Debt and stimulus
Well, duh. Borrowing $1.9 trillion and injecting it into the economy should certainly provide some stimulus. The real question is: does the extra economic growth justify the debt incurred? How long will it take to pay that debt?
To answer that question I've put together a spreadsheet that (hopefully) is downloadable via this link. It lets you input relevant variables and see the effect on the deficit, the debt Bush has incurred during his term, and the total national debt.
(If the link doesn't work, please e-mail me and I'll fix it.)
I start with FY2005. The numbers come from Treasury Department data.
For instance, Bush has incurred about $1.9 trillion in debt through the end of FY2005. If we assume that inflation averages 2.2%, revenue grows a fairly robust 2% above inflation, and spending grows a relatively restrained 1% above inflation, we see three things:
- It will take until 2021 to run a budget surplus;
- It will take until 2033 to pay off the Bush debt;
- It will take until 2041 to pay off the national debt.
It is therefore doubly irresponsible to borrow huge amounts of money in order to stimulate the economy. First, because the debt will take so long to pay off; and second, because we lack the fiscal discipline to avoid spending the eventual largesse.
For those of you praising Bush for cutting taxes without cutting spending: think fondly of him in 2020, when you're still paying off the debt he rang up on your behalf.
economy, Bush, tax cuts, deficit, budget, politics, midtopia