U.S. economic situation not so bad
Letter to the Editor | Wednesday, April 4, 2007
Katie Palmitier’s personal financial story in her Apr. 4 Viewpoint column “No money, ‘mo problems” hardly seems to be one of financial crisis – far from it – but she did raise a point that often is not fully discussed in the public square: Why do we have a national debt, and why does it seem to be so high? It’s true, our national debt is at $8.8 trillion, and does not appear to be shrinking. And obviously, to you and me, $8.8 trillion is a staggering amount, an impossible number for us to really grasp.
But here is a more staggering number – $13.03 trillion, which is about 1.5 times as large as our national debt. What is that number? It is the U.S. gross domestic product (GDP) – the amount of money that Americans made as a whole during 2006. Using this number, the comparison of our GDP and our national debt shows that our current state is at about the average ratio between the two figures since the 1940s. Indeed, for half of the Clinton administration, the ratio was smaller, meaning the national debt was closer to the U.S. GDP.
What’s more is another huge number – $2.7 trillion, which is our national budget for fiscal year 2007. The budget is about 30 percent of our national debt. Now, to the average American, it might seem like we are spending too much considering our national debt. But consider this: Many Americans take out loans to buy houses and cars, which add up to more than their annual income, many times more than three times their income. Are they wrong in doing this? Should they save up until they can actually pay for their home or car? I think most Americans would say no. It seems logical, then, that the United States would take a similar approach.
Further, to say that “an increase in taxes could be the answer to the country’s financial problem” is a shortsighted look at how taxes affect our economy, and makes our economy out to be a zero-sum game. Indeed, the reality is much more complex, and our economy’s strength shows that. The Dow Jones is doing remarkably well, nearing its all-time high, and unemployment is low, despite low taxes. Since the tax cuts took place, income from tax revenue has increased, particularly from the wealthy, who received the greatest tax cuts.
So, before you make a judgment about our nation’s economic situation, make sure you have all the figures first. If Palmitier had all the figures, and perhaps some real-life financial experience, she wouldn’t have so easily painted such a bleak, and sarcastic, picture of our president and our nation’s spending priorities. Indeed, a complete look at our budget problems paints quite a different picture and, dare I say it, an optimistic forecast for our nation’s economy.
Saint Edward’s Hall