$1.3 Trillion Deficit in Perspective

RSC ^ | October 14, 2010

[Conservative Coulter Fan]

Background: CBO recently reported that the final FY 2010 deficit came to $1.291 trillion (8.9% of GDP). This is the second year in a row that the federal deficit has exceeded $1 trillion. Prior to last year, the federal deficit had never exceeded $459 billion. Federal spending came to $3.453 trillion or 23.8% of GDP. Federal tax collections amounted to $2.162 trillion or 15.9% of GDP. FY 2009 and FY 2010 are the first two years that federal spending exceeded $3 trillion. The past two years are the highest spending levels as a percentage of the economy in all of American history, excepting World War II. The purpose of this policy brief is to put this deficit spending in perspective.

In Comparison to Historical Budget Data…

The FY 2010 deficit alone is $45 billion higher than the total deficits run up in the twelve years of GOP control of the House from FY 1996-FY 2007. That figure is $1.246 trillion, which comes to an average of $104 billion a year. Put another way, the average annual deficits under the GOP Congress were less than the monthly deficits in FY 2009 ($118 billion average) and FY 2010 ($108 billion average).

The FY 2009 deficit (10.0% of GDP) was the highest deficit as a percentage of GDP in the post-World War II era. The FY 2010 deficit (8.9% of GDP) is the second highest deficit in U.S. history as a percentage of GDP.
The FY 2009 deficit was 208.5% greater than any previous deficit in U.S. history. Excepting FY 2009, the FY 2010 deficit is 181.3% greater than any previous deficit in U.S. history.

The FY 2010 deficit is higher than the entire federal budget as recently as 1990.

The FY 2010 deficit is higher than the public debt as recently as 1983.

FY 2010 spending is higher than the public debt as of 1994.

At $1.291 trillion, the FY 2010 deficit is more than all spending for military operations related to the Global War on Terrorism since 2001 ($1.12 trillion per most recent figure available).

The FY 2010 deficit is $145 billion more than the cost of Social Security and Medicare in FY 2010 combined.

The FY 2010 deficit is $198 billion more than the amount collected from individual income tax and corporate tax collections combined.

Many proponents argue that the New Deal offers a model for deficit spending leading to economic recovery. In fact, from FY 1933 to FY 1940 (from 1941 to 1945, the budget data is far more impacted by World War II than the New Deal) federal deficits averaged 3.6% of GDP (compared to 10.0% of GDP in 2009 and 8.9% of GDP in 2010).

As a percentage of the economy, the federal deficit in FY 2010 (8.9% of GDP) is actually larger than total federal outlays in some years of the New Deal: 1933 (8.0% of GDP), 1937 (8.6% of GDP), and 1938 (7.7% of GDP).

Federal spending averaged 9.4% of GDP during the New Deal period of FY 1933-1940. Federal spending in 2010, as a percentage of economy, was more than two and a half times this level (23.8% of GDP).

In Comparison to State and Global Economies…

The FY 2010 deficit is larger than 49 of our 50 state economies—all except California.

The FY 2010 deficit is roughly the same as the economic output of India (converted to U.S. dollars), a nation with a population that is almost four times greater than America’s.

The FY 2010 deficit is larger than the economy of Russia ($1.23 trillion, converted to U.S. dollars).

The FY 2010 deficit is almost the size of Canada’s economy ($1.34 trillion in 2009), larger than Mexico’s economy ($875 billion), more than double Turkey’s economy ($614 billion), three times the economy of Sweden ($406 billion), four times the economy of Argentina ($310 billion), more than five times the economy of Portugal ($233 billion), and more than ten times the economy of Ukraine ($117 billion).

More than 94% of the world’s economies are smaller than the U.S. FY 2010 deficit.

Since FY 2007 (the most recent year under Republican congressional control)…

Spending: has increased from $2.729 trillion to $3.453 trillion—an increase of $724 billion or 26.5%.

The National Debt: has increased from $8.67 trillion to $13.62 trillion—an increase of $4.95 trillion or 56.9%.

The Debt Limit: has increased six times. Since the Democrats took over Congress, the debt limit has increased from $8.965 trillion to $14.3 trillion—an increase of $5.3 trillion or 59%.

