|Current Bush deficit - in units of Boeing aircraft model||PdxMark|
Jan 15, 2004 1:37 PM
|I'd meant not to slip back into political stuff here, but I can't help myself. The logarithmic map of the universe got me thinking about how to illustrate the scope of GW BuSh's current year deficit of about $400 billion. Boeing aircraft seemed like a goood unit of measure.
So, there have been 1375 747s built in all time. At the current average price of $200M each, all 747s ever built amount to $275 billion.
So next we check the 767, of which 856 have been built. At a current average price of $125M each, all 767s ever built amount to $107 billion, giving us a sub-total of $382 billion.
We're still a little short of $400 billion, and there is a good chance the deficit will go over that, so let's consider the 1000 cheapie 757s ever built at the current average price of $80M each. That gives us another $80 billion.
So, GWB's deficit of $400 billion (+/-) just for THIS YEAR amounts to the price of ALL 747s EVER built, all 767s EVER built, and a good number of the 757s EVER built.
Way to go Georgie.
Steam, let's hear the frothing defense of why this is a good thing...
|don't know if anyone knows if it's good||DougSloan|
Jan 15, 2004 2:48 PM
|I think the general rule is that deficits are ok if you are in power, and bad if you are not. If you are not, then your adversaries are ingratiating themselves with voters/contributors on borrowed money, which could hamstring the "nots" when they get in power. Republicans hated deficits with Democratically controlled congress and executive, and Democrats said they were harmless, or at least would demand that if they were to be reduced, it would would cost "the rich."
So, I really am not going to take seriously any Democrat denouncing deficits per se, because for 30 years they found them to be just fine. Only now when they are not spending the money do they get all righteous about deficits. No credibility.
I think it would be better if there never were deficits. I normally would stop there, but I will add this bit of speculation. If the economy is down, and some deficit spending/lower taxation will stimulate the economy such that more people are working, production is up, and everyone makes more money and pays more taxes, then the deficit goes away, absent spending that outpaces the growth. So, IF, and that's a big IF, the deficit allows or causes the economy to grow in excess of the deficit, then it is good, almost by definition, I'd think.
However, as TJ pointed out a few days ago, deficit as a percentage of GDP is not the slightest bit alarming. You can't consider only raw dollars, or airplanes, because it's the effect on the economy that matters. Obviously, my borrowing $X for a house is not the same as Bill Gates borrowing the same amount, and I could not have borrowed the same 15 years ago that I can now, and still have a healthy bank account.
|Democrats aren't denouncing deficits "per se". . .||czardonic|
Jan 15, 2004 3:08 PM
|. . .they are denouncing Bush's deficits and, more importantly, what we are getting in return for them.|
|ok, then that's just politics||DougSloan|
Jan 15, 2004 3:13 PM
|Naturally, the minority party will not approve of the spending or tax policy of the majority party, nor the results achieved by the majority party. If that's all we're talking about, then I fully expect that. If they did not oppose Bush, then they would cease to exist, essentially.
I have seen the attacks more characterized by attacks on deficits per se, though, particularly the one I responded to above.
Jan 15, 2004 4:00 PM
|"Just politics" is certainly one reason why a minority party might object to a majority party's policies. But another reason is that those policies are demonstrably just plain lousy.
There are many who argue the latter.
|Ah, but TJs numbers ignore...||dr hoo|
Jan 15, 2004 4:11 PM
|... the social security surplus. In other words, when you throw that money into the pot, things look not so bad. But if you take that out, things look worse.
I think comparison of deficit to GDP is misleading in a very important way. Deficit is related to income and spending. Why not compare deficit as a percentage of government spending, or revenue?
Please note, that as a percentage of the SPENDING of the government, a 400 billion dollar deficit is 20% of all spending. Put that in houshold terms. Spend all the money you take in in a year, and add 20% more. Would you consider THAT responsible? Even for a COUPLE of years?
Also, the talk about deficits ignores the DEBT. The federal budget in 2001 (if anyone wants to update the #s feel free) had 11% dedicated to interest payments according to the White House webpage. Given government spending of 1.835 trillion, the interest payment on the that debt is ~200 billion. And until we pay down the DEBT, that number is wasted money. And adding deficit upon deficit means MORE wasted money.
Wouldn't you be worried if you were paying over 10% of your income to debt service? Maybe not, but what if you were not paying any of the principle down? And if you were adding huge amounts of debt on top of that each year, making the situation worse, would that not be an issue of concern?
Now add on top of that a head of household who decided that the family should buy an expensive vacation house (moon, mars), and put grandma in a nice home (medicare expansion). It causes one to pause.
Add in proposed privatization of Social Security, which creates more problems of transitions costs.
That being said, all the serious criticism of the deficit are focused on LONG TERM effects, given projected long term and large deficits. Short term they are not a problem, but I don't see the current administration's policies as producing ONLY short term deficits. If the tax cuts are made permanent, those long term numbers look MUCH worse.
