re: We’re watching the death throes of the GOP

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Referring to 1917-18?

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Currently, the United States is experiencing an unusual and concerning phenomenon — the annual deficit is high even though the unemployment rate is low.

A low unemployment rate usually signals a healthy economy, contributing to conditions that encourage lower deficits. When the unemployment rate is low, the federal government’s balance sheet benefits in two ways. First, more people are working so the federal government spends less money on relief programs known as automatic stabilizers, such as unemployment insurance, Medicaid, and Supplemental Nutrition Assistance Program. Second, the federal government collects more money from taxes due to higher payrolls. Lower spending on automatic stabilizers paired with higher revenues as more people are employed should generate lower deficits.

That relationship is not in effect today. In 2023, the unemployment rate averaged 3.6 percent, well below its 50-year average of 6.2 percent. However, the deficit last year was 6.3 percent of gross domestic product (GDP), significantly above its 50-year average of 3.7 percent. The average deficit when the unemployment rate was low (defined as below 6 percent) between 1970 and 2022 was 1.9 percent of GDP.

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