The Deficit: has increased from $161 billion in the last budget before Democrats took control of the Congress (FY 2007) to $1.291 trillion—an increase of $1.13 trillion or 701.9%.

$8.3 Trillion Deterioration to Nation’s Budget Outlook: In January 2007, the month Democrats took control of Congress, CBO projected that the federal government would run a budget surplus of $800 billion over ten years (covering the period from 2008-2017). After three years of a Democrat-controlled Congress’s economic and budget policies, the federal government is projected to run a deficit of $7.5 trillion over the same period. This is an $8.3 trillion deterioration of the budget outlook in the three years since Democrats took control of Congress.

[Tzimisce]

No problem - we’ll just print more money. :D

[WebFocus]

Grouch Marx (FILM: At the Circus) trying to help a friend who owes $10,000 Dollars:

Groucho: “Let’s analyze the problem -— we can say that Jeff owes ten thousand dollars. We can also say that ten thousand dollars is owed by Jeff... which ever way you look at it, he still owes ten thousand dollars...”

TO MAKE A LONG STORY SHORT — THE UNITED STATES OF AMERICA IS SCREWED ANYWAY YOU LOOK AT IT.

[AlmaKing]

I need charts and graphs. I can’t read.

[griswold3]

.

[Liz]

Here's how Obama "Stimulated" the Economy......by run-away spending

The US Treasury entry must be seen in this context. COS Rahm Emanuel took control of the US Treasury when he crept into our WH.

Behind The Real Size of the Wall Street Bailout (more like $14 trillion)
Mother Jones | Dec. 21, 2009 / FR Posted January 04, 2010 by E. Pluribus Unum

A guide to the abbreviations, acronyms, and obscure programs that make up the $14 trillion federal bailout of Wall Street.

The price tag for the Wall Street bailout is often put at $700 billion—the size of the Troubled Assets Relief Program. But TARP is just the best known program in an array of more than 30 overseen by Treasury Department and Federal Reserve that have paid out or put aside money to bail out financial firms and inject money into the markets. To get a sense of the size of the real $14 trillion bailout, see our chart here. Below, a guide to the pieces of the puzzle:

Treasury Department bailout programs (controlled by Rahm Emanuel)

Money Market Mutual Fund: In September 2008, the Treasury announced that it would insure the holdings of publicly offered money market mutual funds. According to the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), these guarantees could have potentially cost the federal government more than $3 trillion [PDF].

Public-Private Investment Fund: This joint Treasury-Federal Reserve program bought toxic assets from banks and brokerages—as much as $5 billion of assets per firm. According to SIGTARP, the government's potential exposure from the PPIF is between $500 million and $1 trillion [PDF].

TARP: As part of the Troubled Asset Relief Program, the Treasury has made loans to or investments more than 750 banks and financial institutions. $650 billion has been paid out (not including HAMP; see below). As of December 21, 2009, $117.5 billion of that has been repaid. Government-sponsored enterprise (GSE) stock purchase: The Treasury has bought $200 million in preferred stock from Fannie Mae and another $200 million from Freddie Mac [PDF] to show that they "will remain viable entities critical to the functioning of the housing and mortgage markets." GSE mortgage-backed securities purchase: Under the Housing and Economic Recovery Act of 2008, the Treasury may buy mortgage-backed securities from Fannie Mae and Freddie Mac. According to SIGTARP, these purchases could cost as much as $314 billion [PDF].

--SNIP--- long read

Federal Reserve bailout programs

Commercial Paper Funding Facility: With the support from the Treasury, the Fed established the CPFF in October 2008 to increase the availability of short-term debt (commercial paper) funding. Up to $1.8 trillion [PDF] was earmarked for the program.

Mortgage-backed securities purchase: In 2009, the Fed earmarked up to $1.25 trillion to buy investments based on home loans.

Term Asset-Backed Securities Loan Facility: TALF provides financing to investors who are buying asset-backed securities. In February 2009, the Fed and Treasury announced an expansion of the program to generate up to $1 trillion in new lending.

Foreign Central Bank Currency Liquidity Swaps: The Fed has provided $755 billion [PDF] for currency liquidity swaps with foreign central banks.

--SNIP--- long read

[Liz]