Читать книгу Northern Light: Lessons for America from Canada's Fiscal Fix - Robert P. Murphy - Страница 33

Figure 1.6 shows the federal budget surplus/deficit as a share of the economy.

Figure 1.6 US federal budget surplus/deficit, as a share of nominal GDP, actual FY 1930–2011, CBO baseline forecast FY 2012–2050

Sources: White House, American Presidency Project, CBO June 2012 Long-Term Fiscal Outlook.

The figures are straightforward, since we have already documented the trends in federal spending and receipts. Note the massive deficits during World War II – peaking at 30.3 percent of GDP in 1943 – and the recent postwar record of a 10.1 percent budget deficit in FY 2009.

In other words it is easy to establish that US government debt is rising and quickly. If government debt accumulation is dangerous, then the situation is dire.⁸ But how do we establish that large and increasing accumulations of government debt are, in fact, dangerous? $

When it comes to assessing the danger of the government’s debt, the empirical research of Reinhart and Rogoff is usually cited. Here is how the two economists summarized their own work in an article for the layperson:

At what point does indebtedness become a problem? In our study “Growth in a Time of Debt,” we found relatively little association between public liabilities and growth for debt levels of less than 90 percent of GDP. But burdens above 90 percent are associated with 1 percent lower median growth. Our results are based on a data set of public debt covering 44 countries for up to 200 years. The annual data set incorporates more than 3,700 observations spanning a wide range of political and historical circumstances, legal structures and monetary regimes.⁹

As the figures above attest, the United States is heading fast toward the point at which other nations historically have begun to see significant economic drags from their mushrooming debt burden.

Our discussion of rising US government indebtedness needs one more nuance. When discussing government debt, economists often focus not on the total amount (the one the controversy around the “debt ceiling” focused on), but rather the amount “held by the public.” This represents Treasury IOUs held by other governments, private individuals, and businesses. It excludes US bonds held by agencies of the US government, such as the Social Security Administration. To account for the growth in the economy and thus capacity to service a given level of debt, the figure is often expressed as a percentage of GDP. Figure 1.7 below is the Congressional Budget Office (CBO) history and forecast of the public debt as a share of GDP, under two fiscal scenarios.¹⁰

Figure 1.7 US federal debt held by the public as a share of GDP, under two fiscal scenarios, actual FY 1972–2011, CBO projections FY 2012–2050

Source: CBO Historical Budget Data, June 2012 Long-Term Fiscal Outlook.

As figure 1.7 illustrates, the federal debt held by the public escalated rapidly with the large budget deficits occurring since the onset of the recent financial crisis, hitting 68 percent of GDP by the end of FY 2011. Even if the currently planned (if unrealistic) budget and tax reforms are implemented, the CBO projects that the federal debt will rise to 76 percent of GDP by 2014 before turning down. Note that the projected reduction in the debt as a share of GDP does not mean that the federal budget will be balanced. Rather, it simply means that – under the rosy “current law baseline” scenario’s assumptions – the nominal size of the economy would begin growing faster than the nominal debt held by the public, starting in the year 2015. Indeed, even in this optimistic scenario, the CBO predicts a perpetual string of budget deficits through the year 2049.

Unfortunately, history gives little confidence that the federal government will live up to these “current law” assumptions. In contrast, the “alternative fiscal scenario” assumes that the government, as it usually does, postpones hard choices. For example, the alternative fiscal scenario assumes that tax rate reductions are extended, that the alternative minimum tax (AMT) is indexed for inflation at 2011 exemption levels, that physicians continue to receive Medicare reimbursements at current rates rather than implementing large reductions as scheduled (the so-called “doc fix” question), and that the harsh enforcement provisions in the Budget Control Act of 2011 are not applied. As figure 1.7 shows, if Congress takes the easy path on these issues – as it has in the past – then the CBO projects the federal debt will exceed annual US economic output by the year 2024.

One way of understanding the problem of a growing debt burden is to chart the increase in federal interest payments over time. Figure 1.8 shows the tremendous growth over the last century, as the federal debt itself has mushroomed.

Figure 1.8 Nominal US federal net interest outlays, FY 1940–2011 (semi-logarithmic scale)