The other side of the coin, from Max Sawicky.

Max is simply attacking the deficit projections, which are either realistic or pie-in-the-sky depending on the projected revenue one uses. But the WSJ article focuses just as much on what the deficit has done up to now, and there's no debating the validity of those numbers. They aren't cooked up projections.

"They aren't cooked up projections."

Alas, one must always avoid underestimating the capacity of the WSJ editorial page to cook up anything. Once someone credible takes a hard look at their analysis, then I'll believe it.

there's no debating the validity of those numbers.

Well, then, we better not question them, should we? Heck, I'm a sucker for the dangerous. I know I've been warned.

"The news Mr. Conrad won't broadcast is that over the past three years the federal deficit has shrunk by 58%."

That's simply not true. Three years ago (2004) the federal deficit was $595 billion dollars. Two years ago it was $677 billion. One year ago it was $676 billion. This year it will be $642 billion (source: budget for Fiscal Year 2006, Historical tables, p. 119)

"U.S. federal debt as a share of GDP is falling again (see the top chart nearby). At 37% in 2006 and heading south, the U.S. figure compares to 52% in Germany, 43% in France, and 79% in Japan. Once again rising total "debt" is a scare word used to justify higher taxes."

This is a remarkably disingenous passage. Although he doesn't use it in the text, a glance at the accompanyning chart tells the lie: Federal debt held by the public as a % of GDP

Nearly 50% of the United States debt, that part of the debt not owed by the government to the government (i.e. the social security trust fund) is NOT HELD BY THE PUBLIC. It's held by foreign governments (primarily Japan, China, and Britain).

Note: the fact that it's not held by Old Lady Migillicuddy down the street, but instead by the Chinese government, doesn't mean you don't have to PAY IT BACK.

In fact, the ratio of the entire US debt to US GDP is nearly 70%. What's more, it's risen every single year since 2000. Source: Again, the Budget for FIscal Year 2006, Historical Tables, pp. 118-119.

Finally,

"Alarmists point to the $1.4 trillion rise in total federal debt from 2003-2006, but that amount is dwarfed by the $14 trillion in new household wealth created over the same period."

Wow. Sounds good, right? Well it would be, if he wasn't comparing apples-to-oranges. The "wealth created" is largely paper wealth in the form of inflated real-estate prices spurred by, you got it, increasing amounts of consumer debt.

That wealth could dissappear overnight in a collapse of the real-estate boom. Guess what doesn't dissappear overnight? Debt. When those McMansions tank, americans will still wake up owing the Chinese and the British and the Japanese an average of $15,000 or so PER PERSON.

Those people aren't going to forgive the debt just because Susy Soccermom and Danny Daytrader decided to buy a stickbuilt in Garden Acres at just the wrongtime.

greg

By the way, here is a URL for the budgetary figures I posted:

http://www.whitehouse.gov/omb/budget/fy2006/pdf/hist.pdf

greg

Well this WSJ article certainly elicited more of a visceral reaction than I anticipated.

Greg, I don't have time to research all of your claims, expecially since I am no Bush budget supporter. But the one thing I did look at in depth revealed a glaring misconception on your part. (Or, as you might call it, "appalling ignorance". Note: never use that phrase with someone you wish to engage in dialogue.)

The "Federal debt held by the public as a % of GDP" which you reference appears to not be understand by you at all. The United States public debt is the amount owed by the government to its creditors, whether they are nationals or foreigners. This is a commonly used phrase and doesn't refer to the "public" as non-governmental people (ie Old Lady Migillicuddy down the street, as you say). Instead, it refers to all non-US government people and entities, and includes foreign entities and governments. Japan, for instance, holds about &644.2 biillion in US public debt.

The graph and statistics you're trying to cite include intragovernmental holdings (or Federal Government Accounts), which is money for government trust funds, such as pension plans and the debt for social security. That does not incude debt to foreign entities.

