$5000 / American

That’s how much Obama & co. will be borrowing this year. Then again, of course a per capita number like that is a deceitful way of measuring that debt accumulation, because how many of the Americans alive today are going to have to service that debt? How many over the age of, say, 65? From the article:

“The still-fragile economy and fresh tax cuts approved by Congress last month will drive the federal deficit to nearly $1.5 trillion this year, the biggest budget gap in U.S. history, congressional budget analysts said Wednesday.” [...]
“At $1.5 trillion, the deficit would equal 9.8 percent of the economy, the CBO said, making it one of the largest by that measure since the end of World War II.“

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Here’s a (long) CBO report on the subject. An excerpt:

“if most of the provisions in the 2010 tax act that were originally enacted in 2001, 2003, and 2009 or that modified estate and gift taxation were extended (rather than allowed to expire on December 31, 2012), and the alternative minimum tax
was indexed for inflation, annual revenues would average about 18 percent of GDP through 2021 (which is equal to their 40-year average), rather than the 19.9 percent shown in CBO’s baseline projections. If Medicare’s payment rates for physicians’ services were held constant as well, then deficits from 2012 through 2021 would average about 6 percent of GDP, compared with 3.6 percent in the baseline. By 2021, the budget deficit would be about double the baseline projection, and with cumulative deficits totaling nearly $12 trillion over the 2012–2021 period, debt held by the public would reach 97 percent of GDP, the highest level since 1946.”

More than 6% of GDP / year for the next decade. This is for the ‘realistic’ setting with assumptions less likely to be untrue than the baseline model. Note that the ‘debt held by the public’ in that sentence is federal debt. That’s debt equal to ~100% of GDP owed by the federal government in 2021, plus debt held by the states, plus private debt. That’s a lot of debt.

I wonder what would happen if Obama and his collegues were to increase taxation by $5000/citizen this year instead of just borrowing the money. I think people would probably react quite differently in that case. Ricardian equivalence?

An update on US mortgage debt

Nearly 10.7 million, or 23 percent, of all residential properties with mortgages were in negative equity as of September, 2009. An additional 2.3 million mortgages were approaching negative equity, meaning they had less than five percent equity. Together negative equity and near negative equity mortgages account for nearly 28 percent of all residential properties with a mortgage nationwide.

The distribution of negative equity is heavily concentrated in five states: Nevada (65 percent), which had the highest percentage negative equity, followed by Arizona (48 percent), Florida (45 percent), Michigan (37 percent) and California (35 percent). Among the top five states, the average negative equity share was 40 percent, compared to 14 percent for the remaining states. In numerical terms, California (2.4 million) and Florida (2.0 million) had the largest number of negative equity mortgages accounting for 4.4 million or 42 percent of all negative equity loans.

Calculated Risk. I missed the post when he first posted it last year, but he drew attention to these numbers yesterday, so I decided to take a closer look, there’s quite a bit more at the first link. In Nevada almost two out of three homeowners with a mortgage are underwater, and half of all homeowners with a mortgage have negative equity of 25% or more (which is the point where default likelihood starts to rise dramatically). That is a lot of debt.

How much is an average US politician worth?

If you’re talking about the guys from Washington (House and Senate): More than 6 millions!

Short version:

Longer version:

Net worth, both Democrats & Republicans from House or Senate:
25th percentile = $228,006
Median = $791,004
75th percentile = $2,962,519
Mean = $6,438,210

Razib gives you even more details at the link, you can find the data here. The numbers above are from the full sample, do notice the difference between the mean and the median: Some of the people in the top of the list has a lot of money. If you remove a few of the ‘outliers’, ie. the politicians with a net worth north of 50 mil $ and those with a negative net worth, which Razib has done in his post, it has a sizeable impact on the stats.

I wonder what the Danish numbers look like. I’m pretty sure all relevant variables are significantly lower. I also wonder how the above numbers compare with those of the top civil servants. Do remember that the average age of Senators is 63 (House: 57); you’d expect most of them to have a sizeable net worth as they are on average pretty close to their retirement age (that’s not to say that these numbers aren’t completely insane…).