And we still have that debt to deal with. I would be MUCH more comfortable with the current and projected deficits if our debt service was more like 5% of all revenues.
(please note, I did not take much time at all with this post, so if I made some silly mistake, please let me know. Ah, what am I saying.... OF COURSE your will!)
numbers from http://w3.access.gpo.gov/usbudget/fy2001/guide02.html
how quaint, it includes a surplus!
|I would add.........||Len J|
Jan 16, 2004 6:41 AM
|that the interest component while large is dramatically understated (in terms of future effects) because interest rates are at a (non-sustainable) low point. If you project out using normal interest rates, the picture gets worse.
On the other side of the argument (to be fair) the defeicit measures cash flows not profit & loss (I know it's not a business, but bear with me). When a business buys or invests in a long term asset, it writes it off over several years. In defecit accounting, the investment is written off immediatly (It's a current expenditure). This doesn't change the fact that the defecit is a real measure of the increase in the debt burden in the current year, however a complete set of financial statements includes a cash flow statement (Similar to measuring the deficit for this year), an income statement, and a balance sheet (the assets and liabilities that exist as of a pooint in time), there is nothing equivilant in gov't accounting to the income statement & Balance sheet, therefor a complete picture of what actually is happening is impossible.
What's the point? The point is that, from a macroeconomic standpoint, incurring a defecit has a range of possible outcomes from a total waste of money to an incredible investment in the country that will pay off for years to come. As Doug says, it remains to be seen.
What we do know is that this particular deficit is made up of two main components:
-A tax break whose largest component in whole dollars was given to (Invested in) the wealthiest. &
-A $90 billion "investment" in Iraq, coupled with a $40 billion "investment" in Afganistan.
The question is will either of these investments pay off in a better economic environment (and therefor larger tax revenus in the future) to "Pay back" the defecit incurred this year. Otherwise the hole just gets deeper & deeper. TJ's point about defecits a a % of GDP is correct, the question is how big is too big. Remember, the economy must grow for TJ's argument to remain valid. If the economy shrinks, tax revenus shrink, deficit expands, GDP reduces, and the deficit as a % of GDP increases exponentially..........unless spending is cut dramatically.
|It's size and return...||PdxMark|
Jan 15, 2004 4:09 PM
|Deficits are natural in US Federal budgets. The issues are how big they are and what you get for them. Huge deficits during WW2 made perfect sense. Smallish deficits mixed with smallish surpluses provide a sustainable funding structure.
The hypocrisy of Republican santimony over responsible budgeting was best embodied by Saint Ronnie. During the election, he railed against the $100M deficits being run during Carter's administration and then promptly doubled and tripled the deficits through tax cuts and military expansion. 41 had to abandon the cynical Reaganesque budget shenanigans, to the fury of the right-wing.
Now we have enormous absolute deficits with virtually nothing in return for them. What are we getting for the deficits? Larger military? No. Improved education? No. Fewer people in poverty? No. Cleaner environment? No. What we have is a give-away to current voters to the detriment of the future.
George's deficits are are inherently unsustainable and burden future budgets with huge interest costs. Ronnie R and David Stockman knew that. They knew that huge deficits while in power allow Republicans to give away the candy store while in power and then to constrain spending when they are out of power.
TJ's economics are sound, of course. Steam might argue them, but I know better. But the reality of what $400 billion means is staggering. As a percentage of GNP, $400 billion is "no big deal." As a number of Boeing jumbo jets it's a staggering number.
Dismissing valid criticisms of George's policy with "it's just politics" or "Dems hate George" lacks the interest of an actual defense of GWB's policies. Moreover, the last Democratic President ended his term with surpluses, so I think the criticism of Democratic fiscal policy is a bit outdated.
|Wrong again. Jeez.||OldEdScott|
Jan 16, 2004 5:34 AM
|You're really off your game, Doug.
You say: "So, I really am not going to take seriously any Democrat denouncing deficits per se, because for 30 years they found them to be just fine. Only now when they are not spending the money do they get all righteous about deficits. No credibility."
Your much-admired former President William Jefferson Clinton took a much-maligned-on-the-Left centrist position that deficits were an evil, and did something about it WHILE IN POWER. He talked the talk and walked the walk. He got help on that from some principled conservative Republicans in Congress (a rare breed these days). But since you're specifically criticizing Democrats as having 'no credibility' on the issue here, I must mention Clinton and the DLC centrists, who certainly have more credibility on deficit spending than anyone else of EITHER party right now.
That said, I'm really not bothered by a certain amount of deficit spending. The question us, how much is too much? I think dr hoo's analysis is closer to the mark than TJ's.
|Haven't you heard........Deficits don't matter||MR_GRUMPY|
Jan 15, 2004 8:06 PM
|At the rate we're going now, we'll be up to $600 billion a YEAR by the time george gets a footprint on his rear end.|| |