In any event, in a non-recessionary economy, the federal government's ratio of revenue to GDP is generally around 20 percent. While a $1 trillion primary deficit represents less than 7 percent of GDP, it represents about 30 percent of full-employment revenues. Eliminating a primary deficit of that magnitude will not be easy, particularly when the major expenditure components are entitlements, which are under pressure to expand rather than contract.
I do not think it is overstating things to describe our current budget situation as a crisis.
Wednesday, May 05, 2010
Arnold Kling does the historical break down.