5 ms·

Charting the American Debt Crisis

70 points by geekfactor 15y ago

deleted 15y ago
[deleted]
cryptoz 15y ago
Why aren't the wars mentioned under Obama as well? He actively chose to continue fighting both of them, spending huge amounts of money. Sure, he didn't start them but he's had plenty of opportunities to stop them and he hasn't. It's clear that most of the blame is to G. W. Bush. But neglecting to mention that Obama is fighting two wars seriously irks me.
- xradionut 15y ago
  It's not like he has a magic wand or is a dictator. Obama is beholden to the same group of monied interests as the rest of capitol hill. If the large banks, oil companies and corporations thought it would be in their interest to end the wars, the troops would be home. Plus what are you going to do with the sections of economy that depend on these wars? There's no plan to shift any funds or manpower to any peaceful purposes.
  - cryptoz 15y ago
    > It's not like he has a magic wand or is a dictator. He does have a magic wand, in the form of a pen that he can use to veto new military spending. He hasn't used it. > If the large banks, oil companies and corporations thought it would be in their interest to end the wars, the troops would be home. No. If Obama chose not to renew the various war spending bills, the troops would be home. > Plus what are you going to do with the sections of economy that depend on these wars? This sentence is confusing to me. The wars cost us money, money that we don't have any more and that is causing us huge amounts of trouble right now. I'm not sure what will happen to those sections. But they didn't exist 10 years ago, they exist now for the sole purpose of killing people, and they are using money that isn't theirs. Surely we can do away with them.
    - yummyfajitas 15y ago
      This sentence is confusing to me. Xradionut is using the broken window principle - if we break stuff and then rebuild it, we've increased GDP and therefore helped everyone. If we stop doing this, we might ruin the economy. http://en.wikipedia.org/wiki/Parable_of_the_broken_window http://en.wikipedia.org/wiki/Parable_of_the_broken_window In other news, the Tsunami was great news for Japan.
      - jordanb 15y ago
        It's not that the military spending is good for the economy overall, but rather that it's good for a large group of very powerful people who wield far more influence than any one president.
      - xradionut 15y ago
        : rolls eyes : No. I'm a life long student of history and politics that was raised by a pair of history professors. I grew up watching news about the Vietnam War and the Nixon debacle. (Yes, I'm an old cynical fart.) Most people evaluate political news with the attention span of a day-trader or ferret instead of spending the time researching the causes and tracing the money. Obama can't fulfill his promises nor do the morally and legally right actions to "fix" the situation. His hands are tied by his political obligations. That's why the general public is going to be fked some more. We've basically turned back a generation of progress in a generation.
    - xradionut 15y ago
      Politically he can't veto spending, even if legally he can. The reality is that the President is mostly a figurehead, bought and paid for just like Congress and trapped by chains of patronage and party. That's why nothing changes. Pay attention to who his advisers are. Notice who has benefited over the last three decades of political change. Read some real history. > Surely we can do away with them. What are you going to do with the military and their families? To the contractors and suppliers? And the jobs and businesses that relies on the war gravy train? You need a "real" stimulus and infrastructure program. Otherwise you are looking at an much larger number of unemployed group of people, many which are soldiers. We have some real big problems in the United States, which will not be solved, because it's not interests of the people in control to solve them.
  - freerobby 15y ago
    The wars, combined, only comprise about $1T of our deficit.
    - cryptoz 15y ago
      "only"? $1,000,000,000,000 is a lot of money, even in the context of $14,300,000,000,000. Also, do you have a source for that $1 trillion figure? I think it's higher than that. Not to change the debate, but if Obama really cared about saving money he not only would have ended the wars in 2009 but also cut military spending significantly - we could keep the largest military in the world and still cut its spending by $3 or $4 hundred billion. (http://en.wikipedia.org/wiki/List_of_countries_by_military_expenditures http://en.wikipedia.org/wiki/List_of_countries_by_military_e...)
    - DannoHung 15y ago
      Of the deficit? That's huge. What do they comprise in terms of the debt?
- cdavid 15y ago
