Debunking Gloom-and-Doom

I have done way more than my share of gloom-and-doom myself, and I realize that I am being too pessimistic.  So when I see other people do the same thing, I can debunk some of their arguments.

Read: Tax Day trauma: Paying for our massive national debt.

Claim:  At the rate the national debt is rising, interest payments — the fastest growing part of the federal budget — will be bigger than Medicaid by next year and the military by 2025. 

This one is true. Interest payments at ($460B) will be bigger than Medicaid ($420B) by 2020.  Interest payments in 2025 will be $724B and Defense will be $706B.

Claim:  The highest our debt has ever been was just after World War II at 106 percent of the size of the economy (GDP). It quickly fell in the years that followed as war costs subsided, the economy boomed, and the budget was near balance. Today, the debt is 78 percent of GDP, almost double what it was just before the Great Recession. It will pass the World War II-high in as soon as 10 years.

False.  Debt held by the public is what matters, not the national debt, because the national debt includes bookkeeping games to make sure Social Security is paid.  Debt held by the public will not exceed 106%  until 2037 not 2029.  Note that this depends on assumptions about how fast GDP is rising.  I am assuming a 4% nominal increase, which includes inflation.  If you use a lower increase then it is possible this would be reached earlier.  But the article didn't disclose their assumptions.

Claim:  If you look 50 years out, the numbers are incomprehensible. Debt would be over twice as large as the economy even if Congress didn’t do anything to make it worse, and three times as large if they extend current policies. 

False.  The numbers are not incomprehensible any more than today's numbers are incomprehensible.  50 years from now is 2049, when the debt will be 141% of GDP, not over twice as large.  This is assuming current policies.  Yes it is bad, but don't exaggerate.

Claim: The first step in addressing the debt is acknowledging it. The second is to stop adding to it. Only then can we come up with a plan to put it on a downward path back to responsible levels in a way that has the least impact on people’s lives.

True, I strongly agree with the conclusion.