars would stretch to if they were laid end-to-end.  Probably Jupiter or so.  (Good thing our GDP would stretch way beyond that—to Saturn or so—isn't it?)

In any case, the burden of the debt is still one-third lower than it was in the mid-1990s (burden = percentage of tax receipts it takes to pay the interest).  Below are the charts; click to enlarge.

Comments

[mark]

I came across some interesting charts. The Dow average was 100 at the start of WWII. It climbed to 1000 (up 10x) by 1965 then stayed flat for 17 years. The Dow then started climbing again and between 1982 and 1999 was up another 10x crossing the 10000 mark. Since then the Dow is only up about 20%. I also found a chart of the public debt (not total) to GDP ratio. Oddly, the ratio went above 40% at the beginning of WWII and stayed above 40% until 1965. The ratio was below 40% from 1965 until 1982. From 1982 until 1999 the ratio was back above above 40%. The ratio has been below 40% through the present. What a coincidence! The time frames match up exactly. I wonder why the Dow performs so much better when the big bad national debt is higher.

[Jeremy]

I know you're busy but I'd really be interested in seeing the "Interest on Debt" graph extend back to the 80's if possible.