Putting deficits in perspective

Frank Boosman of Pseudorandom felt that the “record deficit” chart I reprinted from Reuters earlier this week was misleading, in that it did not put the deficit figures into context as a percentage of GDP (which most economists feel is a more meaningful way of measuring deficits than in terms of absolute dollars). I would tend to agree with that.
A lively discussion followed in my comments section.
Frank pointed out that “[a] chart of deficit growth as a percentage of GDP would be far more useful,” and I replied by saying, “I invite you to create such a chart and edify us. I think even if you plot these graphs on a logarithmic scale it’s still clear when the numbers are in the black and when they are in the red.”
Frank asked, “If I do create such a chart, drawn from the same CBO data as the Reuters chart, and place it on my blog, will you blog it here to provide both sides of the story? [By the way, I’m not a supporter of the current administration. My only motivation in this is to avoid misleading statistics.]”
I replied, “Sure, of course. I never turn down free content!”
Unable to find a ready-made chart of this data, Frank used the raw data provided by the Congressional Budget Office to prepare the chart. (He used CBO historical data as well as CBO projections.)
As promised, I’m running a copy of his chart here. I’ve squished it a bit to fit my column-width, but the image is itself a link to the full-size image, which should be easier on the eyes:
scrunched deficit/GDP chart
As Frank explains (I am largely plagiarizing his blog entry), “The point here is not that President Bush isn’t running deficits (he is), nor that budget deficits aren’t a bad thing (I happen to believe they are). The point is that this chart looks quite different from the Reuters chart. Both are accurate, but the GDP-based chart is more useful and relevant.”
So, who holds the record for largest deficits as a percentage of GDP? Why the sainted Franklin Delano Roosevelt, that’s who (again, quoting Frank):

An Office of Management and Budget file that can be found here (PDF, 2.25 MB) contains GDP-based budget data going back to 1930. I didn’t take the time to chart it as well, but I found it interesting that during the Depression years 1932-1936, President Roosevelt ran deficits in the range of 4.0 to 5.9 percent of GDP, and during the war years 1942-1945, he ran deficits in the range of 14.2 to 30.3 percent of GDP.

His final comment, “Though I agree neither with President Bush’s specific tax-cutting plans nor his plans for real increases in military spending, I can see why he and his economic team believe their projected budget deficits to be reasonable. From their viewpoint, they’re fighting two wars (against terror and Iraq) while suffering through a serious economic slowdown, making the deficits justifiable when viewed in a historical context. I disagree with this, but I understand it.”
I’d like to point out that no costs for the anticipated war in Iraq are included in the projected deficit figures, nor are the expected costs of reforming the alternative minimum tax, but quibble as I might, I think Frank has done us all a service by rolling up his sleeves and plotting this data. Thanks!