The Truth About Deficits

Imagine quoting the LA Times again. Who'da thunk it? However, for the record, the LA Times said on Sunday September 25, 2005:

Besides, deficits are relative. The 2004 budget deficit was $412 billion, a record in dollar terms. But it amounted to 3.6% of the U.S. economy overall as measured by gross domestic product. By contrast, the 1983 deficit was 6% of GDP; the 1992 deficit was 4.7% of GDP.

It's not surprising bond investors would have been more nervous about red ink in the 1980s and early '90s; it was consuming more of the economic pie.

Here are the stats for deficits as a percent of GDP. Please note that current numbers are around the average, and they are projected to drop. While a fiscal conservative, like me, would like to see them drop, and turn to surpluses, they are not that bad given war and a recent recession.

1962 -1.2
1963 -0.8
1964 -0.9
1965 -0.2
1966 -0.5
1967 -1.1
1968 -3.0
1969 0.4

1970 -0.3
1971 -2.1
1972 -2.0
1973 -1.2
1974 -0.4
1975 -3.3
1976 -4.1
1977 -2.7
1978 -2.7
1979 -1.6

1980 -2.7
1981 -2.5
1982 -3.7
1983 -5.6
1984 -4.7
1985 -5.1
1986 -5.0
1987 -3.2
1988 -3.1
1989 -2.9

1990 -3.9
1991 -4.4
1992 -4.5
1993 -3.8
1994 -2.9
1995 -2.2
1996 -1.4
1997 -0.3
1998 0.8
1999 1.4

2000 2.5
2001 1.3
2002 -1.5
2003 -3.4
2004 -3.5