You know that story grandfathers tell their kids about going to the movies in the 1930s and paying five-cents for a show and pennies for popcorn? It's baffling to imagine now that movie tickets cost $11 in Washington, D.C., but grampa isn't lying. He might have paid 0.4% of today's movie price, but U.S. GDP in 1936 was about 0.4% of what it is today.
Here's the moral of the story: real dollar amounts need context. For example, the Congressional Budget office projects that interest payments on the debt will grow from $187 billion this year to nearly $1 trillion in 2020. There are good and bad ways to scaremonger on that number. NPR does both in a short paragraph:
How much is $916 billion? It's more than we currently spend on Social Security. And it will represent 18 percent of federal spending in 2020 -- nearly as large a share as defense spending.
Ah, but see there's no reason to compare interest payments in 2020 to Social Security expenditures in 2010. It's not as bad as gramps saying "I should be able to buy thousands of Iron Man II tickets with $11!" but it's still meaningless without context. In 2020, GDP is projected to be about 150% of its current level. So why compare grapes to grapefruit? This year's trillion 'aint the same as next year's trillion.
But the second statistic is spot on: the CBO projects that $1 trillion of interest payments will be about 4% of GDP. If federal spending hangs around the 20-25% level, that would make servicing the debt a fifth of our budget, twice its 2010 level and nearly as large as today's share of defense spending, or non-security discretionary spending. Now that's something to worry about.
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