From: jej20@ccc.amdahl.com (Jerry E Joplin)
Newsgroups: talk.politics.misc,alt.politics.perot,alt.politics.elections
Subject: Re: All deficits are not created equal.
Date: 5 Oct 92 20:03:16 GMT
Reply-To: jej20@JUTS.ccc.amdahl.com (Jerry E Joplin)
Organization: Amdahl Corporation, Sunnyvale CA

In article <Hp3-g8B@engin.umich.edu> jwh@citi.umich.edu writes:
>                            Our debt/GNP percentage is not historically
>out of line either.  In other words, our current debt situation is
>not dramatically different than it has been in the past.  
>

              PUBLIC DEBT OF THE U.S. GOVERNMENT                
---------------------------------------------------------------
Fiscal Year         Total Amount   Amount Per     Amount as     
                    (billions)     Capita         % of GNP
---------------------------------------------------------------
1990                3,223         13,000          56            
1980                  914          4,037          36   
1970                  371          1,811          40   
1960                  286          1,585          59   
1950                  257          1,696          98   
1945                  259          1,849         120
1940                   43            325          51   
1920                   24            228          27   

In 1992 the debt reached 4 trillion or about 64% of GNP.  Notice
this is the highest percentage of GNP since the spike that occurred
at the end of the depression and WWII.  Also the debt has been 
increasing at an alarming rate since 1980.  You not only have to
think about the level of debt, but at the rate which it is
increasing.  Even if Clinton cuts the deficit in half (assuming
Clinton is going to be our next President), the Debt will have
increased to over 70% of GNP by 1996 and the Government will
still be running $160 Billion deficits.  

>As far as the deficit is concerned, you need to remember that the
>deficit is only the difference between receipts and expenditures.
>No adjustments are made for the type of expenditures.  Expenditures
>on capital investments are reasonable things to take loans out to
>do.  It probably isn't reasonable to take out a loan for non-investment
>expenditures.  

The U.S. Government paid $200 Billion dollars in interest on the Debt
in 1992.  Do you consider this a non-investment expenditure?  By 1996
this figure will have grown to $300 Billion, assuming Clinton's rosy
scenario for deficit reduction.  It will probably be worse considering
our government's record on deficit reduction plans.

>
>The main point of all this is to show that the 'deficit' and 'debt'
>are not the bogeymen that most politicians make them out to be.
>As long as the deficit is not monetized, the impact on the economy
>is minimal, at least at current levels.  Does this mean we shouldn't
>do something about it?  No, it just means that it would be foolish
>to ruin the economy in order to solve a 'problem' that really isn't
>as bad as people would like to think.  

If the impact on the ecomony is only minimal, then why do we 
need to do anything about it?  :-)

Deficit spending is certainly not a bogeyman.  However, we should
look at the trend.  Entitlment programs are on autopilot with expenditures 
doubling every 6 years.  At this rate, expenditures for Entitlements 
alone will exceed all U.S. Government revenues by the year 2000.
What then?


>James W. Howe                  internet: jwh@citi.umich.edu
>University of Michigan             uucp: uunet!mailrus!citi.umich.edu!jwh
>Ann Arbor, MI   48103-4943         


Jerry Joplin             |  I do not speak for Amdahl Corp.
joplin@mcode.amdahl.com  |
Newsgroups: talk.politics.misc,alt.politics.elections