Is GOP trying to sabotage economy to hurt Obama? Read more: http://www.newstimes.com

So you are telling me that GDP increase for 2011 was 3.9%?

 

Year - GDP
2010 14,526.5
2011 15,094.0
Source: BEA.gov.

Yep, that calculates to 3.9% to me.

 

Like I already told you, you were using the wrong column. If you want to insist that the 2011 GDP increase was 3.9%, go ahead, but don't expect to be taken seriously about such issues.

No wonder you think the stimulus worked. Hell, if the GDP had actually been 3.9% last year, I would have believed it worked!

 

Dude, I don't insist it. Those numbers are direct from the Bureau of Economic Analysis, which puts out GDP numbers.

I linked you the source. Take it up with them if you have a beef.

 

As I told you, I got my numbers from the same source. You just used the wrong column.

It's OK though. I'll enjoy you using those numbers in future posts!

 

What number do you think it represents, and why do you think I used the wrong column?

 

From another BEA page:

Current-dollar GDP

Current-dollar GDP -- the market value of the nation's output of goods and services -- increased
3.9 percent, or $144.7 billion, in the fourth quarter to a level of $15,320.8 billion. In the third quarter,
current-dollar GDP increased 4.4 percent, or $163.3 billion.
http://www.bea.gov/newsreleases/national/gdp/2012/gdp4q11_2nd.htm

It was recently revised down to 3.6%.

 

When I first pulled up the spreadsheet I looked at the GDP increases in your columns and the numbers didn't seem right. I mean, I knew that last year's GDP was reported in the media (after the adjustments) as 1.7%, not 3.9%. A 3.9% GDP increase is really good. That means that not only would we have been well out of the recession but the economy would be humming along great. But that's just last year, looking at some of the other years they just didn't jive with what I knew. In the first column, it had the 2008 GDP as 1.9%, which is low, but we were in recession starting in December 2007 so we would have had to have had zero to negative economic growth. The chained 2005 dollars column had a GDP of -0.3. Just look through the column and you'll see that those numbers are just too high. I mean, 11.2% in 1984? It was a good year but not a superheated one.

I didn't know what the difference was between "GDP percent change based on current dollars" and "GDP percent change based on chained 2005 dollars" so I googled it to make sure I was on the right track and apparently the GDP has to be indexed to a year which is upgraded periodlically to have uniform prices so as to not throw off the numbers, and 2005 is the current indexing year used by the BEA.

 

So all this time you were saying I had the "wrong column" and you had no idea what the columns meant?

How could you conclude I had the "wrong column" when you didn't have a clue what you were even looking at?

So again, is this where I should say I expected more from you?

The columns show "current dollar" or actual GDP and "real" or "chained 2005 dollars" numbers which are adjusted for inflation. The economy actually grew by 3.9% in 2011, but the "real" GDP was 1.7% so you essentially have 2.2% inflation. When GDP numbers are quoted in the press, they usually refer to "real" GDP numbers becaue they are not affected by inflation, which can skew the numbers (witness 1981, which had actual GDP growth of 12.1% but "real" GDP growth of 2.5%).

So the 1.7% number you are familiar with is not actual GDP, but "real" or inflation adjusted GDP. However, the actual (current dollar) GDP grew 3.9%.

Thus, going back to where we started, if you wanted to compute where GDP would be in 75 years to see how the size of the economy stacks up to perceived entitlement shortfalls, you would use actual or current GDP figures to calculate the average growth to extrapolate. And the average actual GDP growth over the past 30 years has been 5.5%.

Thus, using 5% to project GDP forward is not "totally off base" at all, and I'm just as good here as I usually am.

 

How could the GOP possibly sabotage the economy any worse than the EPA with new regs that will quintuple electric rates?

 

Let your imagination fly. It's doing pretty good so far.

 

Inflation adjusted GDP is the only way you can read GDP to get a grasp of what the actual real growth in GDP is for the preceding year. If inflation is 3% for the year and you get a 3% raise, your effective raise is zero. You're not 3% better off.