The WSJ may have its faults, but that graph is using a statistic - Federal debt held by the public as a % of GDP - which is perfectly fair and reasonable to use.

First, aren't you attacking the White House projections?

No, the data for 2004, 2005, 2006 are not projections. They are historic fact. When the Wall Street Journal allowed "The news Mr. Conrad won't broadcast is that over the past three years the federal deficit has shrunk by 58%" to be printed as historic fact, they allowed a lie to be printed.

You don't seem to understand the "Federal public debt held by the public" at all. That is a common phrase which refers to the amount owed by the government to its creditors, whether they are nationals or foreigners. More specifically, it is the amount of money owed by the United States federal government to creditors who hold US Debt Instruments.

Of which a very large percentage are foreign debt holders (44% per http://en.wikipedia.org/wiki/U.S._public_debt ), not US nationals.

Of the 44% of US public debt not held by the US public, over half (64%) is not owned by the public of other countries, but by their central banks (same ref).

The point is that, by focusing only on that part of the debt "held by the public," the WSJ article grossly distorts the debt:GDP ratio by nearly 100%. What's more, it makes no mention whatsoever that a disproportionate amount (compared to the other countries mentioned) of the US' "public debt" isn't held by the US public but, largely, by the central banks of foreign countries.

It was a poorly-researched (that's being generous) economic hitpiece, designed to excuse the irresponsible fiscal policies of this administration by dressing them up in smoke-and-mirrors, hoping no one would notice while the message was carried by the usual waterbearers.

If I got excited, it's largely because of your offhand dismissal that "there's no debating the validity of these numbers" as if a relativist liberal like myself would ever accept the authoritarian premise that there are things beyond debate.

greg

The graph and statistics you're trying to cite include intragovernmental holdings (or Federal Government Accounts), which is money for government trust funds, such as pension plans and the debt for social security. That does not incude debt to foreign entities.

Yes, I stated that in my original post where I said: "that part of the debt not owed by the government to the government "

Federal debt held by the public as a % of GDP - which is perfectly fair and reasonable to use.

Not when it's being used as a comparative basis, to judge how deep our hole is compared to, say, Japan, Germany, and France (the examples used in the article).

For instance, the 44% debt:GDP cited for France, does that include France's total national debt, or just that part of France's debt that France wants to arbitrarily classify as "held by the public?"

From today's WSJ, apropos of the wealth claim:

The key housing and financial sectors were in focus after HSBC warned that bad debt provisions would be 20% higher than analysts had forecast for 2006, blaming a weak U.S. sub-prime lending market, which the bank had aggressively entered. The American-traded shares of HSBC declined 2.7%. Other mortgage lenders also slumped, with Countrywide Financial down 2.6% and Washington Mutual off 2.6%.

"On balance, what you're starting to see, as housing values come down, is that banks realize they are on the hook for some of these mortgages,"

http://online.wsj.com/article/SB117093837047402188.html?mod=home_whats_news_us

greg

Greg, you still don't seem to understand what economists mean when they say "US public debt". The debt held by the public includes foreign debt holders, including their central bank holders, their nationals, and mom and pop down the street. It is everything not owed to the US government itself. Therefore when the WSJ was citing "Federal debt held by the public as a % of GDP", it was a legitimate, normal, and common statistic to use.

At times you seem to recognize the difference, but at times you seem not to. You're criticizing the WSJ for not including foreigners (banks, individuals, and everyone foreign) who hold US federal debt, when in fact the WSJ does in fact include it. Check out this website. There you can see that the US debt held by the public was roughly $4.9 trillion at the end of '06. Then go to this website and note that the US GDP was $13.22 trillion. Do the math and you get roughly 37%, which is precisely what the WSJ reported.

And although I don't have the energy to debate this in depth, it's worth noting that the U.S. public debt was the 35th largest in the world by percentage of GDP (as of 2005). So plenty of countries - including plenty of Western ones - are in far worse shape.

