The Big Yawn – US borrowing tops 100% of GDP

Conservatives like big numbers. Whether that provides yet more psychological insight in the fetid conservative psyche than we need to know is another matter. One of the reason they like big numbers is the shock value – millions were spent on this or billions on that. They do not generally like to show you what those numbers mean in terms of percents or the value that individual Americans might derive from those numbers – It shocking that Medicaid spent such and such dollars – plays much better than a few million children or seniors got life saving medical care. Such is the wing-nut celebration surrounding these numbers from the US Treasury – US borrowing tops 100% of GDP: Treasury. First, to state the obvious this was the inevitable, predictable or fairly boring result of siging off on the Republican plan to raise the debt ceiling. What did conservative pundits like  the americanthinker, Datechguy’s Blog, Conservatives4Palin, Pajamas Media, Weasel Zippers, Power Line, and The Lonely Conservative think was going to happen, gold bars were going to rain from the sky.

I knew you could do it, Barry. It was simply a matter of putting your mind to it and not listening to the naysayers who believed it couldn’t be done.

I must admit, it is a singular achievement — US national debt reaching 100% of our Gross Domestic Product. AmericanThinker  August 4, 2011

It’ll be some irony when the Greatest Generation’s kids have finally frittered away the nation that the Greatest fought so hard to defend. But that’s where we’re headed. Pajama’s Media August 3rd, 2011

This has to change. So much for hope and change. The Lonely Conservative August 3, 2011

One day after upping the debt ceiling and we’re already borrowing over 100% of GDP. Absolutely sickening. Weasel Zippers August 3, 2011

Cons4palin tried to equate the of the debt to GDP ratio to Obama’s coming bus tour, as in I just saw a report on the moon and thought of cream cheese. The numbers from this breathtaking news,

US debt shot up $238 billion to reach 100 percent of gross domestic project after the government’s debt ceiling was lifted, Treasury figures showed Wednesday.

Treasury borrowing jumped Tuesday, the data showed, immediately after President Barack Obama signed into law an increase in the debt ceiling as the country’s spending commitments reached a breaking point and it threatened to default on its debt.

The new borrowing took total public debt to $14.58 trillion, over end-2010 GDP of $14.53 trillion, and putting it in a league with highly indebted countries like Italy and Belgium.

Public debt subject to the official debt limit — a slightly tighter definition — was $14.53 trillion as of the end of Tuesday, rising from the previous official cap of $14.29 trillion a day earlier.

This is the kind of sly bias that conservatives let pass. It just says the deal President Obama signed off on, not that it was a Republican plan that by putting all the emphasis on spending cuts has very likely further hobbled the economy. Note the 14.58 trillion. Wow that is a lot of money. But in proportion to what historical numbers. It is noted that during WW II the debt to GDP ration was over 100%. It went down every year until a conservative named George W. Bush was president, US, examining a bailout, has boosted debt before(9-23-2008)

Details are still being worked out in Congress, but the proposal would lift the legal limit for government borrowing to $11.3 trillion, $700 billion higher than what it is now and twice what it was a decade ago.

Economists warn ballooning the federal debt could weaken the U.S. dollar, raise interest rates, weaken the already faltering economy and ultimately lead to higher taxes.

Still, compared with the existing $9.5 trillion debt, “another $700 billion is not enormous,” said William Cline, a senior fellow at the Peterson Institute for International Economics, writing on the institute’s Web site.

Of this new and shocking debt, 77.5% was created during the Bush Dynasty. Since spending is not above the average of the last 12 years that means the recession, the loss of jobs and the loss of demand takes up some percentage of the increase. How could we reduce the percent of the debt in relation to GDP. We could end the Bush tax cuts. Some reasonable people warned about this earlier this year, Federal Debt on Unsustainable Path Under Current Policies

The latest projections from the Congressional Budget Office (CBO) confirm what we already knew:  the federal budget is on an unsustainable path. [1]  If we continue current policies — including a further extension of the Bush tax cuts, which policymakers recently extended through 2012 — deficits will remain high throughout the decade and the debt will rise to 95 percent of Gross Domestic Product (GDP) by 2021.  If instead policymakers let the Bush tax cuts lapse after 2012, as economists such as Martin Feldstein and Peter Orszag have suggested — or pay for any elements of those tax cuts they want to continue — the debt would barely grow as a share of GDP over the rest of the decade. (Substantial additional steps would be needed to keep the budget from returning to an unsustainable path in the decades after that.)  The choice belongs to Congress.