I still think you're incorrect. Even Paul Krugman, apologist as he is for massive deficit spending, used inflation adjusted GDP figures. Has anyone else tried to use current dollar GDP for economic projections? I can't see how it could possibly be accurate.

 

Why are you guys debating projections 75 years into the future to begin with? I know the CBO generally doesn't make projections of any kind beyond a ten year horizon unless specifically asked to because there's just too much uncertainty to make such a project meaningful. Talking about 75 years in the future... Honestly, you may as well consult a magic 8 ball. I mean, most of the people who will be on Medicare in 75 years probably haven't even been born yet.

 

Sure, you look at real GDP to assess the "real" or inflation adjusted effect.

But you have to compare apples to applies. When folks cite those studies that project the entitlement shortfall of $65 billion over the next 75 years, they are not using inflation adjusted numbers. Therefore, if you want to compare the relative size of GDP, you also do not use inflation adjusted numbers, otherwise you are comparing apples and oranges. You use actual numbers because they refledct what the size of the GDP will actually be as projected.

It is the same thing I said about the debt. Based on 5-6% GDP growth, the size of the economy doubles in 12-15 years. If the size of the debt stays the same (we balance the budget) then the relative size of the debt shrinks by half. And this is another situation where current or actual GDP numbers are appropriately used.

Let's use your example. If you get a 3% raise and prices go up 3%, you are correct, your real income has not changed. However, if you have a fixed mortgage that did not go up 3%, your mortgage rate is relative to your income, 3% less. So if you were comparing your income to the cost of your mortgage, you would use your actual income and compare actual income with actual costs. Otherwise, if you said your ("real") income didn't change, that would give you a false result that your mortgage cost did not change relative to your income, when in fact it did.

 

We are talking about it because earlier in the thread someone brought up the claim that there was a 65 trillion unfunded entitlement liabilities. That sounds like a scary number, so what I was doing was putting it into perspective. That $65 trillion figures is calculated by projecting costs and benefits 75 years into the future. Fair enough, but if you are going to do that, let's look at where GDP will likely be in 75 years, which will be in the order of 1/2 a quadrillion dollars. In that perspective, the $65 trillion doesn't look so unmanageable.

The point is, while we do need to get a handle on these things, the $65 trillion figure is more of a scare tactic.

 

What a farce....

Like the Republicans have any power..... Get Real...

Maybe Obama and pals aughta pass a budget or something.... Ya Know... Its only been 3+ years without one...

 

Of course it's a scare tactic, I'm just suggesting it would be better to debunk it by pointing out the extreme silliness of even talking about such projections in the first place rather then getting down in the weeds. Talking about $65 trillion in 75 years is about as valid as saying that that averages to about $900 billion a year, so by the time Sol turns into a red giant in 5 billion years and vaporizes the Earth, that'll add up to $4 sextillion in unfunded mandates.

You're right that the Republicans don't have much power to pass their own agenda. However, they do have a lot of power to obstruct anything else from getting done either. Including very basic stuff like the government actually paying its bills. So what they've been doing is preventing any action to help the economy and using threats of letting the economy blow up through inaction to rattle markets, undermine confidence, and spread uncertainty. All of which are toxic to economic growth. So while they haven't managed to throw gasoline on the fire, they have prevented anyone else from putting it out.

 

And yet, your projections are wrong. You claimed that there is no threat from unfounded liabilities since the economy will grow over time to be able to handle them, but if that were true, it would be happening already. Since you estimated we've had a 5.5% GDP growth rate since 1981, why has medicare and social security unfunded liability continued to increase? 15 years ago the Social Security Trust fund was scheduled to be exhausted by 2043. Now, it's 2034, and starting last year we are dipping into the "trust fund" now to pay current retirees. Kind of surprising if we really had 3.9% GDP growth last year. There should have been plenty of payroll taxes to pay out benefits.