If there is a criticism to be made of that graph, it is that it doesn't include intragovernmental debt, such as social security debt. Such debt is still arguably relevant in a broad discussion of budget deficits. However, it is true that federal debt held by the public (everyone and everything that is not the US gov.) is a stat commonly used and referenced by economists of all stripes.

My point is not that numbers in the WSJ should never be questioned. My point is that the WSJ's statements regarding what has happened up to now in that column are true. The legitimate debate is whether the projections for the future are accurate (although, I think they're as reasonable as any other).

I don't know how to say this any more gently - you're wrong about the public debt.

Greg, you still don't seem to understand what economists mean when they say "US public debt". The debt held by the public includes foreign debt holders, including their central bank holders, their nationals, and mom and pop down the street. It is everything not owed to the US government itself. Therefore when the WSJ was citing "Federal debt held by the public as a % of GDP", it was a legitimate, normal, and common statistic to use.

I understand this perfectly well and, while I admit that my original wording was clumsy, this (your point above) is not one with which I disagree -- as I explicitly stated in my first post on the subject.

I'd appreciate it if, when we're saying the same thing, you don't say "you're wrong."

That said, the distinction between debt "held by the public" and that not, is an artifice. The government is under the same obligation to pay back its debt whether it's held by Mrs. McGillicuddy, Mr. Takimoro, the Central Bank of China, or the Social Security Administration in that the effect of a default on any of those obligations would be roughly equal.

The Social Security Administration hasn't lent the US Government a trillion dollars not expecting it to be paid back, and it hasn't lent it out of the government's own pocket. It's lent it from public funds taken from you, me, and everyone else who's paid OASDI and we expect it to be paid back. And we don't expect the government to pay it to itself, we expect it to pay it to us, the public.

Do the math and you get roughly 37%, which is precisely what the WSJ reported.

Or you can go to the OMB document which I provided the URL for and you can see that the % of total government debt, as a percentage of GDP (the column labelled "Gross Federal Debt"), is nearly 70%, and growing. Why did the WSJ choose to report the artificial "Held by the 'Public'" figure and not the equally-valid "Gross" figure, since the federal government must repay each equally and not to itself?

My point is that the WSJ's statements regarding what has happened up to now in that column are true.

No, they are manifestly not.

it's worth noting that the U.S. public debt was the 35th largest in the world by percentage of GDP (as of 2005).

No, that portion of the US debt, arbitrarily labelled as "Held by the Public," are the 35th largest in the world compared to other countries that may or may not carve out a bureaucratic category of "Held by the Public" from their debts, just to make the numbers look better.

And although I don't have the energy to debate this in depth,

That's an infuriating tactic. Throw out a rhetorical bomb, about one of the arguably greatest issues facing our economy, and then when challenged on the presuppositions of that bomb glibly declare "oh, well, I don't have time to debate this silly, silly stuff. Right-wing experts agree that everything is going to be just fine in the future, just like the President said. Anyone who disagrees, is just wrong."

greg

By the way, I've worked up a spreadsheet (which I would be happy to share) using OMB data and consumer price index information from the Minneapolis Fed, I think everyone will agree that there's no debating the validity of these numbers:

US National Debt (and the presidents responsible for it):

http://www.assmotax.org/Data/USDebt07.jpg

US Debt vs. GDP:

http://www.assmotax.org/Data/DebtvGDP07.jpg

All dollar figures are inflation-adjusted to 2007 equivalents.

greg

Issues of whether Greg did or didn't misunderstand the phrase "held by the public" aside (though it did sound in the initial posts like you did misunderstand them, Greg), the overall objection is sound: the numbers only sound good if you ignore the fact that they are based on the government's borrowing against an income stream that is already committed to something else, i.e., future social security payments. It's real debt, and the WSJ editorial page is (unsurprsingly) being patently dishonest in working the numbers in the way they are.

