Imagine that you were making $50,000 per year and buy a house with a $100,000 mortgage. Since you also have to pay for things such as food, utilities, clothing and a host of other expenses, the payments on that mortgage would be a considerable amount of money.
Now imagine that you have been offered a new job with a salary of $500,000 per year and - to celebrate - decide to buy a new house with a $200,000 mortgage. Your mother-in-law clucks her tongue and criticizes you for going deeper into debt, even though your new mortgage is a much smaller part of your income.
Well, that's the case with our budget deficit. Since they peaked in 2004, the deficit as a percentage of GDP (Gross Domestic Product) has declined dramatically, despite war spending.
Year ---- Deficit as % of GDP
2002 ---- 1.50%
2003 ---- 3.50%
2004 ---- 3.60%
2005 ---- 2.60%
2006 ---- 1.90%
2007 ---- 1.80%
2008 ---- 1.60%
There is another way of looking at this. Economic numbers are always slippery and are constantly revised, even years later. The number that gets most attention is the rate of economic growth, but for people who pay attention, the number that is first issued is never right. One number that is rock-solid is tax receipts.
The media would have you believe that the economy under Bush is in the doldrums and revenue growth is tepid. In fact, revenue growth to the government is growing much faster than the growth in the economy generally.
Total tax receipts
(in Trillions of dollars)
2002----- $1.85
2003----- $1.78
2004----- $1.88
2005----- $2.15
2006----- $2.41
2007----- $2.54
2008----- $2.66
From 2002 through the end of 2008, tax receipts will have grown a stunning 44% even as the Democrats argue that "tax cuts for the wealthy" have proven ineffective.
This is nonsense - nonsense on stilts. But the Democrats believe it; it is an article of faith. And the economic miracle that Bush has wrought may be crushed by the heavy hand of a failed belief system unless Conservatives regain the initiative.
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