Researchers claim ‘serious errors’ in GDP study cited by deficit hawks

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While the original study claims that a debt to GDP ratio of over 90 percent will result in average economic growth of -0.1 percent, the new study claims modern economies still grow under those conditions at an average pace of 2.2 percent.

"Contrary to [Reinhart-Rogoff], average GDP growth at public debt/GDP ratios over 90 percent is not dramatically different than when public debt/GDP ratios are lower," the economists wrote.

Reinhart and Rogoff defended their original study, saying their initial read of the new paper did not appear to undercut their fundamental findings about the threat posed by excessive debt.

"The weight of the evidence to date –including this latest comment — seems entirely consistent with our original interpretation of the data," they said in a statement to the Wall Street Journal.

The United States's debt to GDP ratio is 76.6 percent when taking into account debt held by the public, and 107 percent when taking into gross debt in 2013, according to White House's budget proposal.

The White House maintains only debt held by the public needs to be considered, and projects the president's plan would lower the ratio to 73 percent by 2023.

Among the problems identified in the new study from Thomas Herndon, Michael Ash and Robert Pollin, they claimed that the original work included a coding error in a spreadsheet. The error, which meant that five of the 20 nations studied were inadvertently left out of key calculations, is responsible for lowering economic growth findings by 0.3 percent.

The study also accuses Reinhart and Rogoff of using "unconventional weighting" in making calculations, as well as selectively excluding pieces of data.

The new findings, first highlighted by Mike Konczal of the Roosevelt Institute, shake the foundation of a fundamental piece of evidence for policymakers emphasizing the need for deficit reduction.

On Friday, the House Budget Committee cited the study extensively in its takedown of President Obama's 2014 budget proposal.

"Instead of taking steps to reduce the excessive burden of debt, the President’s budget, even if fully implemented, never reduces gross federal debt below the important 90 percent threshold," the committee said on its website.

House Budget Committee Chairman Paul Ryan (R-Wis.) also cited the study in his 2013 budget proposal, saying it showed "conclusive empirical evidence" that high debt levels significantly weigh on economic growth.

And Sen. Jeff Sessions (R-Ala.), the ranking member on the Senate Budget Committee, heavily relied on the study in his opening remarks on the debate over the Senate budget in March, citing the "famed economists."

The work has been cited not just by Republicans, but members of both parties training their fire on the nation's deficit. Former Senate Budget Committee Chairman Kent Conrad (D-N.D.) cited the study on the Senate floor in his farewell address before his retirement in 2012. Calling it a "landmark work," he used it to underscore his persistent push to shrink the nation's debt.

"This is not just numbers on a page," he said in December. "This is a question of future economic opportunity."

New York Times' columnist and Nobel Prize-winning economist Paul Krugman seized on the study Tuesday, writing a post titled, "Holy Coding Error, Batman."

— This story was updated at 4:22 p.m.