Here's a bit of a surprising thing:
When the pandemic hit, federal debt spiked up over 100%—partly because of huge spending and partly because GDP plunged. GDP recovered the next quarter and the debt level settled at 97%.
Since then we've spent tons of money and run huge annual deficits, and the debt level has increased by $6.5 trillion. But GDP has increased by $7.5 trillion and the national debt has declined to 95% of GDP.
In particular, take a look at the first quarter of 2021, when President Biden signed the $1.9 trillion ARP bill. There's not a hint of it. It stimulated growth so much that it completely swallowed the additional spending.
Of course, our next recession will put paid to all this and debt will again rise. But for the moment at least, we can all breathe easy.
"It stimulated growth so much that it completely swallowed the additional spending."
But I thought that's what tax cuts for billionaires did...
And a longer-term view: https://fred.stlouisfed.org/series/GFDEGDQ188S Perhaps there is a difference of metric or maybe of opinion because that puts it above 100%.
Despite my opposition to his supporting Netanyahu's merciless bombing of Palestinians in Gaza & the West Bank, Lebanon, & only a short distance from where my friends live in Tehran, I just wish that Biden had been credited with all that he accomplished with legislation, multiple hostages being released (but not Austin Tice & some more others presumably still held captive by Syria, Russia, & possibly others) the ongoing pretense by so many that all was hunky-dory during trump's first reign is sickening.
it is especially sad, now that, while many do not understand what a president can & can't do to affect inflation, it has improved enough that I am reading more & more reports of how many really have been splurging on non-essentials (entertainment, or eating out), as well as saving some money - because it is true that some have increased income along with reduced inflation in some categories.
I hope that many also understand the many "Republicans" & some Democrats who would have accused Biden of having betrayed Israel, rather than cutting off Netanyahu's vile assault on civilians, reporters, & aud workers to save his own hide. He still should have stopped the flow of war materiel. Otherwise, he should be given credit for all that he did accomplish despite the absurdities of House control.
I wonder just how soon some of the middle class whiners who buy the oversized gas puzzles & pitch a fit about the price of gas will last in their adulation of trump's supposedly good business acumen once the result of the tariffs hits.
Like +50.
Yippee! No one cares. Despite competent fiscal and foreign policy… despite being scandal free (except for some senators and reps)… despite all of that, the voters preferred trump by a very small margin or just didn’t give a crap one way or the other. 77 million assholes and many 10s of millions more useless POS rule!
There’s nothing to be thankful for this day. Screw it!
https://youtu.be/quYd7qJzsAE
https://www.emmanuelmusic.org/bach-translations/bwv-192
Cheers!
+1
"Of course, our next recession will put paid to all this and debt will again rise."
And then, during the subsequent recovery, it will again decline, and the debt panic brought on by those recession-era numbers will again be shown to have been based on a misunderstanding of how counter-cyclical deficit spending works.
At least, that will be the case if deficits are allowed to rise enough to ensure a robust recovery. Otherwise, the recovery will falter, the debt level will remain elevated relative to GDP, and we will be back in a self-reinforcing cycles of debt panic and subpar growth, that the success of Bidenomics should have cured us of but didn't, because apparently hardly anyone believes that success was real.
Most of the screeching about NATIONAL DEBT DROWNING OUR CHILDREN!! is in utterly bad faith, as proven repeatedly when Republicans pass massive tax cuts for the wealthy and corporations that cause what at the time are the LARGEST increases in national debt (Reagan, Bush II, Trump), and the response is ... crickets.
What Republicans really care about, of course, is that Big Gummint spends Our Hard-Earned Tax Dollars™ on WELFARE HANDOUTS for THOSE PEOPLE.
(And again, there is a segment of the population who probably actually believes it, because they don't really understand what's going on and/or because they're motivated to believe it.)
The irony is, we might actually be getting to the point that debt IS a little higher than it should be as a fraction of GDP. But that won't stop the next round of tax cuts for the wealthy and corporations.
Truly, Republican bad faith knows no limits.
Unfortunately, those bad faith arguments convince a whole lot of people who don't know any better.
Even if debt rose (gradually) to 150% or more of GDP, we wouldn't have a ton to worry about unless/until we are no longer the default global currency. I just don't see that happening - at least not for fiscal reasons.
Is the Chinese economy still growing faster than that of the United States? Geopolitics aside, I would think that money talks and once the Chinese economy is larger than the US' then a shift of the global default currency seems plausible.
Except that most countries don’t want the global reserve currency to be in the hands of an authoritarian dictatorship like China’s, even if China has the larger economy. Nobody wants the reserve currency to be manipulated or held hostage by a single person or group of oligarchs, and the risk of that happening is higher in a non democracy. I think if the US also becomes an authoritarian dictatorship, the Euro would become the global reserve currency before the yuan does.
I'm sure no one would want that, but when they are buying so much from the now world's largest economy, and that economy wishes to be paid in renminbi...
The Chinese economy is in more trouble than ours is.
I'm surprised that Kevin is surprised. Seems like business as usual. Democrats manage the economy to everyone's benefit. Republicans rant against them for wasteful spending and lie a lot. And everyone remembers the lies.
Of course, the debt also went up far less under Carter, Clinton, and even Obama than under Reagan and GWBush. But of course all right-thinking people know that real people vote the economy while Democrats just don't care about it or them. And the rest of us are screwed as well.
A bit of quibble with the assertion about the Obama administration, based on https://fred.stlouisfed.org/series/GFDEGDQ188S
Carter: 77Q1 33.65% 80Q4 31.15% -2.5 percent of GDP
Reagan: 81Q1 30.87% 88Q4 49.71% +18.8 percent of GDP
GHWBush: 89Q1 49.73% 92W4 62.52% +12.8 percent of GDP
Clinton: 93Q1 62.86% 00Q4 54.25% -8.6 percent of GDP
GWBush: 01Q1 55.14% 08Q4 75.24% +20.1 percent of GDP
Obama: 09Q1 77.01% 16Q4 104.68% +27.7 percent of GDP
I was going by several online charts, such as this one.
https://www.self.inc/info/us-debt-by-president/
The difference appears to be they seem to be using absolute/nominal (I think that is the term) figures rather than normalizing to GDP or adjusting to inflation.
"... There's not a hint of it. It stimulated growth so much that it completely swallowed the additional spending."
Actually I suspect it stimulated inflation which devalued the debt compared to the inflated GDP.
Your "suspicion" and $4.50 will get you an overpriced latte at Starbucks™.
Most of the US debt is not inflation adjusted. So if the Biden administration bumps inflation by 10% this decreases the real value of the debt by 10%. Whereas the GDP does not decrease in real terms. Which means it increases by 10% in nominal dollars. Either way you look at it the value of the debt relative to GDP decreases by 10%. This is why the ratio of debt to GDP didn't decrease. It wasn't because of some astonishing spurt in real GDP.
SInce the debt is in dollars it can always be inflated away although this might have bad side effects like failing banks. Silicon Valley Bank failed because their holdings of long term treasuries (that is US government debt) were suddenly worth a lot less making the bank insolvent.
Nobody cares about the debt except (1) center left wonks like Kevin and (2) Republicans when it can be used as a weapon against Democrats doing anything on their agenda.
By end of next year, more tax cuts will explode the debt yet again, as they always do when republicans have trifectas.
Let's see a graph of the interest payment on the debt as a % if GDP.