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What Are the Deficit Issues? The Trump Policies Are Unlikely to Reduce the a Currently Very High Deficit Level.

Armchair Politician, March 3, 2017, Brad Peery, ArmchairPolitician.US

To address the budget deficit, the first element is understanding the budget deficit as a percentage of GDP. A corporate analogy is a company looking at its debt as a percentage of revenues. However, the drawback is that the Government does not make a profit. In 2010, the deficit reached a high 9.8%, as the Government went through supporting US companies, such as the large banks, and the auto companies. In 2015, the deficit as a percentage of GDP was down to 2.4%.

A second way of looking at the deficit on a current basis is as a percentage of GDP. As GDP grows, the deficit percentage of GDP may grow or decline. If the Trump policies produce over 3% GDP growth, and the debt grows at less than 3%, the debt as a percentage of GDP will decline.

Government Debt to GDP in the United States averaged 61.94 percent from 1940 until 2015, reaching an all time high of 121.70 percent in 1946 and a record low of 31.70 percent in 1974.The United States recorded a government debt equivalent to 104.17 percent of the country’s Gross Domestic Product in 2015.

ArmchairPolitician.US Opinion

With the current deficit at 104%, and the long term average being at 62%, the size of the US deficit is an issue. For the next 4 years, it appears unlikely that we can run surpluses that might reduce the debt percentage because of the military buildup, infrastructure spending, the border wall and other possible spending initiatives.

Entitlements, Such As Medicare and Social Security, Need to Be Taken Into Account To Look At Future Deficits. These Will Be Addressed in Future Blog Postings.

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