How much of the U.S. economic problems are caused by the deficit and what percentage of the deficit is the Iraq war?

BY Paul Solman  February 19, 2008 at 10:54 AM EST

Question/Comment:
1. How much of the U.S. economic problems are caused by the deficit?
2. What percentage of the deficit is the Iraq war?
3. How can the U.S. ever pay off the deficit, and how long will it take?
4. What percentage of the economy is the deficit, or how is it measured?

Paul Solman:
1. Some.
2. According to e-mailer Tom Lains, below, $150 billion a year, which would be a sizable chunk of our deficit, depending on whether or not you include the Social Security surplus in it. And even more if you include future costs of the war, as we suggested in our most recent story on the subject.

3. If you mean pay off the national debt (our cumulative deficits over the years), the answer is “probably never.” We’ve kept adding to it since we became the U.S. of A. If you mean the deficit (the annual shortfall between federal revenues and federal expenditures) then we’ll “pay it off” if and when we balance the budget.

4. The deficit’s measurement is the subject of great controversy. If you exclude the Iraq war and the extra money we’re taking in from FICA taxes to set aside for future Social Security obligations, it is just a few hundred billion in a $13 trillion economy. Depending on how you add in the war and entitlements, however, it could be a lot more. Our national debt — if you include the money we owe to ourselves, i.e., Treasury bills and bonds owned by Americans and the Social Security trust fund – is $9+ trillion (see above). That would be pushing 70 percent of GDP. By contrast, Japan is up around 175 percent; China, down near 20 percent.