MSNBC's "Countdown" show host, Keith Olbermann, recently claimed that today's "federal budget debt" is "far less than it was throughout the Reagan administration." He also said it is "about the same as it was in 1970." Is he right? Tonight's countdown:
10) What is a "federal budget debt"? No researcher, intern or night security guard told him that there is no such thing? No one fact checked him before he went on-air? Add this to the ever-growing catalog of Olbermann's greatest hits kept by the indispensable NewsBusters.org.
9) There is a federal (or national) debt. There is an annual federal budget deficit.
8) Let's assume he meant the "federal debt" -- the amount of money the government owes. This number can be stated in dollars. It can also be stated as a percentage of gross domestic product (total value of goods and services we produce in a given year).
It makes more sense to talk about these numbers as a percentage of GDP. Consider two scenarios. Suppose you make 10K per year. You also owe 10K on your credit cards. Now suppose you make 100K per year. But, again, you owe 10K. In the second case, your debt is far less of a big deal because -- as a percentage of your earnings -- your debt went from 100 percent to 10 percent. Our economy usually grows every year, so stating debt as a percentage gives a better idea of its impact.
Either way -- as dollars or a percentage of GDP -- Olbermann was wrong about the debt.
At the end of 1988, the final full year of the Reagan presidency, the debt stood at $2.6 trillion. As a percentage of GDP, the debt stood at 52 percent.
Now examine President Barack Obama's first year in office. It is part former President George W. Bush's and part President Obama's. (But as senator, Obama voted for the 2009 budget, which included the TARP bank bailout, since expanded.) In 2009, the debt was over $12 trillion. As a percentage of GDP, the debt was over 83 percent.
Obama's first-year debt, therefore, is higher than the debt of any Reagan year by far -- both in dollars and as a percentage of GDP. And 2010 is projected to continue this upward spiral.
7) Assume Olbermann didn't mean "federal debt," but meant "budget deficit" -- the annual gap between what the government takes in and what the government spends.