President Obama's FY 2010 budget outline includes ten years' worth of deficit projections. As Obama noted two nights ago, he intends to cut the federal budget deficit from $1.75 trillion in 2009 to $533 billion by the end of his first term.
But what's projected for 2014? A slightly higher deficit -- $570b. For 2015? $583b. By 2016, the deficit exceeds $636b again; by 2019, it's up to about $712b.
The budget projects that the national debt will increase nearly two-fold over 10 years, from $8.3 trillion in 2009 to $15.3 trillion in 2019.
So why does the deficit go up? Largely, it's because the baby boom generation is retiring and taking Social Security checks. Social Security spending rises fairly dramatically over the next ten years.
jesus christ
remember when a trillion dollars used to be a lot?
Looks like I picked the wrong decade to enter the workforce, I'm going to be paying this off for the next 35 years, and my children for the next 50 after that
Assuming that Obama's budget still counts the Social Security surplus, this isn't remotely surprising. Ignoring the projected increases in healthcare costs (Obama's plan changes the projection there dramatically I assume), Social Security outlays are increasing by about 1.5% GDP / 10 years while revenues are declining. That's way more than a couple hundred billion dollars.
This doesn't mean that Social Security is in trouble per se, but it does mean that the utility of employing Social Security revenue as an accounting gimmick is running out.
To add, I imagine Obama was tempted to separate Social Security from the budget entirely. It would increase the current year's deficit even more but allow him to project much more substantial declines. I suppose you'd also have to subtract the trust fund dollars from the national debt to do that honestly, though.
Remember back when Reagan proved that deficits didn't matter? Ahhhh...good times.
So, the plan was halving the deficit by the end of Obama's first term. By the end of 2012? Whether or not they see it going back up after that really hasn't been discussed. Very tricky.
The proposed budget would stablize the deficit at about 3 percent of gross domestic product from 2013 through 2019. An excellent start, although more action will be needed, as President Obama acknowledged on Monday.
Increases in defense spending? Growing the deficit from a historically high level to >100% of GDP in a decade (look at how well that worked out in Japan)? Why didn't the markets freak out today at this insanity? We have to get entitlements under control yesterday.
Neither major party stands for fiscal responsibility anymore. Americans have become too stupid to understand our long-term interest, and I'm pretty sure the ship is going to go down because of it. I guess one last party will be fun for the Boomers, too bad I'm going to be here to watch it all crash.
FYI, I charted out my point on Social Security based on the budget numbers here: http://alchemytoday.com/2009/02/26/209/
John M.'s hysteria isn't warranted, though. If you're alive today you're slated to get nearly full benefits, and full ones with some minor corrections. Social Security won't go bankrupt. The whole shebang might collapse into a Mad Max hellhole but it won't be FDR's fault.
SOME PERSPECTIVE ON BUDGET/GDP RATIOS
If you go back and look at the numbers over the last 50 years you'll find the federal budget has hovered around 21% of GDP for the entire time. It went to about 23% in the late seventies and eighties and down to, for all those Clinton fans, about 18% in the nineties. Now it's going to about 23% again for a couple of years before gradually sinking back to around....voila...21%. The tax take over the time has been around 18%...the difference has been financed by borrowing, most of which occurred on Reagan's and Bush's watches, which accounts for the 11 trillion of public debt.....The tax take is going to tick up to around 21-23% as the top marginal rate goes back to 39%....not exactly a pogrom amongst the wealthiest 20% of the country but it will sound like it if you listen to Rush Limbaugh and the ed page of the WSJ. These gentry will also be blathering on against a war on US business as tax loopholes are really closed...It's still not going to get anywhere near the punitive rate of 35% allegedly being paid by US corporations according to the aforesaid folks but it will push it up a bit from the effective rate of around 6.5% actually being paid by US business today.....So all the chicken littles might want to reflect on these numbers a bit which put this subject in its correct perspective before slashing their wrists.