Your initial disgust with the current GOP leadership's fiscal mismanagement is still very much well in order, JC, and is undeserving of being tempered in any way other than ill-tempered.

greg,

Three years ago (2004) the federal deficit was $595 billion dollars. Two years ago it was $677 billion. One year ago it was $676 billion. This year it will be $642 billion (source: budget for Fiscal Year 2006, Historical tables, p. 119) (link added)

Table 7.1 on page 119 lists debt, not deficit. Even so, I don't see those numbers on that page, so I don't know what you are citing.

Table 1.1 on page 22 lists the actual deficit in 2004 as $412 billion. It estimates the 2007 deficit as $312 billion. But the WSJ editorial cites the CBO estimate for 2007, which is $172 billion. I can't say which is a more reliable projection, but going by the actual 2004 deficit and the CBO projection for 2007, you do indeed see a 58% reduction in budget deficit over three years.

Regarding debt as a % of GDP, there's no argument over the numbers there, just an argument about which metrics to use. I have no idea which is more important, nor do I know whether intragovernmental debt is included for Japan, Germany, and France. If someone has the time to look that up, that might be enlightening. However, it seems like the debt owed by a government to all entities other than itself would be the most obvious way to compute how much a nation owes, so my assumption is the WSJ was comparing apples to apples.

greg is also putting a big emphasis on how much of the US government's debt is held by foreign individuals and govenrments. That is often cited, presumably with the aim to trigger xenophobic reactions in people. But I wonder whether that's unusual. How much of Japan's debt is held by foreign governments or individuals? If there is something like a global market for government debt (i.e. Germans owning Japanese bonds, Americans owning French bonds, etc.), is it that unusual that 44% of a country's public debt is held by foreign entities?

Table 7.1 on page 119 lists debt, not deficit. Even so, I don't see those numbers on that page, so I don't know what you are citing.

The deficit is calculated by the delta in debt. For instance:

In 2004, the gross debt is listed as 7,354,673 (million) dollars. The year before, 2003, it was listed as 6,760,014 (million) dollars. The difference between the two (the deficit) is 594,659 (million) dollars.

By the way, you may be wondering why I'm using the 2006 budget, instead of the 2007 budget (which is available). It's because, AFAIK, they discontinued the (extraordinarily helpful) separate breakout of "Historical Tables" in 2007.

you do indeed see a 58% reduction in budget deficit over three years.

However, the passage in the WSJ implies that over the past three years, the deficit has steadily declined by 58%, which is simply untrue. What the WSJ seems to want to say, without saying it, is:

"If you take the deficit two years ago and compare it to what is PROJECTED for this year, there will be a 58% reduction."

debt owed by a government to all entities other than itself

This is extremely misleading. It's not "intragovernmental debt" owed by "a government to itself." The language used is debt "Held by Federal Government Accounts" -- i.e. held in the Social Security Trust fund, held by government pension (retirement) accounts, held by the highway trust fund, held by the aviation trust fund, etc.

That's not money the government borrowed from itself. It is money the government, just like public debt, HAS TO PAY BACK (sorry for the shouting). The money the government holds in federal pension funds isn't money the government is going to pa to itself, it's money it is obligated to pay to retired servicepeople, retired bureaucrats, etc. The money it holds in the Social Security Trust fund isn't money it owes itself, it's money it has to pay back to you and me.

Regarding debt held by Japan, at least, most of Japan's debt, as opposed to the US', is held domestically. Very few "foreign" entities hold Japanese paper which is why Japan's debt:GDP ratio of 74% is not quite comparable to the US' debt:GDP ratio of 70%. If it was, I'd be getting out of my Japan Fund.

presumably with the aim to trigger xenophobic reactions in people.

