Politico.com has a story that is just downright depressing. Our nation’s debt is about to hit $11 TRILLION. That is a staggering sum. It was half that size in 1996. In 13 years we have added as much debt as it took us to accumulate in the more than 200 years prior.
Back when I was a budget associate in the U.S. House, I always went straight to the appendix of the President’s budget to look at a couple figures: Government spending as a percentage of GDP and deficit as a percentage of GDP. Obviously, if the economy continues to grow, we can absorb some increases in government spending and debt.
For example, in FY 1983 federal spending was 23.5% of GDP. That reflected both weak economic growth and increased defense spending by Reagan. The deficit was 6% of GDP (a post-WWII high). By FY 1988 the percentage of federal spending was 21.3% and the deficit was 3.1%.
In Clinton’s first budget, FY 1994, the percentage of federal spending was 21% and the deficit was 2.9%. The budget following the Republican take-over of Congress dropped to 20.3% and the deficit was 1.4%.
Bush’s budgets tended to be on par with Clinton’s budgets (as a percentage, remember) with the FY 2007 budget at 20% of GDP and the deficit at 1.2%
How does Obama’s first budget stack up? Federal spending as a percentage of GDP will be a whopping 27.2%. And the deficit as a percentage of GDP? Buckle up… 8.3%, which shatters the previous high of 6% in 1983. To make matters worse, that 8.3% is BEFORE taking into account the stimulus package passed earlier in the year.
This is ugly.