"It's only a small percentage of the GDP..."

[kentuck]

How many times have we heard this? Is it accurate to say? Yes, the $600 billion deficit is only 4 or 5% of GDP but the GDP does not belong to the "government". The GDP is not operating monies for GWB and the Repubs. People give up part of the GDP, their tax share, for the government to operate. Even at the present rate, people are not happy with paying taxes.

The GDP belongs to the people of this nation. It is not the possible amount that the government can borrow. It is the amount that the people produce in a years time. Included in the amount is the $15,000 that a low-wage employee might make in a year. To pretend that this somehow belongs to the Repubs for future borrowing is a cruel and distorted argument.

If the present deficit is "only" 5% of the GDP, we could increase taxes by 5% on the GDP and balance the budget. However, as with the $15,000 per year worker, it would not be fair to tax him to pay for the profligacy of the Republicans. And there would be screaming and moaning if they were asked to pay up. They don't believe in "tax increases" - they believe in "tax cuts"! And this is just on this years deficit - not the entire debt.

So, politically speaking, the GDP is not "taxable" income. To pretend it is out there to be used as possible government revenues whenever the politicians wish, is a fairy tale. The GDP does not belong to the politicians. The "taxes" belong to the politicians.

[Gore1FL]

1. The other falacy

is that 5% of GDP is the Deficit. The true measure is debt/GDP not the Deficit.

the Deficit is how much deeper in debt we go each year. 5% annual overspending is preposterous.

Interestingly enough, the debt/GDP was lower when Snowe et al were shrieking about it.

[rock]

2. And just as damning

is the trend. Before Clinton, we were year-by-year accumulating more debt. During Clinton we swung it around and were paying it down. Now we're back to every year building it up again with no relief in sight. This is stupid.

[AP]

3. It also matters where the defecit is being spent. If FDR put

us into debt to create more mealth, I wouldn't complain.

But were spending this money in ways that are ruining the economy (specifically, it's going to create a further-embedded hegemony). When it inevitably shrinks the GDP, that 10% could double to 20% without there being any additional spending at all.

[corporalclegg9]

4. They only say that for comparison sake

I don't think that when people talk about the deficit being a percentage of GDP that they're implying that we could consume a whole bunch more of the GDP and still be okay.

I think they're just using that as a way to compare to past levels of deficit because comparing absolute numbers makes no sense due to inflation, i.e. of COURSE our deficit today is going to be more than during World War I but so is our income.

Anyway, that's just how I read it. It seems to me that using deficit as a percentage of GDP is a pretty fair way to measure it. That being said, I don't think it puts the deficit picture into a much better perspective. Whereas in absolute numbers we have the worst deficit ever, using deficit as a percentage of GDP just makes it one of the top few.

[kentuck]

5. What is the relation of the deficit to the GDP ?

Why not compare the deficit to taxcuts since 1980? Why pick the GDP for comparison??

[uptohere]

6. because the taxes on it are what go to paying on it...

...once the economy turns sufficiently to where taxes exceed spending.

Clinton's ability to turn defecit spending around was aided dramatically by the dot com bubble. A lot of money was being made, a lot of tax revenue was generated.

When revenues return to normal (that won't be dod com levels of course) then we can make up the difference of a 5% much easier than a difference of 20%.

But the simple answer to your question is the relationship of tax revenues to GDP. They correlate directly.

[kentuck]

7. But the point is:

There are those that give the impression that they have the big pot of gold in front of them called the GDP and the deficit they are running is not really that important because it is such a small percentage of what is in the "big pot"...as if they could reach in that pot and make up the deficit at any time they desire. But the "big pot" belongs to the people and they are not willing to let government stick its paw into their pot. They will cut it off. Therein lies the problem.

[Brian Sweat]

8. This is an old chestnut from the Reagan era.

Only they got it wrong. It supposed to be, the deficit is less than the growth in the GDP. The problem is that they can say that this time around, because the deficit is greater than the growth in the GDP. I'll have a rant about this later.

$600 billion is 6 percent of the $10 trillion U.S. gross domestic product. Also, the interest on the $600 billion is more than the increase in federal revenue. In otherwards, even if we hold every other item on the budget to the same actual dollar amount, the increased cost in debt service will excede any growth in revenue. Not only are we spending it faster than we are taking it in, but the disparity is increasing. In three short years, Schleprock has taken us from a surplus, to deficit spending so severe that the country is at stake. The deficit is $2,000 for every man, woman and child in this country.


RANT

I am old enough to remember that in the eighties it was the Democrats who were concerned about what we considered at the time to be a huge deficit. The Republicans constantly dismissed our concernes by saying that the deficit was less than the growth in the GDP.


Fast forward 10 years and they are blaming the Democrats for the debt incurred in the eighties because the Democrats controlled the house. Nevermind that it was the Republicans (with the aid of a handful of blue dog Democrats) who voted for the budgets and debt ceiling increases.