No sooner had the president signed the new debt limit, and then up went federal debt — to $14.58 trillion.
Brave new world, that has such numbers in it.
What’s so amazing about this number is that it is larger than last year’s GDP of $14.53 trillion.
I know, Gross Domestic Product figures are a mess, and don’t measure exactly what we think they measure. But they are the most popular form of national income accounting, and indicate, in a very rough sense, “the size of the economy” for a given year.
And, boy, for our federal government to owe the amount of the whole economy it rules, and more — what a milestone!
The last time debt was more than GDP? The late 1940s.
Recovery happened swiftly, then. This should give us hope: There is a way out.
But remember: World War II didn’t bring us out of the Great Depression, the end of the war did.
And remember, further: Most of the big names in economics — by then, Keynesians all — had predicted a huge economic downturn as government spending plummeted and wartime regulations (chiefly wage and price controls) hit the dustbin.
Bad prediction. The economy soon took off.
Why? Less government spending, less regulation.
Alas, I don’t see that happening, today or tomorrow. With the budget deal, overall spending is now set to rise still further. The medical industry — a huge growth sector for government spending as well as private spending — is set for increasing regulation.
This is Common Sense. I’m Paul Jacob.