National Debt as a proportion of GDP

A friend on Facebook suggested that a simplified look at the national debt problem (comparing it to a household budget) circulating the web was left lacking on the full substance of the matter. As one objection, he mentioned that national debt was not being considered as a fraction of the GDP. Also that, by that measure, the national debt was much higher just after WWII.

My first, knee jerk response was, simple models are good. At least this one was OK because it was simply demonstrating the scale of different line items. Sure there are other subtleties, but they need to be discussed as part of a bigger discussion.

Meanwhile, I wanted to understand this statistic myself and so scanned the CYBERSPHERE, by the way - if nobody has claimed to have coined this term (I can't imagine it hasn't already been used) - you heard it first here.  So I found some charts, but not wanting to go from a second reference I used. http://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/hist07z1.xls
Then created this chart from it

The thing that struck me is that, if you don't have the chart in front of you, saying it was higher just after WWII gives the impression that it has been steadily decreasing ever since. In reality, it WAS decreasing until about 1980 and has been increasing ever since. And now, it is on target to be higher than just after  WWII. Interestingly - that is when Ronald Reagan took office, only to decline in Bill Clinton's second term, grow again under Bush, then zoom up again at the end of Bush and under Obama - well as Emeril Lagasse would say, "let's kick it up a notch".

It would be interesting to analyze these segments separately, but for now we'll let the facts speak for themselves. In closing, the last  6 data points are estimates, including current year's 2011 and 2012 out to 2016. The White House apparently would like to paint a nice rosy picture. Imagine the growing national debt as a doomsday asteroid hurtling towards the earth. The rise in the current years represents inverse of the distance from impact. I think our president fancies himself in a cape zooming skyward and with one hand, man of steel, saving the earth from total destruction. Or perhaps, taking our men home from war will do the trick, possibly dismantling the military-industrial (I am with IKE on this one - but it has morphed) complex will work. Help me figure out this magic trick, please.