More Hot Debt Pix

In response to my last posting, Andy Aaron has sent this link, which is worth a couple thousand words.

Attention! This Is Important

Send this posting to everyone on your mailing list. I'm absolutely serious-- everyone, at least everyone who votes in America, needs to see this picture. Click on the envelope icon at the bottom (this sends a link), or just copy and paste.

This chart is from a report funded by the Pew Charitable Trusts called "No Silver Bullet: Paths for Reducing the Federal Debt." I'm sorry it's a little small; if it bothers you, try hitting CTRL + a couple times.

The bottom dotted line shows Congressional Budget Office projections for what the national debt would be now if nothing had changed since 2000, and the top of the gray region shows the same thing with adjustments in assumptions. Essentially by 2010 the debt is zero.

The dark blue region represents increases in the debt due to changes in the economy. This started to become significant in 2008, when the economy went south, leading to decreases in revenue and increases in safety-net spending. Above that are light blue for the effects of tax cuts, green for unforeseen changes in military spending (mainly, I would imagine, the cost of two wars), gold for non-defense discretionary spending, red for entitlements, and light green (sage?) for the interest on everything else.

Take a look at the right edge. The economy, tax cuts, and war account for about two-thirds of the national debt. Interest is about another sixth. Domestic discretionary spending and entitlements together account for the final sixth.

What would a naive observer think this implies about reducing the national debt? Pretty obviously, that we should focus on reversing the tax cuts, creating jobs, and winding down the wars. But that, of course, is not where the discussion has been. Instead of focusing on the two-thirds, we've been arguing about the one-sixth. Many people in the U.S. believe that the debt has grown so rapidly because of a huge increase in domestic spending. Clearly, that is not true.

And why does no one think it's important for voters to know the facts?

BTW, if you're wondering why the chart shows actual debt as about 60% of GDP and not the 90+% everyone's been hysterical about, it's because it excludes the portion of the national debt held by the Social Security Trust Fund.