Rise in debt could be stopped by ending Bush tax cuts

Conservatives have decided that keeping tax cuts that mostly benefit the wealthy are more important than deficit reduction or job creation. So the above conservatives seem to think you can cut taxes and create jobs while simultaneously lowering the debt. You can get away with some of that voodoo economic mumbo-jumbo during good economic times, but not now. Obama cut taxes for small business 17 times. A third of the stimulus was tax cuts. Obama gave conservatives an extension of the Bush tax cuts in what was another hostage situation – they would only extend unemployment benefits if the tax cuts were extended another two years. So where are the jobs created by tax cuts. The official unemployment rate is 9.2%, but the real figure, because of people who no longer qualify for unemployment befits are no longer reported as officially unemployed. From all the whining a visitor from another planet might get the impression that conservatives really care about the national debt. That given the opportunity they would in no way tolerate or vote for any plan that increase the debt as a percentage of GDP. Those visitors would definitely have the wrong impression. Failing to Avert the Rise in Debt

Using TPC’s new revenue estimates, we estimate that the budget deficit under the Ryan plan would reach about 7 percent of GDP and the debt would grow to 90 percent of GDP by 2020. TPC estimates that revenues under the Ryan plan would average 16.3 percent of GDP over the period from 2011 through 2020.

In contrast, following the specifications provided by Rep. Ryan’s staff, the CBO analysis assumed that revenues over the same period would average 18.4 percent of GDP. That difference amounts to a loss of almost $4 trillion in revenues over the next decade. As a result of these lower revenues, federal interest costs would also be much higher than those shown in the CBO analysis.

Extrapolating TPC’s revenue estimates beyond 2020 shows that the Ryan plan would fail to stem the rising tide of debt for years to come. [5] The debt would continue to grow in relation to the size of the economy for at least 40 more years reaching over 175 percent of GDP by 2050. (See Figure 1.) Even by 2080, the debt would still equal about 100 percent of GDP. [6]

Ryan plan: Debt would reach 175% of GDP

175% of GDP. That is outrageous. As outraged as conservatives are about the debt being 100% of GDP they would never ever support 175% of GDP, right? Because conservatives are knowledgeable about such matters, would never lie and are always sincere? Not really. The Republican controlled House voted in the affirmative, not once, but twice for the Ryan 175% of GDP plan.

Despite the hand cuffs that the debt ceiling deal placed on job creation, The Obama administration is still using what tolls it has left – Twenty Community Banks across the Country Receive $253 Million to Help Small Businesses Access Capital, Create New Jobs

Today, the U.S. Department of the Treasury announced that 20 community banks across the country received a total of $253 million as part of the next wave of funding provided through the Small Business Lending Fund (SBLF). The SBLF, which was established as part of the Small Business Jobs Act that President Obama signed into law, encourages community banks to increase their lending to small businesses, helping those companies expand their operations and create new jobs.          

Including today’s announcement, 43 community banks have now received a total of $590 million in SBLF funding. Additional SBLF funding announcements will be made on a rolling basis in the weeks ahead.

“Access to capital is critical to ensuring small businesses can invest, expand, and hire in their local communities,” said Deputy Secretary Neal S. Wolin. “These funds will help unlock credit for Main Street entrepreneurs to support private sector growth and job creation.”

Small businesses play a critical role in the U.S. economy and are central to growth and job creation. Small businesses employ roughly one-half of all Americans and account for about 60 percent of gross job creation. But small business owners faced disproportionate challenges in the aftermath of the recession and credit crisis, including difficulty accessing capital.