  Actually, most of the worsening debt situation is due to the financial crisis started 3 years ago, but this would not fit into a story which benefit any political side (http://www.cepr.net/index.php/blogs/beat-the-press/president-obama-doesnt-understand-the-origins-of-the-deficit http://www.cepr.net/index.php/blogs/beat-the-press/president...). Framing it as tax cut, spending cut and other morally-loaded terms unfortunately works well in most countries facing this issue...
- roc 15y ago
  > "Why aren't the wars mentioned under Obama as well?" For the same reason that Reagan's tax cuts aren't mentioned under every subsequent administration. When you chart a timeline of policy changes, it's implied that the responsibility for continuing those policies is inherited by each subsequent administration until a reversal (if any).
  - OstiaAntica 15y ago
    Obama has escalated the war in Afghanistan, and also the adventure in Libya.
- sethg 15y ago
  Obama has wound down the Iraq war and is planning to wind down Afghanistan; the Reid spending-cut proposal takes these into account when projecting how spending can be reduced over the next decade.
shawndumas 15y ago
"President Obama asserted[1]: '[T]he deficit was on track to top $1 trillion the year I took office.' This is seriously mistaken. The Congressional Budget Office's projections from January of 2008, the last ones made before it recognized the housing bubble and the implications of its collapse, showed a deficit of just $198 billion for 2009, the year President Obama took office. In other words, the deficit was absolutely not 'on track to top $1 trillion.'"[2] ---- [1]: http://blogs.wsj.com/washwire/2011/07/25/obamas-address-to-the-nation-on-debt-talks/ http://blogs.wsj.com/washwire/2011/07/25/obamas-address-to-t... [2]: http://www.cepr.net/index.php/blogs/beat-the-press/president-obama-doesnt-understand-the-origins-of-the-deficit http://www.cepr.net/index.php/blogs/beat-the-press/president...
- peterstjohn 15y ago
  Anything from Janurary 2009, which is actually when he took office? http://cbo.gov/ftpdocs/99xx/doc9957/01-07-Outlook.pdf http://cbo.gov/ftpdocs/99xx/doc9957/01-07-Outlook.pdf (Page 11: "CBO currently projects that the deficit this year will total $1.2 trillion, or 8.3 percent of GDP. That total, however, does not include the effects of any future legislation.")
- ojbyrne 15y ago
  From the second link: "The huge deficits came about entirely as a result of the economic downturn brought about by the collapse of the housing bubble." Since the housing bubble and the collapse happened before Jan 2008, and was not _recognized_ (which is being used as an accounting term - i.e. put on paper) - using the phrase "on track" to include that subsequent recognizing seems perfectly reasonable.
- freerobby 15y ago
  He was citing what the numbers actually were. The CBO's projections a year earlier were way off because they had overestimated GDP growth and their employment numbers proved to be overly optimistic.
bavcyc 15y ago
No article on the US debt is going to be neutral. Someone posted an interesting video the other day: http://www.kpcb.com/usainc/ http://www.kpcb.com/usainc/ The Heritage Foundation has a different take on it: http://blog.heritage.org/2011/07/28/the-truth-about-obamas-budget-deficits-in-pictures/ http://blog.heritage.org/2011/07/28/the-truth-about-obamas-b... Which shows that Obama is more to blame than Bush. Situation is normal as each side is blaming the other side. John Mauldin has a book called Endgame, which is worth reading through Interlibrary loan. It presents some interesting ideas. Think we need a new super post that just allows everyone to post articles on who's responsible for the US debt underneath.
- davidw 15y ago
  > Think we need a new super post that just allows everyone to post articles on who's responsible for the US debt underneath. How about this as an alternative suggestion: we keep politics off of HN?
mckoss 15y ago
Excellent visual. I've not seen this explained as clearly in any other news source. It seems so simple to do; I chalk it up the kind of lazy Journalism we have today.
btilly 15y ago
http://www.whitehouse.gov/infographics/us-national-debt http://www.whitehouse.gov/infographics/us-national-debt provides an interesting alternate take. Rather than chart by when the debt arrived, it charts by which policies caused the debt.
TamDenholm 15y ago
I know i'm making a glib comment on an extremely complicated issue, but i really wish i could just raise my own credit limit over and over again in order to keep a good credit rating.
- sethg 15y ago
  The debt ceiling is not analogous to your credit limit. Your credit limit is imposed by the institutions that loan money to you. The US debt ceiling is imposed by Congress. The closest analogy to your credit limit is the interest rate for Treasury bills; as investors become more concerned that the US will either become insolvent or inflate its way out of debt, they will demand a higher interest rate for that money. T-bill rates are as low as they’ve been since the 1940s, so clearly the markets are happy to loan the government money; Congress is just arguing about how much to allow itself to borrow.
  - nhaehnle 15y ago
