The National Debt Explained in a Road Trip


The key to understanding the flaw in the argument of the video is to look at the following graphs from the Economic Report Of The President – February, 2010

Government Debt Under Previous Policy

The graph above shows that it is the policies of the previous administration that are responsible for the acceleration of debt that the video would like to attribute to Obama.

The above graph shows how little the Recovery Act contributes to the long term deficit problem.

The response to the video can come from the Economic Report of the President released to the Congress in early February of this year.

There is an amazing wealth of data in the graphs and tables.  I have extracted some from the first five chapters of the report.  Follow this link to the graphs and tables and the key to the pages where they appear in the report.

It is not easy to summarize the 462 pages of the report, but Christina Romer makes a valiant effort in the summary A Look Inside the Economic Report of the President.

Below is a section that I selected from the actual report.

The challenging long-run budget outlook the Administration inherited has two primary causes: the policy choices of the previous eight years and projected rising spending on Medicare, Medicaid, and Social Security. The policy choices under the previous administration contribute a substantial amount to the high projected deficits as a share of GDP, while rising spending for health care and Social Security is the main reason the spending, continuation of the 2001 and 2003 tax cuts, avoiding scheduled cuts in Medicare’s physician payment rates, and holding other discretionary outlays constant as a share of GDP.

The conclusion from chapter 5 is:

Conclusion: The Distance Still to Go

The actions the Administration has taken and is proposing would reduce deficits by more than $1 trillion over the next 10 years and by even more after that. These actions are significantly bolder steps toward deficit reduction than any taken in decades, and they will face serious opposition by those with vested interests. Even with these actions, however, the primary budget is forecast to remain in deficit in 2015. And the longer-run fiscal problem facing the country still centers on the growth of health care costs and the aging of the population. Thus, barring a substantial and sustained quickening of economic growth above its usual trend rate, further steps will be needed to get the deficit down to the target in the medium and long run.

Regardless of the form they take, these additional steps to reduce the deficit will involve sacrifices by a broad range of groups and significant compromise. Thus, a bipartisan effort will be essential. That is why the President is issuing an executive order creating a bipartisan fiscal commission to report back with a package of measures for additional deficit reduction. The charge to the commission is to propose both medium-term actions to close the gap between noninterest expenditures and tax revenues and additional steps to address the longer-term issues associated with rising health care costs, the aging of the population, and the persistent deficit. The commission’s recommendations will form an important foundation on which to base policy decisions moving forward.

The Administration understands that addressing the long-run fiscal challenge will be a long and difficult task requiring commitment and shared sacrifice. But the President also believes that Americans deserve for and expect policymakers to deal with the ever-rising deficit. The changes eventually enacted will be central to the long-run preservation of both America’s financial strength and the standards of living of ordinary Americans.

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