No xenophobia implied. What is implied is that there's a vast difference between the US government having $25,000 per capita debt while, on average, US citizens hold $25,000 in treasury notes (of some form, whether pensions, social security, direct investment, etc.) and the same debt but held outside the US.

government to all entities other than itself

Just for emphasis, debt not "Held by the public" is not synonymous with debt that the US Government owes to itself.

greg

But the WSJ editorial cites the CBO estimate for 2007, which is $172 billion

Actually, I had been taking this at face value until now when I looked it up in the CBO report. The CBO report lists a deficit of $357 billion dollars, not $172, for 2007. Summary Table 1, 2007 column, "Total Deficit or Surplus On-Budget"

What the WSJ appears to have done, remarkably disingenously, is to subtract from the government's 2007 shortfall of $357 billion dollars the surplus going into the Social Security Trust fund from OASDI payments.

That's kind of like you borrowing $1000 from your brother-in-law and, when you go to buy a house, only listing $300 as your debt because you know he still has $700 in the bank.

greg

Greg wrote:

Nearly 50% of the United States debt, that part of the debt not owed by the government to the government (i.e. the social security trust fund) is NOT HELD BY THE PUBLIC. It's held by foreign governments (primarily Japan, China, and Britain).

Note: the fact that it's not held by Old Lady Migillicuddy down the street, but instead by the Chinese government, doesn't mean you don't have to PAY IT BACK.

It is abundantly clear in this comment that you misunderstood the meaning of federal debt held by the public. You clearly imply that debt held by foreign governments is not public debt when in fact it is. That is why you next wrote this misguided paragraph:

In fact, the ratio of the entire US debt to US GDP is nearly 70%. What's more, it's risen every single year since 2000.

This is only true if you include intragovernmental debt, which the WSJ explicitly and clearly left out, and for good reason. I'm well aware that the government still "HAS TO PAY IT BACK," but economists often only look at federal debt held by the public. As I've already said, it is a common and reasonable statistic to use. And when you do, you arrive at a figure around 37%, which is what the WSJ reported. In other words, you were wrong. I really don't know any other way to make it more clear.

phil, you wrote:

the numbers only sound good if you ignore the fact that they are based on the government's borrowing against an income stream that is already committed to something else, i.e., future social security payments.

I understand what you're saying here, but I don't see how the point relates to what greg is saying. Is it that the projections are faulty because projected income will need to go elsewhere? As I've stated, I agree that that is where the legitimate debate lies. But the WSJ is also arguing the debt reduction up to now, in the last three years, has been relatively decent.

greg,

The deficit is calculated by the delta in debt.

Err...no. The deficit is calculated by subtracting expenditures from revenue. Granted, it seems as though this should equal the change in debt. I'm not an accountant, so I don't know why they're not the same. Nevertheless, while the increase in debt is a very important number to be cognizant of, the deficit has a specific definition, and the numbers you cited are not the deficit.

That's not money the government borrowed from itself. It is money the government, just like public debt, HAS TO PAY BACK (sorry for the shouting).

I agree that money borrowed from the SS trust fund is not free in some way. However, there *is* an important distinction between borrowing from outside the government and borrowing from government accounts. The government is legally obligated to pay back its bonds. If it defaults on those, very bad things happen to the economy. However, as I understand it, the government *could* reduce SS payments rather than repay what it borrowed from the trust fund. That would be a very bad thing, too, but a different sort of bad thing than defaulting on our public debt. So distinguishing between the two is not just some kind of trick.

Regarding debt held by Japan, at least, most of Japan's debt, as opposed to the US', is held domestically.

As you stated (quoted from Wikipedia), only 44% of US debt is held by foreigners. So 56% is held domestically. I'd say that qualifies as "most."

You're still implying that the total US national debt:GDP ratio of 70%, either by itself or in combination with the portion of that debt held by foreign entities, is cause for serious concern. The problem with this argument is that you haven't provided any actual data to compare it with.

You're still implying that the total US national debt:GDP ratio of 70%, either by itself or in combination with the portion of that debt held by foreign entities, is cause for serious concern. The problem with this argument is that you haven't provided any actual data to compare it with. The problem with this argument is that you haven't provided any actual data to compare it with.

