The average annual deficit for the last four years has been $1 trillion plus change. With Obama back in office this will probably be the norm for at least four more years. Forget about all the microscopic arguments in DC about the $85 billion tax on the wealthy or the $65 billion sequestration.
Look at the $1 trillion macroscopic picture.
The total output of the U.S. is about $12 trillion every year, our Gross Domestic Product (GDP). Economists all say our economy is growing at a rate of 2%, meaning our economic output is increasing by about $250 billion a year. Running a $1 trillion deficit means our economic output is actually decreasing $750 billion a year or negative 6%.
The liberal economic community looks at everything with a rosy optimistic glow. They look at all these numbers and say our total output is actually $12 trillion minus the $1 trillion deficit equals $11 trillion. $250 billion of that means our economy is growing at 2.25%.
All politics aside, (1) the U.S. economy is an $11 trillion economy and (2) the annual variation from that norm is $1 trillion in government spending that is (3) a real negative plus an annual increase of $250 billion equals (4) an annual GDP with a net decrease of $750 billion which turns out to be (5) a negative annual 6.8% decrease in GDP.
Or course, everybody on Wall Street and K Street in Washington knows this. They just don’t want Joe Consumer to know it. 70% of the economy comes from consumer spending, and they have to keep consumer spending up. If people realized we’re actually in the middle of a deep recession they wouldn’t spend. They would pay down their debts and put more money in savings.
Economists hate thrifty consumers.
Graphic courtesy of Wikipedia.
