Federal budget deficit

 

Elias Tsepouridis has a recent post, where he expresses his concerns regarding the increase of the federal budget deficit. However, I think he forgot to mention something important. As we can see in his graph, since 1982, the US has only had four years with a budget surplus. So more than the current size of the deficit, I think we should look at the size of the public debt, because if the debt was low, then the deficit (used as a way to fight the current crises) would be fairly sustainable. However, that was not the case in 2007, when the federal debt as percent of GDP in 2007 was already at 50%. So now, we have to somehow balance the economic need for stimulus with the sustainability of public finance.

The public deficit is unsustainable, not because of its size, but because it has already drove the debt to GDP ratio to over 92%, and counting. Anybody want to guess when we get to 100?