To judge only by cable news, the debt problem that the United States is facing threatens to destroy the entire universe RIGHT AFTER THE COMMERCIAL BREAK. But how bad is it, in historical context? And, more importantly, what's driving the debt?
The talented folks at Elefint Designs sent us a rather detailed chart that attempts to tease some of these questions apart. And perhaps the most surprising thing is that we're actually starting to bend the curve of debt growth.[Click to enlarge]
As you can see in the chart above, the debt is in fact at levels not too far off their historical highs, which resulted from the cost of World War II. (And in that time period, it was the great economic boom of the 1950s which swelled the amount of taxes collected by the government — and in turn helped us out from under the debt.)
But the most surprising thing is revealed in the very tail end of that chart, which represents the last couple of years:
The debt growth is actually slowing — which is the precise opposite of what you'd expect if you're listening to all the screaming cable-news morons. We're not in a good place by any means, and the debt isn't going down quite yet — but we're no longer seeing hockey-stick growth.
What the graph doesn't quite flesh out is how the debt got to be so bad. The short answer? The wars started by President George W. Bush and his tax-cuts for Americans making over $250,000 a year. All of this is laid out rather brilliantly in this chart from The New York Times:
Winding down those wars and those tax cuts does indeed look like the smartest thing we could do to begin addressing the debt — after all, they were the two things that we just did to create this debt. If this is truly the most pressing issue in the land — as the GOP would have you believe — why wouldn't you simply undo them?
But it's a truly bizarre thing that we almost never hear about any of this: Washington has been very happy to have a food fight involving Social Security and Medicare reforms which will never happen. (Here, both political parties here have been equally bad, with the Republicans proposing extraordinary cuts and the Democrats usually insisting on no cuts whatsoever. On the tax cuts, Republicans have been happy to say that they're "just" responsible for $700 billion in lost revenue.)
If you were looking to blame President Obama for something, it would be this: He folded like a leaf during the debate over extending the Bush tax cuts for the top 2% of income earners. And that eliminated his administration's only real chance to raise revenues — and his own best chance to say that he was dealing seriously with the budget shortfalls we're experiencing.
Washington's lack of seriousness about the problem looks incredible when you see these charts. And there's plenty of blame to spread among both parties.