$482 Billion Budget Deficit Sets Record
By Justin Gardner | Related entries in Bush, Economy, History, MoneyDisheartening news for the next President…
WASHINGTON (AFP) — The US government’s budget deficit is expected to balloon to a record 482 billion dollars in the next fiscal year, largely due to an emergency economic stimulus and a slowing economy, a White House report showed Monday.The report revealed that the Office of Management and Budget (OMB) had trimmed its budget deficit prediction for 2008 by 21 billion dollars to 389 billion.
The OMB cited “higher inflation and more modest expectations regarding economic growth” in revising its deficit projections.
You think maybe if we weren’t spending over $410 million in Iraq every single day we could better balance the budget? After all, that would slice $150 billion off this total. Still quite a deficit, but a hell of a lot more palatable.
But the “best” part of this story is the following…
White House spokeswoman Dana Perino said that a swollen US deficit is “the price that we pay in order to help improve the economy.”She said the White House still stood by its goal of achieving a balanced budget by 2012[...]
How can these people stand by a goal that they won’t even be in office to deliver? Especially when we’re talking about a record deficit? They really think they could turn that around in 4 years if they’re not willing to get out of Iraq anytime soon?
Amazing.
UPDATE:
As many pointed out in the comments section, the $150 billion for Iraq was emergency funding, so even if we got out of there it wouldn’t change this massive number.
My apologies for the confusion.
This entry was posted on Monday, July 28th, 2008 and is filed under Bush, Economy, History, Money. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
July 28th, 2008 at 8:56 pm
I’m not sure, but I think this figure doesn’t include the spending in iraq, since that’s all “emergency” spending, and not part of the normal budget.
July 28th, 2008 at 9:40 pm
actually add $150 billion because iraq is not included in that number
July 29th, 2008 at 12:35 am
McCain’s tax cut plan will only expand the deficit, he’ll take it over 700 Billion a year
July 29th, 2008 at 7:06 am
If you look at the recovery between 2003-2006, there was a very steep decline in deficit over a short period of time - a time when we were spending just as much in Iraq and Afghanistan as we are now (if not more so, since the initial invasion was a larger appropriation); of course, the wars are not included in these statistics anyway.
Another recovery is predictable, whoever the next president may be, particularly because this deficit coincides with problems in the real-estate market, which will bottom out after a year or so and people will start investing again. Just about every industrialized nation is running a budget deficit this year, America’s record deficit turns out to be about 2.9% of GDP (which is not a record, yet its the statistic that really matters), England and Australia are running about 3.3%
Its not the end of the world, and for everyone that blames Bush, consider that between 2003-2006, during the peak of fighting in the Iraq war, this nation underwent a dramatic economic recovery from the last recession which began in 1999.
The budget deficit began to increase in 2006 - a year when Congress became Democrat. Considering that it is Congress that actually sets the budget and decides where money is spent, should they get some of the blame? And if Bush is the culprit, is it not because he merely approved of what the Democrat Congress was doing?
July 29th, 2008 at 7:31 am
White House spokeswoman Dana Perino said that a swollen US deficit is “the price that we pay in order to help improve the economy.”
Um, how is that, Dana? Which bit is it that is meant to help the economy, the bit where the borrowing binge pushes inflation through the roof? Or the bit where interest rates faced by non-government borrowers go up, killing off what little job growth might be left? Or perhaps the bit where it promises massive future transfers from (largely domestic) taxpayers to (disproportionately foreign) bondholders? No, really, we’re all terribly curious…
July 29th, 2008 at 8:25 am
Yes our Percentage deficit to GDP, at the moment is quite small, however it won’t be for very long, concord coaltion, the GAO and the CBO have all crunched the numbers and under their projections our Deficit and Debt as a percentage of GDP is going to ramp up, and ramp up fast over the next 10-20 years under current conditions. McCain will make that ramp up even faster.
July 29th, 2008 at 11:03 am
Here’s what I don’t get…why do stories about “record budget deficits” seldom or even never mention
1) the amount of the total budget for the year, so we can figure out how much more we’re spending than what we would spend if we only spent what we “had”
2) total national debt, so we can get an idea of how big the total hole is
And what is the utility for average folks in comparing the deficit to GDP? I know economists love this, but doesn’t it make more sense to compare it to actual government revenue?
Here’s the thing, deficit spending is only troublesome when its scope grows to the point where it’s not sustainable. If we’re spending a few percentage points more than we currently have, but future growth covers those points, it’s no biggie.
But such stories never provide this sort of basic framework, it’s always “record budget deficit.” But there’s really little reason to expect this NOT to happen most years when the amount of money collected and then spent by the government each year continues to grow.
I’m not saying “don’t be worried.” Instead, I’m just asking that such stories give me the tools to decide for myself how worried to be. This one absolutely does not.
July 29th, 2008 at 11:40 am
Not sure why such stories fail to mention the total budget amount, only the deficit. Some folks might find it interesting that the deficit is a record in dollar amounts, But the real question is how much more are we spending than we have in comparative terms, not absolute terms.
The total budget is 3 trillion, of which almost 500 billion is deficit spending. In other words, using round numbers. we have 2.5 trillion to spend, but we’re spending 3. Made even more understandable. In other words, for every 10 dollars we have, we’re going to spend 12. That’s a probl;em.
