This page was definitely an eye-opener: The National Budget, Debt & Deficit
Some interesting points:
- The graph for combined income and spending has grown very quickly since WW2, much faster than the growth in population. Where has all this money gone? Military and social security are likely the two largest.
- Without trying to turn this into a “political party issue” here, it is striking to see the very stark contrast between fiscal policies on the chart “New debt.” The conservative administrations during over the last 20 years have added new debt at a huge rate, whereas Clinton took new debt down to almost zero and was straight down for almost his entire term. Which is the fiscally conservative party, again?
- To expand on the first point, it is interesting to see that government spending and debt, while greatly outpacing population growth, has stayed relatively in line with GDP. I think the lesson here is that the government spends what it can, not what it needs to.
On the issue of how “conservatives” can sanction the massive increases in debt I’ve heard the argument that it’s “OK for governments to hold debt as long as it stays below a certain percentage of GDP.” That may or may not be true by itself, BUT it is never true that holding debt is better fiscal policy than not holding debt. Ask anyone who owns a credit card and they know that while they get the short-term satisfaction of owning something now, they are definitely paying a price for it. In the case of governments the next generation pays the price. The only time it could be advantageous to take on debt is funding a business, but the government isn’t a business.