Robert Samuelson apparently doesn't believe that he has much of a case for his budget deficit scare stories. How else can we explain the fact that he expresses budget deficits in dollar terms rather than as share of GDP. Yes, the budget deficit is a REALLY BIG NUMBER. That would be true even if it were a tiny number relative to the size of the economy. Suppose the deficit was $1,687,435. That is a really big number since almost none of us will ever see anywhere near this much money. However, for the U.S. economy, a deficit of this size is trivial. It is equal to 0.011 percent of GDP. The government could run deficits of this size forever and its ratio of debt to GDP would be continually shrinking as its GDP growth vastly exceeds the rate of growth of the debt. In this vein, Samuelson notes that the baseline budget is projected to be $752 billion in 2015 and that even if President Obama's deficit commission reaches its target, the deficit will still be $571 billion. Measured as a share of GDP, the baseline deficit would be approximately 4.0 percent of GDP. The deficit reduction target would be just over 3.0 percent of GDP.
--Dean Baker
