Both Democrats and Republicans find convenient rhetorical uses for complaining about current budget deficits and total public debt. Democrats cite the deficit and debt to argue for increasing taxes, while Republicans point to them as reasons to reduce government expenditures. One verbal tactic is to compare either the current tax receipts, total expenditures, the deficit, or total debt in terms of absolute values as in: This is “the largest tax increase in history” or the “deepest budget deficit in history.” But as the country continues to grow at a rate of about 3% per year and as even low inflation devalues the currency, over the long run modest tax increases or deficits can be made to appear much larger than they really are.
To appropriately understand our fiscal situation is it necessary scale national fiscal values the same way we scale our own finances, by our income. The house one purchases today may be substantially more expensive in nominal dollars that a house bought twenty years ago. However, during the intervening time one’s ability to afford that house increases with income growth, while inflation has increased the house’s nominal, but not real value. This is evidenced by the historic expansion in the rate of home ownership. Even though house prices have increased with time, more and more people over the last century have been able to own their own home. Despite price increases, growth in incomes have made homes are more affordable
Similarly, government expenditures, revenues, and debt must be scaled by the gross national product GDP. Here, we focus particularly on the national debt as measured against the national GDP. The graph below is instructive. It is a plot of total US debt divided by GDP as a function of time from the beginning of the country to 2006.
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The national debt has taken on a greater importance as the size of government expanded so tremendously since the 1930’s so it is important to focus on the graph after that time. Even during the Civil War in the 1860s, government spending as a fraction of our total wealth was lower than it in the period after the early 1930s.
Government spending has a stimulative effect, taxation has depressing effect, and some level of public debt seems salutatory. The radical decrease in the debt-to-GDP ratio after the end of World War II in 1945 was not the result of budget surpluses, but very strong growth in GDP. However, at the end of the 1960’s the debt ratio dropped below 40% and in the 1970s the US experienced decade-long economic stagnation. The period from 1980 to the present has experienced much higher levels of total debt-to-GDP and simultaneously much greater rates of economic growth and general well being. While individual year surpluses may be beneficial, if they drive the debt too low, the government suppresses economic growth.
We are perpetually warned that we are leaving too much debt to our grandchildren. However, the erstwhile “Greatest Generation” that survived the Depression and won World War II left a debt-to-GDP ratio of over 120%, twice that of the current period. Their more generous and important legacy was the subsequent decades of rapid economic growth that dramatically reduced the debt-to-GDP ratio. In the current period, we should perhaps be a little less concerned about the debt we leave our children and more concerned about whether we bequeath to them a vibrant and rapidly expanding economy.
The current debt-to-GDP ratio is not only reasonable but hovers around a level consistent with a period of nearly three decades of continuous and robust economic expansion. The long-term concern should not be the current debt, but the unfunded Social Security and Medicare liabilities we have incurred. The only way we can hope to meet these obligations is to maintain high economic growth, and a proper level of debt is necessary for such growth.
Obama Obfuscation Tests Supporters
August 24th, 2008In March of 2003, Barack Obama was state senator in Illinois dealing with the Illinois Born Alive Infact Protection Act (BAIPA). The key goal of the act was to make it an affirmative obligation to render conventional medical treatment to all children born, even if the birth was a consequence of an induced abortion. The act brushed against the ragged, politically dangerous edges of the pro-choice and pro-life movements.
One aim of pro-life advocates was to ensure that children born alive and completely separate from their mothers are not treated as medical waste, but accorded appropriate medical attention. Pro-lifers may want to prevent abortions, but there is a much broader constituency who would want to protect children already born. Testimony before Congress has reported cases where live children, the product of unsuccessful abortions, were unceremoniously disposed of rather than treated. The concern was clearly not just a theoretical one.
Pro-choice advocates were concerned that about the legal assertion of rights for babies that were theoretically pre-viable; though one might expect viability to change as a function of medical technology. Specifically, the Illinois BAIPA declared, “A live child born as a result of an abortion shall be fully recognized as a human person and accorded immediate protection under the law.” The pro-choice community is perhaps rightly concerned that someone sometime in the future might ask the embarrassing question: How is a being a fully recognized human only moments after being excess tissue?
The legislative dilemma is how to reconcile the humanity of treating with medical respect babies born alive versus the concerns of the pro-choice community to avoid the legislative precedent of declaring babies born alive as persons. Obama and his Democratic colleagues implemented a compromise by adding a clause to the law that would effectively prevent the law’s use a precedent against abortion. Specifically they added:
Curiously, the record shows that Obama voted only for the amendment, but still voted against the bill. The problem is that Obama’s district was still sufficiently to the Left, that deviation from pro-choice purity, even at the cost of the maltreatment of born-live infants, would have had political costs. Either Obama believed that such infants do not deserve such protection or that the political costs of approving the bill were too high. The whole episode was hardly a “profile in courage.”
If this story became widely acknowledged, it would make Obama appear far out of the national mainstream on the issue of abortion. When asked about the vote in 2004, Obama claimed, according to the Chicago Tribune, that he voted against the state legislation but would have supported a similar federal bill because “the state measure lacked the federal language clarifying that the act would not be used to undermine Roe vs. Wade, the 1973 U.S. Supreme Court opinion that legalized abortion.” However, contrary to Obama’s assertion, the two bills are nearly identical. Obama knew they were nearly identical because he was chairman of the committee that amended the bill so that it would resemble its federal counterpart.
Rather that conceding the issue, Obama accused his pro-life critics of “lying” about his record. Finally, Obama’s campaign’s has conceded that the federal and state bills were near identical. The only way to reconcile his vote in Illinois against the BAIPA and his later claim that would have voted for the nearly identical federal act, is that in both cases he was acting in immediate political self-interest.
There is certainly room to argue about Obama’s first vote in Illinois, though it does depict him as part of the extreme pro-choice wing of the spectrum. However, there is no excuse to misrepresent his vote and worst to call others liars for disputing what turns out to be the facts of this case.
It is not surprising that this story has not been discussed much in the pro-Obama press, but the story is slowly emerging. One character test for Obama supporters is how do they deal with this report. The reactions can involve either be honesty, dishonesty, or deliberate self-deception
One honest reaction is to concede Obama’s serious mistake and consequent dishonesty, but still maintain their support given his overall record and ideology. However, this would tend to undermine the serious messiah complex of some Obama supporters.
The dishonest way is to continue to obfuscate the issue and to attack the veracity of opponents. This will undoubtedly be the reaction of political partisans.
Perhaps the most common way for Obama supporters to deal with the issue is denial. Rather than examine carefully the details of this serious vote and related dishonesty, they will just to avert their gaze. They will not take the time an effort to determine out the truth. It easier to believe that political enemies are after your candidate than to face an unpleasant truth.
A pro-life advocate, Jill Stanek, performed the difficult task of digging up many of the original documents some of which are linked to in this post.
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