    Actually, neither is really analogous to an individual credit limit. As you correctly point out, the debt ceiling is an entirely voluntary constraint that the US government imposes on itself (if, as is appropriate from an economics point of view, you take the government to be the union of executive, legislature and judicative branches). The interest rate for short-term T-bills necessarily follows very closely the monetary policy targets set by the Fed. In fact, the Fed and Treasury cooperate all the time to control the supply and demand of T-bills, in order to make sure that the interest rate established by the market matches the target rate - that's just part of normal day-to-day operations, see e.g. http://pragcap.com/resources/understanding-modern-monetary-system http://pragcap.com/resources/understanding-modern-monetary-s... Long-term interest rates behave slightly differently, and some people believe that useful information about the state of the economy can be extracted from them. This is still not analogous to a credit limit, because those long-term rates can never actually constrain the US government financially. After all, Fed and Treasury can always work together to reduce the supply of long-term bonds, which will drive down the interest rate.
DanielBMarkham 15y ago
Enough with the propaganda graphics. Please. Political theory and hundreds of years of tradition holds that the legislature, not the President, is solely responsible for spending. That's why we have legislatures. That's their job -- to exert popular control over taxes and spending. It's also a fact that the people you currently elect are responsible for the spending and policies that go on today. If new guys couldn't change policies and spending, then why have elections at all? Please. Enough of this already. You want me to sign a letter saying your guy is awesome? Happy to do it. Just please cease and desist the posturing.
- hugh3 15y ago
  Indeed. And it's not even a discussion of any actual utility, it's just finger-pointing. The question of precisely how we should dole out blame for the debt problem (actual answer: a big ol' helping of blame for everybody, including politicians of both parties and the population in general who failed to make it a political issue) is completely irrelevant for the question which needs to be debated: how to solve the damn debt problem. I'm not really interested in helping politicians out as they try to shift blame onto each other. They're pretty good at doing that kind of thing themselves.
- nimblegorilla 15y ago
  What do you mean by propaganda graphics? That article seems pretty factual to me. If we can't have articles like that then it seems like you are arguing for a public informed solely by talking-head soundbites. Also, the president has some influence on policy debates and can veto any spending bill congress passes. I don't think it's accurate to say the legislature is solely responsible for spending.
  - OstiaAntica 15y ago
    In the U.S. the legislature really does hold the power of the purse. The substantial majority of spending is through entitlements, tax code distributions, and debt repayments, which are all on autopilot. The President can veto year-to-year discretionary spending, but the veto can be overridden, which damages the president's credibility and so that situation is avoided by capitulating.
hugh3 15y ago
Does this graph take interest into account? For instance, if the deficit was one trillion dollars at the end of President Smith's administration and two trillion dollars at the end of President Jones' administration eight years later, how is the blame apportioned between Smith and Jones? A large fraction of Jones' deficit is due to the fact that he's stuck paying the interest incurred under President Smith. So a fifty-fifty assignment of blame is wrong. On the other hand, we can hardly absolve President Jones for his failure to pay off the debts incurred by President Smith, either. Of course, as DanielBMarkham has said, the whole idea of blaming presidents for deficits is rather silly, when it's really congress that writes the budgets. (Not that presidents can be absolved of blame either...)
MaysonL 15y ago
What debt crisis? THERE IS NO DEBT CRISIS. What we have here is a Congressional insanity crisis. And a media fail crisis.
- OstiaAntica 15y ago
  Surely borrowing 41 cents of every dollar you are spending, going on 4 years now, while at the same time completely failing to prepare for the baby boom generation's retirement, is a crisis.
grannyg00se 15y ago
So on May16 there were extraordinary measures to inject funds into the budget. What extraordinary measures were taken to ensure that the budget would be closer to being balanced going forward? It seems like there is a never ending solution of debt limit increases going back decades. I suppose things need to get broken very badly before the drastic changes that are needed can be made. Until the general public feels real consequences that are directly attributable to this spend more mentality, nothing is likely to change.