In the US, most of the ‘people’s representatives’ are millionaires close to their retirement age.

College degrees and gender

Since 1970, the gender ratio has flipped:

Only business, engineering and the physical sciences have more males than females enrolled. Via Mark Perry.

A few numbers

Some numbers from realclearpolitics:

“Congressional job approval”:
26.8 percent approve.
64.0 percent disapprove.

Let me just spell that one out for those of you with poor math skills: Almost 2 out of 3 Americans disapprove of the work their own elected representatives do.

“Direction of country”:
38.6 percent “right direction”.
53.8 percent: “wrong track”.

The president’s approval rating is still above 50 percent (52.5 vs 40.7). Within the last 9 months, the amount of people who disapprove of Obama has more than doubled – see the previous link.

Interesting fact of the day

The government is financing 9 out of 10 new mortgages in the United States.

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Link, via Razib Khan.

And yes, of course by “interesting” I mean interesting as in “may you live in interesting times” -interesting.

Fiscal responsibility

(Click the image to view it in a higher resolution)

More here.

A thought

Robin: A thought occurred to me about medical spending. There exists a classic economic model that would be consistent with medical spending being completely uncorrelated from health outcomes – that of a monopoly with the ability to implement price discrimination. (In other words, it’s exactly what you’d expect if people paid widely varying amounts of money for the same average quality of treatment.)

Doug S., in a comment here. I’d never thought of it like that, but now that the idea has been formulated, I wonder how close to the truth this is.

Robin Hanson’s idea about health care spending is, in case you didn’t know, that appr. half of all US health care spending is pure waste with no measurable effect on outcomes. This link provides a graph that illustrates the cost-effectiveness (or lack thereof) of the US health care system by plotting per-capita-spending and longevity for different countries.

FDR and the US economy during the 30′es

Here are some US unemployment numbers from the 30′es (follow the link for source and further comments):

1930: 8.7%
1931: 15.9%
1932: 23.6%
1933: 24.9%
1934: 21.7%
1935: 20.1.%
1936:16.9%
1937:14.3%
1938:19%
1939:17.2%
1940:14.6%

I have a few more stats to add to this picture. Below is a table of annual compounded GDP growth rates for selected countries/areas, 1925-1938:

Belgium: 2.3*
Denmark: 2.4
France: -0.2
Germany: 4.1
Italy: 1.8
Netherlands: 1.3
Norway: 3.4
Sweden: 3.1
Switzerland: 1.9
United Kingdom: 2.5
Europe: 2.2
Canada: 1.8
United States: 1.0
Japan: 3.8

(*: 1924-1938)

Source: Kenwood & Lougheed, Growth of the International Economy 1820-2000, 4.th edition, p.177, table 18. Their source is A. Maddison, ‘Growth and Fluctuation in the World Economy, 1870-1960′, Banca Nazionale del Lavoro Quarterly Review (June, 1962), Table 5, p.141.

Only one of the countries in the above listing, France, did worse than the US during this period. No, FDR and his ‘New Deal’ can’t be blamed for the first 8 years, but…

Incidentally, every time you hear someone compare the current crisis with the Great Depression, have the above unemployment figures in mind. The current US unemployment is around 6%.

Americans aren’t too fond of their politicians

Congress was front and center in the national news last week and the American people were far from impressed. If they could vote to keep or replace the entire Congress, 59% of voters would like to throw them all out and start over again. The latest Rasmussen Reports national telephone survey found that just 17% would vote to keep the current legislators in office.

Today, just 23% have even a little confidence in the ability of Congress to deal with the nation’s economic problems and only 24% believe most Members of Congress understand legislation before they vote on it.

…
Only half (49%) believe that the current Congress is better than individuals selected at random from the phone book. Thirty-three percent (33%) believe a randomly selected group of Americans could do a better job and 19% are not sure (see crosstabs).

A separate survey found that just 11% of voters say Congress is doing a good or an excellent job.

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Rasmussenreports has more, via Glenn Reynolds.