Very true Eric. Moreover, he's still repeating a misunderstanding. You only get to a 70% ratio by including intragovernmental debt, which many economists understandbly leave out. Even if you include foreign entities, it's still at 37%, which is what the WSJ uses, which greg doesn't always admit/grasp.

greg,

What the WSJ appears to have done, remarkably disingenously, is to subtract from the government's 2007 shortfall of $357 billion dollars the surplus going into the Social Security Trust fund from OASDI payments.

What they did was compare the total deficit in 2007 to the total deficit in 2004. Nothing disingenuous about that at all. They're using the CBO's own bottom-line calculations. If you've got a problem, it's with the CBO.

You're straining awfully hard to prove that the WSJ is lying, but they clearly are not. If you think our budget situation is bad, you should come up with a coherent argument to that effect.

"But the WSJ is also arguing the debt reduction up to now, in the last three years, has been relatively decent." The point is that this only seems to be so if one ignores a very big chunk of the real debt, which the obligations to SS are. If you're sure your kid is going to go to an expensive college in a few years, and you borrow money from his college fund to pay for today's bills, you haven't really demonstrated any remarkable fiscal fortitude; you've just been desperate (if you couldn't help it) or a jerk (if you could).

The slightly meta-er point is that it shows that there really is room for books-cookery on the part of the WSJ, and of course whenever you give those clowns that kinds of room, they'll take it. Like I said -- I'll wait for someone with less of a reputation for systematic deceit to do the analysis, before I'll believe it.

It is abundantly clear in this comment that you misunderstood the meaning of federal debt held by the public.

No, it's not no matter how many times you try and bring this strawman up to deflect from the material issues. I reject the government's definition of "debt held by the public," as I've explained several times here before.

That does not equate to "misunderstanding" the government's definition of what a "debt held by the public," is no matter how much it would be convienient for your rhetoric if it was.

If you carefully parse what I wrote initially:

"Nearly 50% of the United States debt, that part of the debt not owed by the government to the government (i.e. the social security trust fund) is NOT HELD BY THE PUBLIC. It's held by foreign governments (primarily Japan, China, and Britain)."

No if I screwed up, I screwed up (and I admit it) by equating debt held in federal accounts as debt "owed to the government by the government." And, truth be told, I should have put scare quotes around my "NOT [actually] HELD BY THE PUBLIC" for the point I was trying to make is that the term "held by the public" implies that it is paper held by people like you, me, and Mrs. McGillicuddy.

Which is why I also said, in the passage that's giving you so much trouble, "Nearly 50% of the United States debt, "

Which was a portion of the debt that I then further clarified by saying it was that portion not held in federal accounts.

Now you can continue to play the right-wing "gotcha" game so as to ignore the substance of the points and I can continue to refuse to play within the right-wing governmental frame that equates trillions of US paper held in foreign central banks as "held by the public" and trillions of dollars owed to Social Security payees as "off-budget revenue."

But I'm not going to play that game, no matter how much you'd like me to.

economists often only look at federal debt held by the public

As the son of an economist, let me say quite respectfully "I don't give a sh*t about what some of them might say." That said, for every economist that says debt is only real if you only account for half of it, I'll find you an economist who says you really should count all your debt when you count your debt.

I'm not an accountant, so I don't know why they're not the same.

What makes you think they're not the same?

However, as I understand it, the government *could* reduce SS payments rather than repay what it borrowed from the trust fund.

I don't think so. How does "US Government Defaults on Treasury Debt to Social Security Administration" ring on Wall Street? Or "Millions of military retirees left destitute as US Government defaults on pension debt?"

That's some serious Third-World crap.

You're still implying that the total US national debt:GDP ratio of 70%, either by itself or in combination with the portion of that debt held by foreign entities, is cause for serious concern. The problem with this argument is that you haven't provided any actual data to compare it with.

Tell that to the WSJ then, which used the artificial 35% number as a basis to compare the US with Germany, France, and Japan without telling us if the Germany France and Japan data constituted only that part of the respective country's debt "Held by the Public" (and what that means), or not.