70 points by geekfactor 15y ago

deleted 15y ago

[deleted]

Why aren't the wars mentioned under Obama as well? He actively chose to continue fighting both of them, spending huge amounts of money. Sure, he didn't start them but he's had plenty of opportunities to stop them and he hasn't. It's clear that most of the blame is to G. W. Bush. But neglecting to mention that Obama is fighting two wars seriously irks me.

xradionut 15y ago
It's not like he has a magic wand or is a dictator. Obama is beholden to the same group of monied interests as the rest of capitol hill. If the large banks, oil companies and corporations thought it would be in their interest to end the wars, the troops would be home. Plus what are you going to do with the sections of economy that depend on these wars? There's no plan to shift any funds or manpower to any peaceful purposes.
- cryptoz 15y ago
  > It's not like he has a magic wand or is a dictator. He does have a magic wand, in the form of a pen that he can use to veto new military spending. He hasn't used it. > If the large banks, oil companies and corporations thought it would be in their interest to end the wars, the troops would be home. No. If Obama chose not to renew the various war spending bills, the troops would be home. > Plus what are you going to do with the sections of economy that depend on these wars? This sentence is confusing to me. The wars cost us money, money that we don't have any more and that is causing us huge amounts of trouble right now. I'm not sure what will happen to those sections. But they didn't exist 10 years ago, they exist now for the sole purpose of killing people, and they are using money that isn't theirs. Surely we can do away with them.
  - yummyfajitas 15y ago
    This sentence is confusing to me. Xradionut is using the broken window principle - if we break stuff and then rebuild it, we've increased GDP and therefore helped everyone. If we stop doing this, we might ruin the economy. http://en.wikipedia.org/wiki/Parable_of_the_broken_window http://en.wikipedia.org/wiki/Parable_of_the_broken_window In other news, the Tsunami was great news for Japan.
    - jordanb 15y ago
      It's not that the military spending is good for the economy overall, but rather that it's good for a large group of very powerful people who wield far more influence than any one president.
    - xradionut 15y ago
      : rolls eyes : No. I'm a life long student of history and politics that was raised by a pair of history professors. I grew up watching news about the Vietnam War and the Nixon debacle. (Yes, I'm an old cynical fart.) Most people evaluate political news with the attention span of a day-trader or ferret instead of spending the time researching the causes and tracing the money. Obama can't fulfill his promises nor do the morally and legally right actions to "fix" the situation. His hands are tied by his political obligations. That's why the general public is going to be fked some more. We've basically turned back a generation of progress in a generation.
  - xradionut 15y ago
    Politically he can't veto spending, even if legally he can. The reality is that the President is mostly a figurehead, bought and paid for just like Congress and trapped by chains of patronage and party. That's why nothing changes. Pay attention to who his advisers are. Notice who has benefited over the last three decades of political change. Read some real history. > Surely we can do away with them. What are you going to do with the military and their families? To the contractors and suppliers? And the jobs and businesses that relies on the war gravy train? You need a "real" stimulus and infrastructure program. Otherwise you are looking at an much larger number of unemployed group of people, many which are soldiers. We have some real big problems in the United States, which will not be solved, because it's not interests of the people in control to solve them.
- freerobby 15y ago
  The wars, combined, only comprise about $1T of our deficit.
  - cryptoz 15y ago
    "only"? $1,000,000,000,000 is a lot of money, even in the context of $14,300,000,000,000. Also, do you have a source for that $1 trillion figure? I think it's higher than that. Not to change the debate, but if Obama really cared about saving money he not only would have ended the wars in 2009 but also cut military spending significantly - we could keep the largest military in the world and still cut its spending by $3 or $4 hundred billion. (http://en.wikipedia.org/wiki/List_of_countries_by_military_expenditures http://en.wikipedia.org/wiki/List_of_countries_by_military_e...)
  - DannoHung 15y ago
    Of the deficit? That's huge. What do they comprise in terms of the debt?
cdavid 15y ago
Actually, most of the worsening debt situation is due to the financial crisis started 3 years ago, but this would not fit into a story which benefit any political side (http://www.cepr.net/index.php/blogs/beat-the-press/president-obama-doesnt-understand-the-origins-of-the-deficit http://www.cepr.net/index.php/blogs/beat-the-press/president...). Framing it as tax cut, spending cut and other morally-loaded terms unfortunately works well in most countries facing this issue...
roc 15y ago
> "Why aren't the wars mentioned under Obama as well?" For the same reason that Reagan's tax cuts aren't mentioned under every subsequent administration. When you chart a timeline of policy changes, it's implied that the responsibility for continuing those policies is inherited by each subsequent administration until a reversal (if any).
- OstiaAntica 15y ago
  Obama has escalated the war in Afghanistan, and also the adventure in Libya.
sethg 15y ago
Obama has wound down the Iraq war and is planning to wind down Afghanistan; the Reid spending-cut proposal takes these into account when projecting how spending can be reduced over the next decade.

