Federal debt held by the public reached a low point as a percentage of GDP reached a low point of 21.9% in the third quarter of 1974. Debt-to-GDP reached a peak of 103.2% in the middle of the COVID plague in mid-2020. It stood at 94.0% at the start of Biden’s first budget-year. And it stands at 95.4% today. If the United States can roughly match government program spending to taxes in the future while it rolls over its debt as it matures and borrows more money to pay the interest, the debt is highly likely to gradually diminish, and eventually fade away. Such a policy is a “deficit gamble”, but it is one on very favorable terms. That is if the United States matches program spending to taxes: and attains an average level of zero for what economists call the primary deficit. That does not mean a balanced budget. It means borrowing more only to pay the interest owed on what had been borrowed before. It means a current-cash deficit of around 3% of GDP—of approximately $800 billion a year.
- Date Posted:
- February 1, 2024
Increases in real disposable income per person in only the two quarters before a vote can, with an adjustment for tenure in the White House, predict the vote share of parties that are governing America to a striking degree of accuracy. Because inflation has fallen without a recession, tight labor markets continue to produce strong real wage growth. In the last quarter of 2023, real disposable income per person grew at an annualised rate of 1.9%. If maintained until the election, that pace would be associated with a winning margin equivalent to Bill Clinton’s in 1996.