So when China stops loaning the FedGov money, guess who they'll come after?
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Posted on 08/31/2009 8:18:37 AM PDT by Thebaddog
According to the Obama administration’s mid-session budget update, the federal government will have to borrow nearly 40 percent of its total expenditures in 2010, a level not seen since World War II.
The report, “Mid-Session Review, Budget of the U.S. Government, Fiscal Year 2010,” shows that 39.9 percent of all federal income will be borrowed, making borrowing the single largest share of revenue in 2010. The next largest component of federal revenue is the personal income tax, which accounts for only 27.3 percent of federal funds.
This is only slightly lower than in 2009, when the federal government borrowed 43.3 percent of the money it has spent so far. The 2009 fiscal years ends Aug. 31, 2009.
The 2010 figures are estimates, based on current policy proposals which have not all been enacted yet. However, all new spending proposals, including spending from initiatives such as health care reform and a proposed cap-and-trade program, would be added to the 2010 deficit.
The revised budget estimates mean that the government will be borrowing the largest share of federal spending since World War II, when the federal government borrowed 62 percent of the budget in 1943, at the war’s apex. Borrowing, however, dropped off quickly after the war, falling to 28 percent in 1946 – with the government running at a surplus by 1947.
That does not seem to be the case this time, because Obama administration projections show the borrowed share of the budget staying at Cold War levels until 2019, when government will borrow 17.3 percent of its budget.
Overall, the Obama administration forecasts spending to be higher than tax revenues, with spending projected to total $43 trillion from 2010 to 2019, borrowing 20 percent of it – or $9.05 trillion.
Office of Management and Budget logo This level of borrowing is unprecedented even during recessions. During the long recession of the 1970’s, federal borrowing never rose above 20 percent of total expenditures despite nearly a decade of sluggish economic growth, high inflation and an international oil crisis.
Debt as a share of the budget reached 15 percent during the 1987recession. Borrowing was generally high during much of the early Reagan administration, reaching a peak of 25 percent in 1983.
However, Obama’s borrowing is 10 times greater than Reagan’s, which was fueled largely by defense spending as America battled the Soviet Union for dominance in the Cold War.
Obama’s 2010 spending is almost entirely domestic, by contrast, with mandatory spending programs, such as the bank bailout and stimulus spending programs nearly equaling defense expenditures despite two ongoing wars.
In fact, defense spending, including the wars in Iraq and Afghanistan, account for 19 percent of federal spending while mandatory programs such as the bailout and the stimulus spending programs account for 18.9 percent.
Entitlement programs, by contrast, including Social Security, Medicare, and Medicaid account for 38.2 percent of total government spending.
Non-defense discretionary spending, which includes the rest of the federal government, accounts for 18.5 percent and interest payments on the current federal debt, valued at $11.7 trillion, accounted for 5.2 percent of spending.
Brian Riedel, budget analyst at the conservative Heritage Foundation, said that the historic levels of borrowing proposed by Obama are not likely to abate, due to what he said were anti-growth policies pursued by the president.
“Two-thirds of the budget was eliminated after World War II ended,” Riedel told CNSNews.com. “But that’s not going to happen now. The White House thinks growth is going to rebound pretty quickly … which I find unrealistic, given some of the anti-growth policies that are a part of the president’s budget.
“Tax increases, cap-and-trade, health care, all of these are going to harm the economy, and they’re going to reduce the growth rate long-term,” he added.
“The lower economic growth is – the lower tax revenues come in, and that means higher borrowing is needed to compensate,” said Riedel.
The people running this government are delusional. They believe their own “smoke.” We are in deep trouble, folks because non of this spending is directed at stimulating the private sector. Without small business and consumers, tax revenues will continue to deteriorate. That 40% borrowing level will quickly prove a pipe dream...
It’s not 40% it’s 100%!!
THROW Da BUMS OUT!!
NOW!!!
Exactly! Where do they think they get the other 60%?
JW
I would rather have them print money.
At least inflation is not unfair, as it affects everyone by the same percentage.
Various taxes
It’s my understanding that we’re now borrowing money to pay the interest on money we borrowed earlier.
Not ture. Inflation punishes those who are living on fixed income or receive wages or otherwise depend on cash. It actually rewards those who own precious assets.
[making borrowing the single largest share of revenue in 2010]
Borrowing is not revenue. Geesh!
These people are completely out of control, and taking the rest of us with them.
The inevitable correction to this massive ROBBERY which we the people have been left "holding the bag" for, is sudden and rapid hyperinflation.
Adam Smith noticed (NOT a quant, by the way) that when two people do a win-win deal, both are better off) This became his invisible hand. I liken it to Jesus "golden rule" or Hillel's simmilar observation. Of course, both were quoting Leviticus. Win-win is good, I screw you is bad...
So what does this have to do with Bernankedom? Simple... human nature creates paradigms/rules in the marketplace and if you don't understand the rules/dynamics and you try to adopt policies that contradict or circumvent the rules... you lose. The USSR was a great example. For 70 years, up was down and down was up. It collapsed under its own weight when market forces finally shattered the Utopian dreams of its dictatorial founders. They just couldn't pound 150 million round pegs into 5 square holes!
These boys are hopeless (and, notice how they are all male!).
I could do a better job balancing the budget than these clowns!
Imagine how bad it would be if they were all female! :o)
I'd much rather live in Reagan style than Obama style...
I believe the interest payments have been figured into the spending. It’s not over the edge yet. But approaching fast.
I may be wrong... this metrosexual thing really has me scared. A man in bed and a dame at the Fed! Yowzers!
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