CBO: Deficit to exceed $1 trillion in 2012
On the campaign trail and during the third presidential debate with Sen. John McCain (R-AZ) in 2008, then-candidate Barack Obama promised that Americans would see a “net-spending cut” during his presidency.
The claim was met with a boatload of skepticism given that Obama was proposing massive expansions in healthcare and non-defense discretionary spending; however, we all crossed our fingers that he would follow through, but we didn’t hold our breath.
The skepticism proved to be justified. Just a couple of months after coming into office, President Barack Obama told Americans that under his budget that there would be trillion dollar deficits as far as the eye can see.
He wasn’t kidding. The Congressional Budget Office released its budget report for this current fiscal year yesterday, predicting yet another trillion dollar budget deficit and unemployment hovering around 9%:
The Congressional Budget Office on Tuesday predicted the deficit will rise to $1.08 trillion in 2012.
The office also projected the jobless rate would rise to 8.9 percent by the end of 2012, and to 9.2 percent in 2013.
These are much dimmer forecasts than in CBO’s last report in August, when the office projected a $973 billion deficit. The report reflects weaker corporate tax revenue and the extension for two months of the payroll tax holiday.
If the CBO estimate is correct, it would mean that the United States recorded a deficit of more than $1 trillion for every year of Obama’s first term.
Most articles on the CBO’s numbers that I’ve read have mentioned that the tax cuts passed in 2001 and 2003 are set to expire at the end of the year, which would reduce the deficit but also threaten economic growth. Of course, there is rarely any emphasis on spending cuts to wasteful government programs, and reform of the nation’s entitlements has largely been taken off the table by congressional Democrats.
So let’s look at the budget deficits over the last several years as compared to gross domestic product (GDP). Budgets from FY 2002 to FY 2009 are at the feet of George W. Bush. But the last three years are almost entirely on Barack Obama.
- FY 2002: $158 billion (1.5% of GDP)
- FY 2003: $378 billion (3.4% of GDP)
- FY 2004: $413 billion (3.5% of GDP)
- FY 2005: $318 billion (2.6% of GDP)
- FY 2006: $248 billion (1.9% of GDP)
- FY 2007: $161 billion (1.2% of GDP)
- FY 2008: $248 billion (3.2% of GDP)
- FY 2009: $1.413 trillion (10% of GDP)
- FY 2010: $1.294 trillion (8.9% of GDP)
- FY 2011: $1.299 trillion (8.6% of GDP)
- FY 2012: $1.08 trillion (7% of GDP)
Don’t get me wrong, I wasn’t happy about the spending spree that occured under Bush. The guy was a big government Republican who increased spending dramatically during his presidency. And this wasn’t just defense spending or war-related appropriations, as his apologists so frequently claim. Veronique de Rugy, an economist at the Mercatus Center, noted in her study on spending under Bush that non-defense discretionary spending increased by more than 20% during his first term alone.
And though he tried to tackle Social Security with a reasonable and respectable proposal, let’s not forget that Bush expanded Medicare, adding a prescription drug benefit to an already fiscally unsound entitlement.
But as you can see, Barack Obama’s spending spree far outpaces his predecessor. But true to Keynesian form, Obama blames this on the economy and says it’s necessary. We can’t possibly hold him to his campaign promises, at least that’s what he seems to want us to think.
Any way you look at it, this is completely unacceptable. And while it may get better in the short-term, the future isn’t looking particularly bright.