Now, truth be told, I suspect that the WSJ calculated equal percentages as debt "held by the public" for those countries because, believe me, Japan's actual debt is far more than 74% of it's GDP. More like 140%.

But that gets back to the point which I was originally trying to make, and failed so badly, which is that the definition of debt "held by the public" is problemmatic at best for the reasons I've tried to outline countless times already.

The nature of Japan's debt, that portion "held by the public" is quite different from the nature of the US's debt "held by the public" because the demographics of what is meant by the "public" are vastly different between the two countries.

Which is why I find the ratio of total (gross) debt to GDP, the sixth column over in the OMB budget tables, a much more meaningful comparison and metric (than the arbitrary "held by the public" category), both within the country and between countries.

As Josh would say, "there's no arguing with the numbers"

greg

You only get to a 70% ratio

You get a 70% ratio by looking at http://www.whitehouse.gov/omb/budget/fy2006/pdf/hist.pdf

That would be pages 118-119, Column 7 titled "Gross Federal Debt."

Go read it, and report back to us if that's not what's there.

greg

Philosopher is exactly right, the CBO practice of using the surplus in the Social Security Trust fund (and others) to "offset" the federal debt is the equivalent of me setting up a trust fund for my children and then claiming the capital and returns in that fund as offsetting to my and my wife's personal debts on our own financial statements.

greg

greg,

It's absolutely fair game for you to criticize the way the CBO does its calculations, and/or the common practice of economists in calculating debt "held by the public." However, it's false to say this is a "right-wing governmental frame." These are standard calculations, and they are being applied consistently across decades of records. Unless there was a change in methodology at some point, these calculations have been used by both Democratic and Republican White Houses and Congresses.

Furthermore, I think Josh and I have thoroughly disproven the idea that the WSJ article is "cooking the books" to make the Bush administration look better. They're simply looking at the data published by the government. (Though you can make a strong argument that the US government has been cooking the books for decades, under the leadership of both parties.)

One further thing...

Me: I'm not an accountant, so I don't know why they're not the same.

greg: What makes you think they're not the same?

As defined, the budget deficit is not the same as the increase in the national debt for the same fiscal year.

However, it's false to say this is a "right-wing governmental frame." These are standard calculations, and they are being applied consistently across decades of records. Unless there was a change in methodology at some point, these calculations have been used by both Democratic and Republican White Houses and Congresses.

This is an assertion (that reporting only the "debt held by the 'public'" to GDP ratio is how "economists" do it "by standard") that both you and Josh have asserted with absolutely no data to back it up.

In fact, my anecdotal research shows that Gross Debt : GDP is the far more common way of expressing the US' debt load.

Type in "united states debt gdp percentage" in Google (without the quotes). The VERY FIRST hit that comes up is the CIA world factbook entry for the US. In that entry you will find:

"Public debt: 64.7% of GDP (2005 est.)"

The very NEXT entry is the Wikipedia entry. The first thing on that page is a chart, titled "The National Debt as a Percentage of GDP." Guess what it shows? That's right, ~65%. The accompanying text says (this is a cut-and-paste): " In 2005 the public debt was 64.7% of GDP"

The THIRD entry, returned by Google, is www.cedarcomm.com showing the US Debt : GDP at 70%.

Do you want me to go on or do you want to back down that reporting only that debt "held by the public" as the US debt, not the gross debt, is "[a] common practice of economists in calculating debt?"

Either the CIA is unaware of what economists "commonly do" or the WSJ purposefully chose to use the bogus debt "held by the public" to bolster its rhetoric.

Since one figure (gross debt) shows the debt : GDP ratio ever-increasing into the future, and the other ("public debt") convieniently does not, then which is the "right wing frame" and which is not?

greg

I don't know how much clearer it gets than this:

WSJ Article: U.S. federal debt as a share of GDP is falling again (see the top chart nearby). At 37% in 2006 and heading south ...

