Tuesday, September 09, 2008

Record Budget Deficit in 2008? Not Even Close.

WASHINGTON (Reuters) - The U.S. budget deficit will swell to record levels in 2009 as the "turbulent" economy cuts revenues and hikes government spending, a congressional report said Tuesday.

MP: The budget deficit in 2008 of $407 billion will be 2.86% of GDP, which is nowhere near record levels (see chart above). There have been 18 years (1968, 1975, 1976, 1981, 1982, 1983, 1984, 1985, 1986, 1987, 1988, 1990, 1991, 1992, 1993, 1994, 2003 and 2004) when the budget deficit was larger, as a percent of GDP (historical data here).


At 9/09/2008 4:40 PM, Blogger K T Cat said...

Whistling past the graveyard, are we? How do those unfunded future obligations look at the Federal and State level?

At 9/09/2008 5:17 PM, Blogger OBloodyHell said...

Yeah, I don't like the tendency towards endless deficits, either.

And why are we showing positives in the Clinton years? He always ran a deficit, he just decreased the amount of it (i.e., it was smaller than other years in absolute numbers)

At 9/09/2008 5:59 PM, Blogger bobble said...

we don't need no stinkin' budget surplus. our kids can pay for our bridges to nowhere after we're dead.

At 9/09/2008 7:12 PM, Blogger Lammert said...

The Big Picture:

At 9/09/2008 7:29 PM, Anonymous Anonymous said...

agree with professor perry,the deficit is manageble at this level,and deficit spending adds to the gdp. the public seems to want a balanced budget,but isn't it interesting that when we get close to a balanced budget or surplus 1974,2000,- we have a recession.

At 9/09/2008 8:14 PM, Anonymous Anonymous said...

the real problem may come in the future entitlements promised -social security/medicare. here's an alternate view:Roubini thinks that it will take a couple of decades for "U.S. policy mistakes in economic, financial and foreign policies (to) ... erode the power of the American empire." That would make it relatively short-lived. Depending on how you count, the Roman empire lasted more than 500 years, the British 460 or so, the Spanish around 400.

One of America's most serious problems, Roubini writes on his website, is the fact that the U.S. is the world's biggest net borrower and net debtor. The countries financing the American deficits are its rivals, China and Russia, and Middle Eastern oil exporters.

History, he says, provides lessons on the importance of financial prudence. "Empires ... tend to be net lenders, i.e. run current account surpluses. The decline of the British Empire started in World War II when the British fiscal deficits in the war and the current account deficits turned the empire into a net borrower and a net debtor."

The British twin deficits were being financed by a rising power that was a net lender and a net creditor - the United States. Whether it will ever return to that state depends, in part, on the competence, or lack of it, of the next U.S. administration. President George W. Bush's team did not set a good example

At 9/09/2008 9:04 PM, Anonymous Anonymous said...

Entitlements liabilities are essentially irrelevant. Since they are impossible to fund, we will avoid them by not paying. Anybody under 50 or so should be treating SS taxes as just another income tax and assume SS will not provide a meaningful level of benefits. Given these well known facts, anybody who doesn't provide for their own retirement is an idiot.

At 9/10/2008 10:36 AM, Anonymous Anonymous said...

There were budget surpluses during the Clinton years on an annual basis although the surpluses were not large enough to erase the deficits that were inherited.

At 9/10/2008 11:39 AM, Anonymous Anonymous said...

Geez, Carpe Diem, are you lecturing nominal versus real deficits to the blonde with big hooters in seat 3C?

By the time Bush43 leaves office with the 2009 deficit "in the bag", the real deficit to GDP will be an all time record. OOPs, forgot the $200 billion Frannie bailout, the $50 billion Detroit Big 3 bailout, the war surge in Afghanistan. OOPs, forgot a lot, didn't you?

Screw the Reagan "supply side, trickle down" Revolution. It's all downhill from here, libertarian loser. Three decades of illusory prosperity.


Hate to break the news to you randian. You will get your social security cheque; you may not get your medicare/medicaid benefit.

All you libertarians unite for the United States of America Socialists. Pathetic wimps!

At 9/11/2008 8:04 AM, Anonymous Anonymous said...

So the biggest deficits came in the 80's? That would be who's watch? Ahh yes, the Great Communicator's. Apparently neither party can make any realistic claim to fiscal responsibility, as least not without a booming economy behind them.

At 6/05/2012 1:40 AM, Blogger Kevin Nelson said...

From a perspective four years on, it's nice to see that Reuters wasn't exactly wrong; it was just a hair premature.


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