Now sure,. its expected that deficits will be bigger when times are lousy. But spending 20% more than you have is not reasonably sustainable. At all. And that’s only this year’s overspending. There’s also the national debt, our cumulative national pool of red ink, which has grown so vast that a substantial portion of the budget goes just to interest payments on it.
And yup, you can compare it to GDP, but that provides what, a useful historical comparative? What else? Projected growth of gov’t revenue may be tied to GDP growth, but the bottom line is that the government doesn’t have the GDP at its disposal to spend, only some fraction of it.
Your takeaway? We shouldn’t be concerned because the deficit has hit a record number in absolute dollars. That’s trivial. But we should be concerned that we are spending $12 for every $10 we have. That should be shocking.
July 29th, 2008 at 2:11 pm
When you talk in terms of raw dollars, you still get figures in the hundreds-of-billions and trillions - which are really big and are used buy politicians to frighten people. There should be some scale to reflect the size of the economy in order to get a proper perspective. Just about every third-world country runs a much smaller deficit and has a much smaller total debt than we do. You want to live there?
GDP is a good reflection of how much you can finance the debt going forward. An entrepreneur who who is already worth millions can buy 100s of thousands of dollars in new goods on credit. A middle-class person - not so much.
Also, government spending figures don’t include what you get for the money. Bridges, office parks, Nimitz-class carriers, research grants, ect… all help build the infrastructure that, supposedly, allows our economy to grow and therefore earn more revenue in the future.
July 29th, 2008 at 5:42 pm
“White House spokeswoman Dana Perino said that a swollen US deficit is “the price that we pay in order to help improve the economy.”
She said the White House still stood by its goal of achieving a balanced budget by 2012[...]”
I eagerly await Dana Perino’s “tell-all” book in which she apologizes about how nothing but Republican BS propaganda spewed out of her mouth while she served “The Administration.” I’m sure Tony Snow would have been disappointed in “puzzlingly reversal.” He might have said something like “This isn’t the Dana we knew, we are puzzled.”
I just love how these criminals can excuse their criminal behavior by coming out with tell-all books as if they were “taken advantage of.” Funniest of all is that Americans in general let these people walk scot-free, as if they weren’t culpable from the word go! Where are the American people? Is this the f’ing twilight zone or what?
July 29th, 2008 at 7:24 pm
“Also, government spending figures don’t include what you get for the money. Bridges, office parks, Nimitz-class carriers, research grants, ect… all help build the infrastructure that, supposedly, allows our economy to grow and therefore earn more revenue in the future.” - Jimmy the Dhimmi
Funny, as if “government spending” were really going to these “things.” I.e. bridges and social services. America’s infrastructure is crumbling. Bridges and infrastructure that was meant to last for 50 years max has far exceeded its safe lifespan. The “reasons” given for government spending and actually spending are two different things. We earmark money for the “public good.” Meanwhile, it goes to corporate subsidies, pork-barrel projects and corporate contractors. All, supposedly for the “public good.” But in reality, not in reality.
Euphemisms are used in the drawing-up of these spending bills in order to make them sound palatable to the apathetic American public. The American public gets what it deserves. Egregious corruption for an egregiously ignorant and indolent populace.
July 29th, 2008 at 8:10 pm
Just a little tidbit for the incredibly brainwashed Jimmy the Dhimmi to address:
Every single penny of the GDP growth you love to tout from your idiot hero W was borrowed. Try some reseach you blithering brainwasherd little toad. Check the numbers, increase in debt is exactly = to GDP growth. I can hardly wait to hear your incredibly moronic explaination.
July 30th, 2008 at 8:25 am
@david - I don’t know who you think you are, but just because you don’t agree with Jimmy doesn’t mean you should call him names, etc. Think of Donklephant like my house and that you’re talking to Jimmy face to face. I doubt you’d ever say something so crude to him in person, so don’t say it here.
Make your arguments and make them well, but leave that nonsense out of it.
July 30th, 2008 at 10:58 am
Jimmy, much of what you say is reasonable regarding GDP. However, the point remains that the size of a deficit that anyone (be they average american, successful entrepreneur, or government) can sustainably run must be related to future growth.
If the government runs deficits in the neighborhood of 10 or 20% OR MORE while government revenue only grows by 2 or 3%, that means that the cumulative hole keeps getting bigger and bigger every year. What this means is that the national debt (the sum of all previous deficits, minus whatever we’ve managed to pay off) gets bigger and bigger.
As the national debt gets bigger, a bigger and bigger portion of the budget itself must be devoted to to paying back previous debts as they come due. That’s a problem. No matter how wonderful and vast GDP becomes, the government still faces the problem of paying back previous debt while also financing other obligations. At some point, if such a trend is not checked, a government faces a situation where it can’t fund the debt obligation and must default.
So the real question to answer is “should we or should we not worry that our government is currently spending 12 dollars for every 10 it collects?” Gut instinct suggest to me that this scope of the overspending is such that there’s little reason to think it’s sustainable for very long at all.
July 30th, 2008 at 11:47 am
Justin, who I am is an American that is sick and tired of lying neocon scum like Jimmy destroying our country. The fact that you welcome liars like him into your “home” says alot about howyou feel about America. The founders would have tarred and feathered traitors like him (and I guess you by association). Now deleate this in the interest of bipartisanship and let America go belly up just so you don’t offend anyone.