Does the Budget Deficit Matter?

Every year when the government has to pass a budget, we get the same narrative from the two sides. The Dems say we need to increase the debt limit in order to fund needed government programs, the GOP-MAGA says we can only increase the debt limit if we cut spending on all those much-needed programs.

What then happens? The debt ceiling is raised so that we can spend more money on all those much-needed programs.

The Federal Reserve started collecting data on how much the federal debt represented a percentage of the GDP in 1969, the idea being that if we had more debt than the amount of money we were earning, that sooner or later the government would go broke, or we’d have to increase our tax revenues to a gazillion degree and then everyone would go broke.

This calculation activity is no doubt where Sarah Palin (remember her?) got the idea that she could manage the federal budget because, after all, she balanced her family’s budget sitting around the kitchen table every week.

Dumb as dumb can be, right? Actually, not much dumber than what we got last week from various members of Congress during the budget debate.

Anyway, as I was saying, from 1969 through 1982, a period when we had 4 brief recessions, the ratio of debt to GDP never went above 40%. From 1982 until 1992, the ratio of debt to…