Federal budget debates often feature large numbers without any context. This can leave the public confused, write Rep. Scott Rigell (R-Va.) and Robert L. Bixby, executive director of The Concord Coalition, in a recent op-ed for The Hill.
“The key to making sense of our nation’s fiscal problems is to look at ratios and trends, not just raw numbers,” they write. “And the ratio that makes the most sense is how any particular number compares to the size of the economy.”
The national debt provides a good example.
Federal budget debates often feature large numbers without any context. This can leave the public confused, write Rep. Scott Rigell (R-Va.) and Robert L. Bixby, executive director of The Concord Coalition, in a recent op-ed for The Hill.
“The key to making sense of our nation’s fiscal problems is to look at ratios and trends, not just raw numbers,” they write. “And the ratio that makes the most sense is how any particular number compares to the size of the economy.”
The national debt provides a good example.
“The key concern about today’s debt is not its dollar total but that it has risen to 75 percent of Gross Domestic Product — the highest since 1951 — and is projected to keep growing,” Bixby and Rigell say. “That pattern will lead to slower economic growth and lower living standards – and is ultimately unsustainable.”
Similarly, individual budget categories such as defense and non-defense appropriations, Social Security, Medicare and tax revenues can best be understood when compared to GDP.
All of these categories are projected to grow in dollars but not all of them will grow faster than the GDP. Revenues are projected to remain flat as a share of the economy while appropriations are projected to shrink. Without reforms, however, Social Security, the major health care programs and interest on the debt are together projected to increase from 11.8 percent of GDP this year to 15.4 percent by 2026.
