Debt as % of GDP Question (i.e. help me debunk a right wing pissant)

[Independent_Patriot]

Just got an email from a right wing friend of mine claiming...

"Debt as a percentage of GDP has increased more under Obama by the end of this year than it did during the entire Bush term."

It's already well known that Bush left war spending off the books, as well as natural disaster spending, and I think some of TARP may have been left off as well.
I'd argue that debt as a % of GDP was upwards of 100% around WW2, and the right wingers were screaming even then that FDR had sold their children and their children's children into economic bondage.
Of course, the debt was paid down fairly quickly, but back then we still had an economy that made stuff, among other factors.
Can anyone shed some more light on this?
Since Bush had been fudging the numbers, am I correct in saying that the latest debt to GDP estimates include not only current war expenditures, but 8 unpaid years of them?

Any insight to help put this Hannity jock-sniffer in his place would be much appreciated.

[mistertrickster]

1. This is how the RepubliCONs lie with statistics.

Of course debt is up against the GDP.

That's because we're in the Bush Recession. What's the definition of a recession? When GDP falls instead of grows.

So even if deficit spending hadn't gone up, the debt to GDP ratio would still have gone up because the GDP went down.

Not only that, when GDP falls, tax revenues go down too . . . so the debt increases.

As soon as the economy rights itself under new regutions (actually old regulations that are finally enforced), the GDP will grow, tax revenues will increase and the debt will go down as it did under Clinton.

[AllentownJake]

2. The statement is true

The proper argument is arguing Keynsian ecomic theories vs. Friedman economic theories. You could also throw in Schumpter but he would be really against bailouts (creative destruction).

Right Wingers subscribe to Friedman people on the left subscribe to Keynes so you really can't have much of an argument if the person has intelligence. What Obama is doing is bad under Friedman but good under Keynse.

[mistertrickster]

4. Correct. Hoover cut spending to try to pay down debt as the economy collapsed

into depression in 29-30 and made the downturn much, much worse as a result.

The government has to spend to stimulate the economy at times like this because it is the only entity that has the resources to spend.

[AllentownJake]

5. Not exactly true

Hoover's stance on the economy was based largely on volunteerism. From before his entry to the presidency, he was a proponent of the concept that public-private cooperation was the way to achieve high long-term growth. Hoover feared that too much intervention or coercion by the government would destroy individuality and self-reliance, which he considered to be important American values. Both his ideals and the economy were put to the test with the onset of The Great Depression. At the outset of the Depression, Hoover claims in his memoirs that he rejected Treasury Secretary Mellon's suggested "leave-it-alone" approach.<35> Critics, such as liberal economist Paul Krugman, who wrote <[The Conscience of a Liberal>, contend that Hoover shared Mellon's laissez-faire viewpoint.<36> Hoover made attempts to stop "the downward spiral" of the Great Depression by hoping that the private sector would recover largely through its own volition. <37> His policies, however, had little or no effect. As the economy quickly deteriorated in the early years of the Great Depression, Hoover declined to pursue legislative relief, believing that it would make people dependent on the federal government. Instead, he organized a number of voluntary measures with businesses, encouraged state and local government responses, and accelerated federal building projects. Only toward the end of his term did he support a series of legislative solutions.

Sound familiar?

[mistertrickster]

12. Okay, you're right. Good analysis. I over-simplified. nt

[TexasObserver]

6. Indeed, much like "bleeding" an anemic person was sure to end badly.

Hoover's approach is an anachronism, much like the former "medical" practice of bleeding.

[AllentownJake]

15. Hoover gets a bad rap

I think we both know there is little a President can do other than through regulation in good times to effect an economy and in re-regulation during bad times.

[TexasObserver]

16. dupe

[AllentownJake]

18. Part 1 of the equation

Part 2 of the equation is regulation.

You can spend all the money in the world, if the business enviroment is the same one that caused a crisis you are essentially throwing good money after bad.

The Too Big to bank proposal by Geithner looks a lot like the NCC where private industry polices itself instead of a strong fedearl oversight commission or roling up the responsibility in an organization like the FDIC.

Putting the Treasury Secretary at the helm of such a program ensures that this will become a political office instead of an independent commission.

I don't trust Geithner with this responsibility. I would trust even Hank Paulson less. So if I don't trust the Treasury Secs. of the last two administrations of oversight it probably isn't the best proposal in the world.

[TexasObserver]

17. Hoover didn't understand the need for major deficit spending to fund govt programs.

He got the need for government programs, but he tried to get there being too fiscally tight.

[AllentownJake]

9. and there is this

Franklin D. Roosevelt blasted the Republican incumbent for spending and taxing too much, increasing national debt, raising tariffs and blocking trade, as well as placing millions on the dole of the government. Roosevelt attacked Hoover for "reckless and extravagant" spending, of thinking "that we ought to center control of everything in Washington as rapidly as possible," and of leading "the greatest spending administration in peacetime in all of history."<45> Roosevelt's running mate, John Nance Garner, accused the Republican of "leading the country down the path of socialism".<46>

But we tend to re-write history.

[mistertrickster]

14. Hehe, interesting! I never saw THAT before. nt

[mistertrickster]

3. National debt as a % of GDP went DOWN under Carter and Clinton.

It went up massively under Reagan (doubled) and somewhat under Bush. Half of the Bush's debt by the end of Oct 2006 was a direct result of his tax cuts for the rich, as even the CONservative AEI admitted.

If you want to lower the national debt, keep a Democrat in the White House.

[TexasObserver]

7. True. And Carter and Clinton are the last two presidents to balance a budget.

[dtotire]

8. Check out this graph on debt as a percentage of GDP

http://zfacts.com/p/318.html

[TexasObserver]

11. Yeah. They never mention that it was +100% debt that pulled us out of the Depression.

[sinkingfeeling]

10. True. Now remind them that the 2009 budget and TARP came from Bush.

[melm00se]

13. this chart will help

the challenging part of the argument will be how it will be paid down.

You are partially correct on the statement that the US is less of a heavy industry country than it was in the 40/50/60's, the part that is missing is that the US, during the same time period, was the only country with an undamaged manufacturing/heavy industrial economy that had no less than 5 extremely hungry export markets (West Germany, Japan, Italy, France and Great Britain) to accept the massive industrial output of the US plus the US domestic market that had gone 5+ years without any significant durable goods replacement inventory. These available markets prevented economic problems similar to those faced in the late teens and early 20's both here and in Europe.

also be prepared for this part of the argument (which is mostly true): it is this massive growth spurt that offset the impact of 80%+ tax rates on the top of the income scale on economic production.

If the world was coming out of the same environment as post-WWII, the concerns would not be as big but in the world today there is no 1 single industrial superpower and the rest of the world a market to that economic engine with absolutely required purchases.

This economic conundrum (!) has no simplistic solution (like raising taxes on the rich which seems to be the solution du jour) and will require a lot of different options, some palatable to the Progressive and some not.