Fiscal Sanity Check

Garen Yegparian

BY GAREN YEGPARIAN

Now that the House of Representatives’ shenanigans over the U.S. government’s debt ceiling increase are a “distant” two week memory, the “Tea Party downgrade” has hit the United States’ credit rating, and the stock market is hollering its disapproval, let’s take a very brief look at reality.

Please see the accompanying table which lists the U.S. gross domestic product (GDP), debt, and government expenditures from the eighteenth century to date.  Two notes regarding the expenditures: 1- the annual expenditures were unavailable in my source prior to 1901; and 2- the figures prior to 1933 are based on the “administrative” vs. “unified” budget concept, meaning that special funds, such as social security, are not included.

Much ado was made about the debt.  As a “corollary” all kinds of noise arose over cutting expenditures.  Analogously, many have latched on to the hangman’s noose known as “the balanced budget” and are eager to put the country’s neck in it.

But look at the debt in terms of the country’s GDP, a measure of the size of the economy.  You might be shocked, in light of all the fireworks over its size, that it is far from the largest it has been (see the WWII) years.  Remember to look at the percentages, not just dollars of the day.  And, the war era is a very apt period to compare, since the U.S. has been mired in two wars for almost a decade, a far longer period than WWII.  So we should expect the debt to be high.

Click to enlarge

Similarly, the government’s expenditures would be expected to increase in times of war, and they have.  But also, there has been the need to repair the damage done to the economy by the reckless bankers, so that has added to the government’s costs.  Despite both these factors, government expenditures as a percentage of GDP are not off the historical scale.

Finally, as you can see in the table, even the government’s annual deficits are not out of line with historical precedents given the wars and financial implosion.

So why all the fuss?  People are scared, worried by the joblessness prevalent in the country.  They are also being riled up by a bunch of know nothings, reminiscent of the mid-1800s movement, that today goes under the banner of the “Tea Party”.  These people seem to ignore all analysis and recommendations by those who study economies.  They are blinded by a few basic, ill-conceived, notions that sound very good at first blush.  So, it’s easy to get citizens to subscribe to these simplifications.

The result is chaos, damage to the country’s economy, and even members of our community being carried along in the wave of ignorance.  This is particularly frightening because it is a type of mob mentality.  Remember, again, that it is the possibility of whipping up mobs that enabled the Turkish leadership, over the centuries, to deprive Armenians of land and liberty.  How dare we subscribe to such mentalities?

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6 Comments

  1. AG said:

    Thanks to democracy, it’s the “will of the people” (a.k.a Tea Party and the like) that wins the argument, not logical sense. Democracy is, by far, the best form of government today but it has downsides. This is one of them. Subject matter experts do not make the decisions. Rather, It’s the stupid politicians who are interested in re-election than common sense.

  2. Berge Minasian said:

    To the Editor’
    I’ve come to the point in my life where I can no longer sit by quitely as our Armenian Press subjects us to biased diatribes against those of us who are political conservatives and yes maybe even “tea party conservatives.” I urge you to take a more “balanced and fair” editorial policy when it concerns political issues in our country. And to Garen, your position might be more worthy of consideration if your leave out the name calling. Because we differ in our political beliefs we are not “ignorant.”

  3. Vartan Yacoubian said:

    Equating the Tea Party’s belief system to that of the 1915 Turkish leadership is insulting to those who perished under that regime. Shame on you Garen, for mitigating the ‘evil’ that decimated our people to the level of these ‘know-nothings”. Such generalization is as dangerous, because it misleads people also. Be careful not to group all of us who do not subscibe to your liberal religion into the same pot. I might be a fiscal conservative, but I really don’t see eye to eye with a murduring barbarian – morally, politically, or otherwise.

  4. manooshag said:

    QUESTION… does the Schmidt $500,000 Turkish ‘payment’ to a member of our USA Congress… has this appeared in the American press… anywhere??

  5. ArdeVast Atheian said:

    Garen, I have been a charter member of the Tea Party from the beginning. Nowhere thru its meetings and its protests have I seen any advocacy other than not violating our constitution and returning to free enterprise and free market economies that made this country great.
    We don’t need your lectures. For the past fifty years we have been experiencing your style of socialism. We’ve all seen where it has taken us.
    You should not use Asbarez as a forum to regurgitate the propaganda and misinformation of the left that has taken us through.

  6. Harout said:

    This article is very biased. If you truly knew your history, and if you truly knew what the Tea Party stands for, you wouldn’t be making the connections that you made in this article. Rubbish! I want news, not your blind opinion.

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