The author of the letter headlined “Politicians lacking math skills as well” (Herald, Sept 14) noted that many folks can’t comprehend the magnitude of trillions of dollars of national debt growth.
Of course, without correcting for population growth, inflation and productivity growth, the numbers mean little to even an economist. Hence, they commonly focus on the comparison (or ratio) of debt to gross domestic product.
This scales it to a common metric of affordability. They can compare to history, to peer countries, etc.
Presidents take office in late January, submit their first budget within months, modify it as required for congressional approval, and it goes into effect in the immediately following fiscal year, which begins on Oct. 1 of the year submitted. Hence, George H.W. Bush’s first fiscal year under his budget was 1990, Clinton’s was 1994, George W. Bush’s was 2002 and Obama’s was 2010.
The national debt at the end of Reagan’s last fiscal budget year was 51 percent of GDP. By the first Bush’s final budget year, the debt had risen to 64 percent of GDP, or about a 25 percent increase in real terms under his watch.
When Clinton left office, his last budget brought the debt down to 55 percent of GDP, down 14 percent in real terms. In every Clinton fiscal year except his first, the national debt (as a percent of GDP) declined. When the second Bush left office, his last budget took the debt up to 83 percent of GDP. That is a rise of over 50 percent in real terms. And Obama’s most recent completed budget year (Sept 30, 2015) raised the debt to 101 percent of GDP. That was a rise of 22 percent in real terms.
Correct use of numbers is real important in economics.
Gerald Baumann
Durango
