Thursday, February 07, 2008

Mankiw sense, in response to Conrad nonsense, on the national debt

Professor Greg relates:
If you look at the end of [Bush's] eight years of responsibility, we see the debt as being over $10.4 trillion. That is almost a doubling of the national debt on his watch.--Senator Kent Conrad, ND

Yes, the federal debt is higher than when the President took office. Debt in 2001 = 35.1% of GDP. Projected debt in 2009 = 37.9% of GDP. The claim that the debt is "almost doubling" under this President is absurd. Measured as a share of the economy, it's about 8% higher than it was when the President took office. (37.9 - 35.1) / 35.1 = 8%. This debt increase comes in the context of: an inherited recession, a stock market crash, corporate scandals, a terrorist attack, war, and a huge increase in the price of oil.--unnamed White House economist

This is correct as far as it goes. What my friend forgets to mention, however, is that the Medicare prescription drug bill signed by President Bush significantly increased the long-term spending trajectory. (FYI, both Senator McCain and Senator Clinton voted against the bill. Barack Obama was not yet in the Senate. Senator Conrad, who above expresses so much concern about fiscal responsibility, voted in favor.)--Greg Mankiw
But not all is rosy. Here's the last graph from the White House:

Could we cut a little spending please? We did it in my bank, in my church, and in my household all in these last several months. Trimming 10% to start is not difficult.

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