CIA World Factbook: Public debt: 64.7% of GDP (2005 est.)

OMB Budget of the United States (p. 119): Gross Federal Debt (2005): 65.7%

OMB Budget of the United States (p. 119): Gross Federal Debt (2010 est.): 70.0%

We're to believe that only the WSJ, and not either the CIA or the Office of Management and Budget, knows how "economists" calculate the debt?

greg

It's like I have to be a broken record, so this is the last time I'll say it. Greg, there are two factors that make up federal public debt: debt held by the public and intragovernmental debt. The CIA and OMB figures you're citing are using all public debt, while the WSJ clearly and explicitly uses only public federal debt held by the public. With those numbers, we arrive at 37%. You keep using all public debt, and when you do you arrive at a number closer to 70%. Macroeconomic textbooks will usually have a good explanation for why economists often you that statistic. Check it out sometime.

If Greg is right about which should be called what, then the result we get is: the WSJ is basically lying, as the key premise in their argument is false.

If JC is right about which numbers should be called what, then the result we get is: the WSJ is basically lying, as the key premise in their argument patently fails to support their intended conclusions (about Congress being able to balance the budget with just a little spending restraint, or about Bush having gotten a fiscal spine).

Either way, the WSJ is being deceitful, and the president's budgets are still ludicrously bad.

It's like I have to be a broken record, though I doubt this is the last time I'll say it. Josh, there are many factors that make up federal public debt, including debt held in federal accounts, debt held by foreign governments, debt held by US nationals, debt held by foreign nationals, debt held by private corporations, debt held by public corporations, debt held by the federal reserve, etc.

In fact, there are so many components of the federal debt that one could probably zero in on any one of them to make one's case, whatever the case they wanted to make.

The CIA and OMB figures report gross debt, i.e. the sum of all debt obligations that the federal government has. This is the standard way of reporting a nation's debt while the WSJ clearly and explicitly used only an arbitrary subset of the debt obligations of the federal government in order to bolster its right-wing frame that, hey, the debt isn't so bad so long as you ignore nearly half of it.

Political science textbooks will usually have a good explanation for why right-wing watercarriers masquerading as "economists" often use distorted statistics to bolster their shaky premises for political purposes.

Since 1975, practically all the gains in household income have gone to the top 20% of households. (CIA World Factbook, https://www.cia.gov/cia/publications/factbook/print/us.html )

Check it out, sometime.

greg

Either way, the WSJ is being deceitful, and the president's budgets are still ludicrously bad.

They are absolutely not being deceitful. They quite clearly delineated the data they were using, and the figures they used are absolutely correct (in contrast to greg's attempt to pass off "delta in debt" as "deficit").

Nevertheless, I do agree with you that the increase in non-defense, non-homeland security spending has been completely unjustifiable. The situation is improving, but could (and should) be much, much better.

If you think that the numbers they used are correct as reported, that doesn't absolve the WSJ of charges of deceit -- the deceit of pretending that those numbers support their stated conclusions, when they know fully well that they do not.

It's similar to the way in which the administration was systematically deceitful in the lead-up to the Iraq war, even while not uttering very many literal falsehoods. (E.g., saying that "British intelligence reports" certain things that our own intelligence knows to be wrong.) Knowingly misrepresenting the facts as supporting conclusions they don't is every bit as much an act of deception as lying about the facts themselves. It's hardly surprising that the WSJ clown show would deploy the same modes of dishonesty perfected by Karl Rove.

"Nevertheless, I do agree with you that the increase in non-defense, non-homeland security spending has been completely unjustifiable.' As you might imagine, I'd rather rectify the spending/revenue imbalance by raising taxes! But I think it's a good start for Republicans to finally start agreeing with Democrats that there is a real connection between taxing and spending -- as a general rule, if you want to cut taxes, then you have to cut spending, and if you want to increase spending, then you have to raise taxes. Thank goodness that we once again have a Congress in place willing to adhere to PAYGO.