If you look at Noah's graph of debt relative to GDP, it certainly looks like the big increase started around 1982:
|Graph #1: Noah's Graph|
Noah's graph shows the Federal debt as a percent of GDP. I called up GDP (red) and the Federal debt (blue) as two separate series, and looked at the growth rates for those two series. Sure enough, the blue line is way up high in the 1980s:
|Graph #2. Click Graph for FRED Source Page|
From the mid-1960s to the early 1980s, the blue line, debt growth, changes from very low to very high. Between the mid-60s and the early '80s, the growth of debt went from low to high. So it doesn't make sense to me that Noah says a deficit explosion began after the early 1980s. The explosion started in the mid-1960s and ended in the early 1980s. Noah has it wrong.
And if you look at the blue line on Graph #2, yes, debt growth reaches a high point in the early 1980s. But the trend was downhill from that moment to the year 2000.
Why does Noah's graph show increase beginning arount 1982? Why does it show the debt essentially flat all through the 1970s, while Graph #2 shows increasing debt since the mid-1960s?
Well, because Noah's graph does not show debt. It shows debt divided by GDP. That's not the same thing. Graph #2 shows the growth rates separately, so that we can better evaluate what we see on Noah's graph.
On #2 the blue line runs below the red for almost all the years before 1982. Then, the blue line runs above the red for almost all the years since 1982. So the Federal debt was growing more slowly than GDP before 1982, and faster than GDP after 1982.
This transition, this change that happened around 1982, affects the appearance of Graph #1. It pushes the debt-to-GDP ratio lower before 1982, and higher afterwards. This is one of the reasons Noah thinks he sees an "explosion" of deficits beginning in the early 1980s. There was a decrease in the growth of GDP. Noah has it wrong.