The Washington Post claims that the federal deficit hit a record $413 billion in 2004. While this is a record in nominal dollars, that is a meaningless number, as I trust the Post's reporter knows. The deficit in 1983 was $207.8 billion. That was smaller in nominal dollars than the 2004 deficit, but so what? The U.S. economy was less than one-third as large in 1983.
The 1983 deficit was equal to 6.0 percent of GDP. The 2004 deficit was only 3.6 percent of GDP. Even adding in the money borrowed from Social Security only brings the 2004 deficit to 4.9 percent of GDP, still more than 1.0 percentage points below the post-war peak in 1983.
The current deficits are larger than can be sustained, but there is no reason to try to mislead readers to make things sound more scary. Reality is bad enough.
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