Over the last generation (since 1983), every two or three years the United States has had a fiscal deficit greater than in 2004, relative to the Gross Domestic Product.

Two of these larger deficits occurred in 1991 and 1992, during the Clinton Administration. Steve Verdon, on Deinonychus antirrhopus, presents several charts illustrating this point, along with links to sites that expand further on the matter.

The 2004 fiscal deficit, although high, occurred at a time when the trade deficit was even higher — a true record level relative to the GDP — and therefore there was an ample supply of fixed-income-oriented investment funds available to absorb the fiscal deficit, thereby keeping inflation under control and interest rates down.

During the 2004 presidential campaign, the Democratic candidate made much mention of millions of “lost jobs”. Although unemployment ran only 5.6%, not at all high when seen in historical perspective, there were really less people employed than in the recent past — hence the claim of “lost jobs”.

The Democratic Party’s explanation of the conflict between normal levels of unemployment and the claim of “lost jobs” was that millions were so disenchanted with their job prospects that they had simply given up looking. To claim this is to assume that if someone stays at home and says they are not looking for work, they must be lying.

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