No sooner had the president signed the new debt limit, and then up went federal debt — to $14.58 trillion.
Brave new world, that has such numbers in it.
What’s so amazing about this number is that it is larger than last year’s GDP of $14.53 trillion.
I know, Gross Domestic Product figures are a mess, and don’t measure exactly what we think they measure. But they are the most popular form of national income accounting, and indicate, in a very rough sense, “the size of the economy” for a given year.
And, boy, for our federal government to owe the amount of the whole economy it rules, and more — what a milestone!
The last time debt was more than GDP? The late 1940s.
Recovery happened swiftly, then. This should give us hope: There is a way out.
But remember: World War II didn’t bring us out of the Great Depression, the end of the war did.
And remember, further: Most of the big names in economics — by then, Keynesians all — had predicted a huge economic downturn as government spending plummeted and wartime regulations (chiefly wage and price controls) hit the dustbin.
Bad prediction. The economy soon took off.
Why? Less government spending, less regulation.
Alas, I don’t see that happening, today or tomorrow. With the budget deal, overall spending is now set to rise still further. The medical industry — a huge growth sector for government spending as well as private spending — is set for increasing regulation.
Brace yourself.
This is Common Sense. I’m Paul Jacob.
3 replies on “Big Government Bigger Than All Else”
Up until 1930, except for the spikes caused by wars, the percent of GDP that the federal government took for its own operation, as a percentage, had been essentially flat. In the 20s, after the spike from WWI had settled down, we had the strongest economy in the world and the lowest unemployment ever recorded in this country, less than 1% in many places. We did not have this at the end of Woodrow Wilson’s reign. By the time he had left office, the stock market and real estate markets had lost half of their value and the unemployment rates were about 13% with the military returning from Europe. Harding cut government spending in half, cut the national debt by a third, cut taxes in every income category, and got the government OUT of the job creating business. Things turned around in a hurry without the weight of the government. The real estate and stock markets regained all of their lost value in a year. Employment soared.
And the federal government wasn’t in the regulating business either. That area of responsibility, as it specifies in the Consitution, was being handled quite well by the states and the local communities.
BOHICA
I wish the GOP would state what regulations they find so onerous. I wonder if they will be air traffic control so pilots can watch out for themselves; or meat inspection which crosses state lines; or is it drug testing so we can take our chances on prescriptions? Has anyone read “The Jungle” recently?
I question whether the absence of regulation got the economy going. Don’t forget that in 1945 most of the industrial world had been destroyed in war. We were the only game in town.