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April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review March 1, 2011 25 Adar I, 5771

Mike Huckabee is on to something here, but jumped the gun

By Glenn Kessler




http://www.JewishWorldReview.com | "For the first time in our history we're under water, we owe more than our entire annual GDP [gross domestic product].... We owe $15 trillion, just about. Our entire GDP for a whole year, everything we produce, make, earn collectively is less than that. We are under water."
--Former Arkansas Gov. Mike Huckabee, Feb. 25. 2011

An important sign of a country's economic health is how its overall debt load compares to the size of its economy, also known as the gross domestic product (GDP). When the debt level equals the size of the economy, that's a rather big warning light.

Once and possible future GOP presidential candidate Mike Huckabee says that the moment of truth has arrived--the size of the U.S. economy is now smaller than the size of the national debt. Is he right?

The Facts

Only three years in the history of the United States--1945, 1946, 1947--has the national debt exceeded the size of the economy, and the ratio quickly fell in the booming economy after World War II. The ratio of debt had more than doubled during the war--it was 45.4 percent in 1941, when the United States entered the war--but defeating the Germans and Japanese was a national imperative.

The ratio of debt to the economy has also soared during the recent recession--from 69 percent in 2008 to 93 percent in 2010--in part because the economy shrank but largely because of increased government spending designed to combat the recession. But it will probably be much harder for the United States to bring down the ratio this time because of the population is aging and the available pool of workers to retirees is shrinking. Also, social welfare programs such as Medicare have been introduced since World War II.

So Huckabee is raising a serious and economically profound issue. But he's gotten ahead of the facts.

As of Feb. 23, according to the Treasury Department debt meter, the national debt was nearly $14.13 trillion. But the gross domestic product, at of the end of 2010, was $14.86 trillion, according to the Commerce Department. That's a ratio of 95 percent, which is about as high as the ratio in 1949. (The ratio was 94 percent on Dec. 31, which is actually an apples-to-apples usage of the GDP figure.)

Still, President Obama's 2012 budget predicts that at some point this year, the boundary will be crossed and by the end of the fiscal year, Sept. 30, gross federal debt will be 102.6 percent of the GDP. The budget further predicts that the ratio will remain above 105 percent for at least five years after that. The ratio could be even worse if outside experts are correct and the economic forecasts in the budget are too rosy.

We used figures for gross federal debt for these calculations. Gross federal debt includes both bonds held by the public and bonds held by other federal accounts, such as the Social Security Administration. The ratio would drop to about 75 percent if bonds held by government accounts were not included. But that would be an incomplete figure.

Some politicians claim the securities held by federal programs such as Social Security and Medicare are "worthless IOUs" but they are wrong. An IOU is just another way of saying bond. These bonds are backed by the full faith and credit of the U.S. government. No president or Congress would risk defaulting on these bonds because it would ruin the nation's financial standing.

The bonds are a real asset to Social Security and Medicare, but they also represent an obligation by the rest of the government. Like any entity that issues debt, such as a corporation, the government will have to make good on its obligations, generally by taking the money out of revenue, reducing expenses or issuing new debt.

The action taken really depends on the resources available at the time, but one can't wave a wand and pretend that these obligations will disappear. So that's why it makes sense to include them in calculations about the nation's indebtedness.

The Pinocchio Test

The national debt figures are scary enough without needing to hype them. Huckabee clearly is an error when he says the United States has already passed the critical threshold of when the national debt exceeds the size of the economy. His figure for the current national debt was also off by nearly $1 trillion.

Still, we are kind of sorry to give him a Pinocchio because if he repeats the comment a few months from now, he may very well be right. Then he would have earned a rare Geppetto checkmark.

One Pinocchio

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Comment on Glenn Kessler's column by clicking here.In an award-winning journalism career spanning nearly three decades, Glenn Kessler has covered foreign policy, economic policy, the White House, Congress, politics, airline safety and Wall Street. He was The Washington Post's chief State Department reporter for nine years, traveling around the world with three different Secretaries of State. Before that, he covered tax and budget policy for The Washington Post and also served as the newspaper's national business editor. Kessler has long specialized in digging beyond the conventional wisdom, such as when he earned a "laurel" from the Columbia Journalism Review



Previously:

02/25/11: Harry Reid's illusory $41 billion in budget cuts


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