Old Federal Debt Argument... with recent numbers

It's an old argument made new again with all the recent stimulus money being tossed about.

1. Who is better at managing federal debt?
2. Who gets blamed when the debt explodes?

I don't mean argument in the philosophical sense. No one really debates these things. We usually use our political incantations to defend our choices and attack our opponents. Still, all sides need to start from essentially the same dataset or there isn't much point even trying.

For this purpose, I tend to pull data from the St Louis Federal Reserve folks. You can find them at...

http://fred.stlouisfed.org/

They'll do all the chart drawing you need, but you have to figure out which datasets to chart and what you can compare. What you do with the charts depends on your particular interests. Want to blame Congress for debt? Start shading the years when this or that party was in control. For extra points, decide whether the House or Senate is more responsible. Maybe you want to blame the President? Okay. Shade in their terms. To blame whole parties, shade by who has control of the most levers of power and you can cover both executive and legislative possibility. (For example, the Democrats didn't have all of Congress and the White House for very long during Obama's years. They had a filibuster proof majority in the Senate for a span measured in days.)

There are things you CAN do that aren't part of who you want to blame. Try the second-derivative game. When does the debt curve acceleration change? Visually, this can be done by imagining tangent circles that fit sections of the graph. I drew in a few on top of the shaded administration colors. Blue circles for debt accelerating upward. Red for acceleration downward. It's no shock that people with Keynesian attitudes create little blue circles right near the front of a recession. (Small circles imply rapid acceleration/deceleration.) That's what stimulus is supposed to be about, right? What I find more interesting (since they are all Keynesian in some sense) is who behaves better, latter when Keynes told them they should tighten up. Nobody likes sharp decelerations, so those curves tend to have large circles.

I intentionally chart public debt AS A PERCENTAGE of GDP. One can argument about that too, but I won't accept that challenge. The debt people take on even at a family level adjusts with their earning potential, so I reject absolute measures of debt and 'the sky is falling' arguments simply because the absolute number is huge. The US GDP is ALSO huge. While every recession is pain (especially painful to people who face the disruption they cause), we tend to bounce back and then continue. 

It IS true that our debt as a fraction of GDP has ballooned, but I find it interesting to note WHEN it balloons. We stimulate near recessions, but not every time. We tighten up a bit afterward, but the political parties are not equals in their willingness to do this hard task. Why? Well... would you vote for them if they did? Turns out some of us do and some of us don't.

From my personal perspective, no amount of tax cutting is ever going to reduce public debt. That is a steaming pile of dung of an idea. What might is cutting services, but good luck convincing people to do that. It's hard enough during good times when some of the politicians realize they can do it and not lose their jobs. 

If you really want out, better beef up the GDP and reduce the costs paid by the general public on certain categories of services. Health care, home ownership, and education are big chunks of what people spend for themselves and their children. If they could spend that money some other way, it might do better for GDP than what they can currently manage. The inflation levels in those sectors are ridiculous, but not many people are aware of that. You can be, though. Just go get those numbers from one of the federal sources (BEA, etc) and chart them yourself.