shawndumas 15y ago

"President Obama asserted[1]: '[T]he deficit was on track to top $1 trillion the year I took office.' This is seriously mistaken. The Congressional Budget Office's projections from January of 2008, the last ones made before it recognized the housing bubble and the implications of its collapse, showed a deficit of just $198 billion for 2009, the year President Obama took office. In other words, the deficit was absolutely not 'on track to top $1 trillion.'"[2] ---- [1]: http://blogs.wsj.com/washwire/2011/07/25/obamas-address-to-the-nation-on-debt-talks/ http://blogs.wsj.com/washwire/2011/07/25/obamas-address-to-t... [2]: http://www.cepr.net/index.php/blogs/beat-the-press/president-obama-doesnt-understand-the-origins-of-the-deficit http://www.cepr.net/index.php/blogs/beat-the-press/president...

peterstjohn 15y ago
Anything from Janurary 2009, which is actually when he took office? http://cbo.gov/ftpdocs/99xx/doc9957/01-07-Outlook.pdf http://cbo.gov/ftpdocs/99xx/doc9957/01-07-Outlook.pdf (Page 11: "CBO currently projects that the deficit this year will total $1.2 trillion, or 8.3 percent of GDP. That total, however, does not include the effects of any future legislation.")
ojbyrne 15y ago
From the second link: "The huge deficits came about entirely as a result of the economic downturn brought about by the collapse of the housing bubble." Since the housing bubble and the collapse happened before Jan 2008, and was not _recognized_ (which is being used as an accounting term - i.e. put on paper) - using the phrase "on track" to include that subsequent recognizing seems perfectly reasonable.
freerobby 15y ago
He was citing what the numbers actually were. The CBO's projections a year earlier were way off because they had overestimated GDP growth and their employment numbers proved to be overly optimistic.

bavcyc 15y ago

No article on the US debt is going to be neutral. Someone posted an interesting video the other day: http://www.kpcb.com/usainc/ http://www.kpcb.com/usainc/ The Heritage Foundation has a different take on it: http://blog.heritage.org/2011/07/28/the-truth-about-obamas-budget-deficits-in-pictures/ http://blog.heritage.org/2011/07/28/the-truth-about-obamas-b... Which shows that Obama is more to blame than Bush. Situation is normal as each side is blaming the other side. John Mauldin has a book called Endgame, which is worth reading through Interlibrary loan. It presents some interesting ideas. Think we need a new super post that just allows everyone to post articles on who's responsible for the US debt underneath.

davidw 15y ago
> Think we need a new super post that just allows everyone to post articles on who's responsible for the US debt underneath. How about this as an alternative suggestion: we keep politics off of HN?

mckoss 15y ago

Excellent visual. I've not seen this explained as clearly in any other news source. It seems so simple to do; I chalk it up the kind of lazy Journalism we have today.

btilly 15y ago

http://www.whitehouse.gov/infographics/us-national-debt http://www.whitehouse.gov/infographics/us-national-debt provides an interesting alternate take. Rather than chart by when the debt arrived, it charts by which policies caused the debt.

