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For much of the past five years readers of the political and economic news were left in little doubt that budget deficits and rising debt were the most important issue facing America. Serious people constantly issued dire warnings that the United States risked turning into another Greece any day now. President Obama appointed a special, bipartisan commission to propose solutions to the alleged fiscal crisis, and spent much of his first term trying to negotiate a Grand Bargain on the budget with Republicans.
That bargain never happened, because Republicans refused to consider any deal that raised taxes. Nonetheless, debt and deficits have faded from the news. And there’s a good reason for that disappearing act: The whole thing turns out to have been a false alarm.
I’m not sure whether most readers realize just how thoroughly the great fiscal panic has fizzled — and the deficit scolds are, of course, still scolding. They’re even trying to spin the latest long-term projections from the Congressional Budget Office — which are distinctly non-alarming — as somehow a confirmation of their earlier scare tactics. So this seems like a good time to offer an update on the debt disaster that wasn’t.
About those projections: The budget office predicts that this year’s federal deficit will be just 2.8 percent of G.D.P., down from 9.8 percent in 2009. It’s true that the fact that we’re still running a deficit means federal debt in dollar terms continues to grow — but the economy is growing too, so the budget office expects the crucial ratio of debt to G.D.P. to remain more or less flat for the next decade.
hings are expected to deteriorate after that, mainly because of the impact of an aging population on Medicare and Social Security. But there has been a dramatic slowdown in the growth of health care costs, which used to play a big role in frightening budget scenarios. As a result, despite aging, debt in 2039 — a quarter-century from now! — is projected to be no higher, as a percentage of G.D.P., than the debt America had at the end of World War II, or that Britain had for much of the 20th century. Oh, and the budget office now expects interest rates to remain fairly low, not much higher than the economy’s rate of growth. This in turn weakens, indeed almost eliminates, the risk of a debt spiral, in which the cost of servicing debt drives debt even higher.
Still, rising debt isn’t good. So what would it take to avoid any rise in the debt ratio? Surprisingly little. The budget office estimates that stabilizing the ratio of debt to G.D.P. at its current level would require spending cuts and/or tax hikes of 1.2 percent of G.D.P. if we started now, or 1.5 percent of G.D.P. if we waited until 2020. Politically, that would be hard given total Republican opposition to anything a Democratic president might propose, but in economic terms it would be no big deal, and wouldn’t require any fundamental change in our major social programs.
Refute what he's said. The hysteria over the debt was wrong.Krugman is more concerned with his leftist politics than he is with economic matters.
From February 2009 through August 2016, the Treasury collected approximately $20,197,437,000,000 in tax revenues (in non-inflation-adjusted dollars), according to the Monthly Treasury Statements. During those same 91 months, the federal debt rose from $10,632,005,246,736.97 to $19,510,296,242,765.66—an increase of $8,878,290,996,028.69. In August, according to the Monthly Treasury Statement released today, the federal government took in $231,327,000,000 in taxes and spent $338,438,000,000—running a one-month deficit of $107,112,000,000.
So far in fiscal 2016, according the Treasury statement, the federal government has collected approximately $2,910,151,000,000 in taxes and spent approximately $3,530,922,000,000—running a deficit of $620,771,000,000 for the first eleven months of the fiscal year. Given that the Bureau of Labor Statistics has reported that there were 151,614,000 people employed in the United States in July, the $20,197,437,000,000 in taxes the Treasury has collected during Obama’s first 91 full months in office equals approximately $133,216 per worker. The $8,878,290,996,028.69 in additional debt the federal government incurred during Obama’s first 91 full months in office equals approximately $58,559 per worker.
During the first 91 full months George W. Bush was president (February 2001 through August 2008), according to the Monthly Treasury Statements, the Treasury collected approximately $16,205,198,000,000 in taxes. During those same 91 months, the debt rose from $5,716,070,587,057.36 to $9,645,725,555,640.02—an increase of $3,929,654,968,582.66. From February 2001 (the first full month of George W. Bush’s presidency) through January 2009 (the month that Bush left office and Obama was inaugurated), the Treasury collected $17,251,191,000,000 in taxes.
Here, according to the numbers published in the Monthly Treasury Statements, are the total receipts the Treasury has brought during the 91 full months President Barack Obama has completed in office:
Feb. 2009-Sept. 2009: $1,330,887,000,000
Fiscal 2010: $2,161,728,000,000
Fiscal 2011: $2,302,495,000,000
Fiscal 2012: $2,449,093,000,000
Fiscal 2013: $2,774,011,000,000
Fiscal 2014: $3,020,371,000,000
Fiscal 2015: $3,248,701,000,000
Oct. 2015- August 2016: $2,910,151,000,000
91 Month Total: $20,197,437,000,000
Obama’s Tax Collections Surpass $20,000,000,000,000; Still Runs Up Debt by $8,878,290,996,028
Millions, billions, trillions.....just numbers.....just numbers.....Refute what he's said. The hysteria over the debt was wrong.Krugman is more concerned with his leftist politics than he is with economic matters.