You seem like a bright guy, and not an uneducated one, but you definitely have some sort of cognitive dissonance on this. It's as if you just can't accept realistic numbers because once you do, the whole facade falls. I imagine many Greeks, even now, are just as delusional.

 

How are they wrong?

No, that is not what I claimed. Re-read my posts.

What would be happening already?

It was a calculation, not an estimation.

Because the projected estimates of costs increase.

There are. Taxes revenues are at a historical low level.

Where did I say I didn't accept the numbers?

What I have pointed out that people through around that $65 trillion number as a scare tactic because they want to gut or kill those proprams. What I'm saying is if you are going to look 75 years into the future to come up with that number, then you have to consider what GDP will probably do to. And in 75 years GDP isn't going to be $15 trillion, but probably closer to 1/2 quadrillion.

 

I do not understand why someone would think the republicans are performing any sabotage on the economy.

Everybody likes to make money. And a short play is pretty risky.

This has come about IMHO because people have borrowed themselves to death on an individual and international level and the have little disposable income.

We just ain't got no money. None thats worth anything that is.

And you can argue over numbers if you like but most people take it personal and worry about their own individual economy.

 

1) The 1% know their wealth will be increased by Republican policies.
2) They want power.

 

Like I said, cognitive dissonance.

 

Can you not address my specific question and statements as opposed to making an unsupported, generalized and vague assertion?

 

The Congressional Budget Office released new projections of a worsening U.S. fiscal outlook, adding fuel to the election-year debate over the causes of rising government debt.

By the end of this year, the CBO said, cumulative federal debt will reach roughly 70% of gross domestic product—the value of all goods and services produced by the economy—the highest level since just after World War II. That's up from about 40% in 2008. Without changes in current policies, federal debt would reach about 200% of GDP in 25 years, the report said.

"The explosive path of federal debt…underscores the need for large and timely policy changes to put the federal government on a sustainable fiscal course," CBO director Doug Elmendorf wrote on his blog on Tuesday.

Budget watchdogs have long warned the U.S. was on an untenable fiscal path, due largely to the projected growth in spending on Medicare and other entitlement benefits as baby boomers age. Tax cuts enacted under former President George W. Bush also have contributed to the current fiscal plight.

Without changes in benefits or higher taxes—or both—the federal debt held by the public could reach 199% of GDP in 25 years, the CBO said, up from 187% in last year's projection.

http://online.wsj.com/article/SB10001424052702303918204577448343232424870.html?mod=googlenews_wsj

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

The above article ought to be an eye-opener. As dire as it seems, the reality is likely much worse. For instance, the report says "By the end of this year, the CBO said, cumulative federal debt will reach roughly 70% of gross domestic product", yet the debt clock shows us already at over 103% GDP. And who really thinks we could run up a debt to 199% GDP? No way would we be able to find buyers for that much debt.

 

Are you asking what evidence there is to think that this is the case, or why any sane person would do such a thing? As far as evidence, I think we've gone over that pretty thoroughly in this thread already. As for why someone would do that... I've wondered that a lot myself over the last few years. It doesn't really make sense to me. All I can say is that there must be some people out there in positions of influence who are both extremely selfish and extremely short sighted, who don't care how much they hurt the country so long as they personally are profiting from it.

No kidding. Which is exactly what fiscal liberals have been saying for decades. Which is exactly why Bill Clinton made the hard choices to balance the budget once he got the economy back on its feet. Which is why we've been saying since Bush was first running for office in 2000 that his tax cuts are a horrible policy that just has to go.

Balancing the budget will require broad based tax increases, discretionary spending cuts, and entitlement reform. anyone who says we can do it without all three is a liar or a fool.

However, you will note the time frame of those projections. 25 years. This is a long term problem that requires a long term solution. This is not an immediate crisis that has to be dealt with right now. We need to get the economy fixed first. Getting us back to growth will in itself go a long way to fixing the budget. Adopting drastic austerity measures right now will drag out this stagnant economy for who knows how long. And that will make the budget situation much worse, not better.