TamDenholm 15y ago

I know i'm making a glib comment on an extremely complicated issue, but i really wish i could just raise my own credit limit over and over again in order to keep a good credit rating.

sethg 15y ago
The debt ceiling is not analogous to your credit limit. Your credit limit is imposed by the institutions that loan money to you. The US debt ceiling is imposed by Congress. The closest analogy to your credit limit is the interest rate for Treasury bills; as investors become more concerned that the US will either become insolvent or inflate its way out of debt, they will demand a higher interest rate for that money. T-bill rates are as low as they’ve been since the 1940s, so clearly the markets are happy to loan the government money; Congress is just arguing about how much to allow itself to borrow.
- nhaehnle 15y ago
  Actually, neither is really analogous to an individual credit limit. As you correctly point out, the debt ceiling is an entirely voluntary constraint that the US government imposes on itself (if, as is appropriate from an economics point of view, you take the government to be the union of executive, legislature and judicative branches). The interest rate for short-term T-bills necessarily follows very closely the monetary policy targets set by the Fed. In fact, the Fed and Treasury cooperate all the time to control the supply and demand of T-bills, in order to make sure that the interest rate established by the market matches the target rate - that's just part of normal day-to-day operations, see e.g. http://pragcap.com/resources/understanding-modern-monetary-system http://pragcap.com/resources/understanding-modern-monetary-s... Long-term interest rates behave slightly differently, and some people believe that useful information about the state of the economy can be extracted from them. This is still not analogous to a credit limit, because those long-term rates can never actually constrain the US government financially. After all, Fed and Treasury can always work together to reduce the supply of long-term bonds, which will drive down the interest rate.

DanielBMarkham 15y ago

Enough with the propaganda graphics. Please. Political theory and hundreds of years of tradition holds that the legislature, not the President, is solely responsible for spending. That's why we have legislatures. That's their job -- to exert popular control over taxes and spending. It's also a fact that the people you currently elect are responsible for the spending and policies that go on today. If new guys couldn't change policies and spending, then why have elections at all? Please. Enough of this already. You want me to sign a letter saying your guy is awesome? Happy to do it. Just please cease and desist the posturing.

hugh3 15y ago
Indeed. And it's not even a discussion of any actual utility, it's just finger-pointing. The question of precisely how we should dole out blame for the debt problem (actual answer: a big ol' helping of blame for everybody, including politicians of both parties and the population in general who failed to make it a political issue) is completely irrelevant for the question which needs to be debated: how to solve the damn debt problem. I'm not really interested in helping politicians out as they try to shift blame onto each other. They're pretty good at doing that kind of thing themselves.
nimblegorilla 15y ago
What do you mean by propaganda graphics? That article seems pretty factual to me. If we can't have articles like that then it seems like you are arguing for a public informed solely by talking-head soundbites. Also, the president has some influence on policy debates and can veto any spending bill congress passes. I don't think it's accurate to say the legislature is solely responsible for spending.
- OstiaAntica 15y ago
  In the U.S. the legislature really does hold the power of the purse. The substantial majority of spending is through entitlements, tax code distributions, and debt repayments, which are all on autopilot. The President can veto year-to-year discretionary spending, but the veto can be overridden, which damages the president's credibility and so that situation is avoided by capitulating.

hugh3 15y ago

Does this graph take interest into account? For instance, if the deficit was one trillion dollars at the end of President Smith's administration and two trillion dollars at the end of President Jones' administration eight years later, how is the blame apportioned between Smith and Jones? A large fraction of Jones' deficit is due to the fact that he's stuck paying the interest incurred under President Smith. So a fifty-fifty assignment of blame is wrong. On the other hand, we can hardly absolve President Jones for his failure to pay off the debts incurred by President Smith, either. Of course, as DanielBMarkham has said, the whole idea of blaming presidents for deficits is rather silly, when it's really congress that writes the budgets. (Not that presidents can be absolved of blame either...)

MaysonL 15y ago

What debt crisis? THERE IS NO DEBT CRISIS. What we have here is a Congressional insanity crisis. And a media fail crisis.

OstiaAntica 15y ago
Surely borrowing 41 cents of every dollar you are spending, going on 4 years now, while at the same time completely failing to prepare for the baby boom generation's retirement, is a crisis.

grannyg00se 15y ago

So on May16 there were extraordinary measures to inject funds into the budget. What extraordinary measures were taken to ensure that the budget would be closer to being balanced going forward? It seems like there is a never ending solution of debt limit increases going back decades. I suppose things need to get broken very badly before the drastic changes that are needed can be made. Until the general public feels real consequences that are directly attributable to this spend more mentality, nothing is likely to change.