That's the on-budget deficit, though, which does not take into account spending the Social Security surplus or the emergency packages on Iraq, which together add a solid $250bn, or more, to the deficit. Let's call it $500bn. Divide it out and you get 3.8% of GDP -- not terrible, but the increase in the debt is, nonetheless, beating the growth rate with those figures, so the debt is becoming more difficult to pay off.
Two things are working in favor of budget hawks: Everybody knows the war is going to be over soon. Whether it happens under Bush or the next president is anybody's guess. (I think it's going to happen under a President Edwards or Obama, personally.) The other bit is that different parties control Congress and the White House, and the utter arrogance of the White House is as close to a guarantee of deadlock as you'll ever get, I'm betting.
One way or another, the deficit must necessarily fall relative to national income because of the PAYGO rules. WHEEEEEEEEEEEEEEEEEEEEE!
And I also like breaking out social security from other spending.
however, for the purpose of comparing our spending to other countries, I don't think we should break out the social security trust funds. Other countries such as those in Europe are also on a "pay as you go" system for funding pensions, as i understand it. Perhaps someone with more knowledge of those systems than I could elaborate on this point, but I believe they are committed to paying pensions of future retirees from future tax revenues, as is the US effectively. Legally of course the US has a limit on paying retirees, in the sense of keeping a scorecard of money that has gone into the system, and legally that is all the country has to pay. but in reality, it's hard to see social security benefits being cut by 40% in 2044 when the tally sheet shows no money left. I imagine the US is in the same boat as most European countries in that all will have to address this issue sometime with a mixture of programs such as raising taxes, reducing benefits and extending the retirement age.
