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Justin on GDP vs. Debt: “I’m not okay with it.”

Justin digs up a recent Government Accountability Office press release:

“U.S. Government’s 2009 Financial Report Shows Significant Fiscal Challenges: Weaknesses Evident in Financial Management as Nation Confronts Long-Term Fiscal Problems & Financial Regulatory Weaknesses”



I guess this is what I was hoping for in terms of a taxpayer waste prevention agency and it already exists (duh)–although I would prefer an independently elected body.   At least they are on record as basically saying the Treasury is cooking the books–for the last 13 years.

I did a quick comparison of our GDP in the 2000-2010 timespan and also the increase in the federal deficit.  I am trying to figure out what I could possibly be missing because the numbers just don’t seem to add up at all.  Here they are (and I fully admit that I am not sure if any of the below have been adjusted for inflation etc):

In 2000 our GDP was about 10.3 trillion dollars.  Our national debt was right around 6 trillion.

10 years later, those numbers are 14.2 trillion in GDP and about 12.5 trillion in debt.  The debt will rise to about about 13.8 trillion dollars.  That strikes me as a horrifyingly terrible return on the debt incurred by the federal government.  We increased GDP by 38% over the decade but increased the federal debt by over 100%.  I know you are taking medical questions but do you have a finance PhD also on call on your blog?

We could use one, that is for sure…

If you look at the charts, it doesn’t even look like either Iraq war or Vietnam ate up more than 3-4 % of GDP per year.

Maybe it should be evaluated more in yearly terms.  So US GDP went up 40% from 2000-2010 (10.2-14.2) that means growth averaged 4% per year.  If debt went up 6.5 trillion that means over ten years it averaged 650 billion per year.  That equals about 4.6% of the 2008 GDP number.

Taken together, that means if you take GDP and subtract the debt incurred by the federal government, we didn’t really grow at all.  We merely substituted debt for growth, and actually regressed.

I’m not sure about that, exactly, but it does sound like almost a lost decade to me.


One Response

  1. My eyes hurt. Can you make me a chart?

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