Quote of the Day (John Steele Gordon, With a Bad Guess on the National Debt)

“For the first time in more than 70 years, the United States is dealing with the politics of surplus. Between 1930 and 1997, the government ran surpluses in only 10 years, and they were small ones. Meanwhile, the national debt ballooned by a factor of no less than 340, from $16.1 billion to about $5.5 trillion. But now the government has taken in more money than it spent for the last four years, and it does not appear that will change in the near future [emphasis added].”—John Steele Gordon, “Perils of the Surplus: How Andrew Jackson Got in Big Trouble When He Was in Bush’s Fix,” American Heritage, May 2001

Dredging up old predictions that make people look stupid is hardly confined to the political black art of opposition research. Christopher Cerf and Victor Navasky found that their 1984 book The Experts Speak barely exhausted its subject, so they were able to return in 1998 with an expanded edition.

So I don’t mean to pick on John Steele Gordon for his errant guesstimate above, even though pointing out mistakes made by someone famous and/or presumed to be knowledgeable is—let’s be honest here!—awfully fun. I don’t share many of Gordon’s conservative positions, but this business-and-financial historian can offer many useful insights, I’ve found over the years.

No, what Gordon’s bad guess points to is the inherent difficulties in economic soothsaying. Particularly when it comes to the national debt (the subject of one of Gordon’s books), economists are like old sea dogs about to sail again: blissful unaware that they’re heading right into a perfect storm.

The beauty of economic forecasts, at least when employed by journalists, is that only very, very seldom does anyone go back to determine how on target those estimates really are. I should state right here that I’m not one of these economist-trackers. I did not set about learning how well Gordon’s predictions accorded with eventual reality; I simply happened to be perusing an American Heritage issue from 10 years ago when I found the above quote.

Today, according to data from the U.S. Treasury Department, the national debt stands at $13.6 trillion dollars—an amount that would have staggered Gordon had he known it in 2001. Meanwhile, the deficit has grown from $459 billion in 2008 to $1.3 trillion in 2011, according to a “TRB” article by Timothy Noah in The New Republic‘s December 29, 2011 issue.

These numbers should surprise no one. “The experience of the past 15 years is that budget deficits—and surpluses—can oscillate wildly,” noted longtime political observer Michael Barone in a 2005 column for U.S. News and World Report. The question is, why? (Or, in this case: Why was Gordon so wrong about deficits after 2001?)

What happened was, to use a title out there, "a series of unfortunate events."  Who would have guessed in May 2001 that, in a little over four months from then, the nation would be unexpectedly attacked by terrorists, and that this would plunge us not only into an effort to guard internal security with virtually no precedent, as far as cost was concerned, but also into two foreign wars, halfway around the world, along with consequent prolonged efforts at nation-building? Who would have guessed a recession (the longest since the Great Depression) that dramatically reduced government revenue? Who would have guessed that Congressional Republicans would continue the Bush tax cuts, even as the deficit grew--or that the Democrats would embark on their own major new program (Obamacare) whose overall impact we still can’t completely gauge?