Don't forget this doesn't include spending for the war on supplementals (~1%GDP). If you add those and SocSec into the mix then we are starting to get into the ballpark of 1983.

Gross Domestic Product (GDP) calculation is intentionally deceptive.

It falsely counts government spending as part of the 'productive' U.S. national output.

Governments at all levels extract at least 40% of the output of the nation.

Real GDP is at least a third less than the official figure.

Larkin wrote, It falsely counts government spending as part of the 'productive' U.S. national output.

Oh, come on. Once you go down that road...

Tell me how one person collecting interest from another person is "productive". Yet that's counted in GDP, right?

Or someone collecting land rent, or any other rent for that matter, which must be a huge portion of GDP.

NPR should only be on the misdemeanor villian list. They did lead with the record deficit, but ended by explaining it was only nominal and deficits compared to GDP were higher in the 80's and 90's. They also pointed out the deficit will be higher because the current budget doesn't fully fund the wars.

But isn't the more interesting number the total federal debt as a percent of GDP? That is, mustn't it be the case that the deficit in any given year isn't that big a concern provided that you haven't run huge deficits year after year after year. (To make the analogy to personal finances, I could borrow a huge amount in a given year to make a particular expenditure, and if I previously was debt-free, it wouldn't be much of a concern, but if I was already up to my eyeballs in debt, it would be.)

And if you look at the OMB projection of the total federal debt for FY 2009, it is projected to reach heights not seen since we brought the debt down after WWII. Over 69%. So while I take your point, Dean, there is a real "record" being set here.

To accurately represent the true Deficit/GDP you also need to add in the "War" costs and the growth in the present value of the unfunded future benefit obligations (mostly Medicare). This would be consistent with real world accounting and would drive the percentage to levels never seen before. In '07 the PV of those obligations were up $2 trillion and during the Bush administration up $32 trillion.

Can we actually believe the GDP numbers? By understating inflation, the GDP appears to be higher than it actually is. By that measure, the deficit is a much larger percentage of GDP.

As Glenn says, the real deficits will push the gross debt as a fraction of GDP above the previous post-WWII high. And realistic projections of the gross deficit (not the phony public deficit) as a fraction of GDP would have that also in post-war record territory in a couple of years.

But Dean is right that the numbers are not horrific in themselves. The country recovered from the WWII debt(120% of GDP) quite well (down to about 25% in the 70's) and no austerity was required. Although the era was generally prosperous, there were some recessions but they were soon over and did not cause any change in the trend of reduction of the national debt. How is it that tax-cutters can reject the highly progressive tax policy of that time (1940-1970) without being confronted with these facts?

What I find appalling is the readiness of not just the media but supposedly responsible economic authorities to take the budget projections of the President and Congress seriously. There is obviously a non-partisan political compulsion to make the future look rosy, yet we are constantly being told by the media that upward revisions of the deficit are surprising. Tax cuts are sold on the basis of these highly biased and unrealistic projections - it could even be argued that the big tax cuts promised by Bush in 2000 gave him the margin of victory in the election.

If the media really took an adversarial relationship to power they would always quote some economically authoritative non-political projection of deficits - do such things exist? I would think such projections would be useful and worth money to business.

I think what I object to the most in each story is how they always talk about tax cuts "boosting" the economy. On MSNBC, they actually said the deficit was increasing "in spite of" the tax cuts.

I have never seen any proof that any deficit spending "boosts" the economy except in a very short-term sense. The idea that tax cuts boost the economy has become so ingrained in our news discourse that even economists no longer bother to point out that it isn't true.

Dean is correct ...

But we are getting closer to insolvency this time around... Record numbers of retirees, a trade deficit of 6% of GDP and cumulative public and private debts of 350% of GDP.

Len -

In a word, no.

Dean is using the annual deficit as a percentage of the annual GDP. So inflation doesn't matter for this computation.

But yeah, the GDP deflator is a cruel joke, and the actual YOY GDP has probably been skimming along zero since 2001.

But that's not relevant to this discussion.

But I agree with Glen - the more important number is certainly total debt outstanding as a percentage of GDP. I'd love for Dean to weigh in to tell us his opinion of that figure - I'd believe him.

Hundreds of gov and military employee EXPERTS with fake diplomas
(names are leaked today) aren't "accountable" let alone patriots protecting America with their "fake genius" .... take a gander at the heavy hitters revealed:

http://www.spokesmanreview.com/breaking/story.asp?ID=15898

the LIST: http://www.spokesmanreview.com/data/diploma-mill/