The Washington Post
Record-High Deficit May Dash Big Plans
written by Lori Montgomery and Neil Irwin
Friday October 16, 2009
The federal budget deficit soared to a record $1.4 trillion in the fiscal year that ended in September, a chasm of red ink unequaled in the postwar era that threatens to complicate the most ambitious goals of the Obama administration, including plans for fresh spending to create jobs and spur economic recovery.
Still, the figure represents a significant improvement over the darkest deficit projections, which had been as much as $400 billion higher earlier this year, when the economy was wallowing in recession. Since then, the outlook has brightened and a government bailout has successfully stabilized the nation's troubled financial sector. In a report released Friday, Treasury officials said the government had spent $132 billion less than expected in August, due primarily to a drop in anticipated spending on the banking bailout.
At about 10 percent of the overall economy, the gap between federal spending and tax collections is the largest on record since the end of World War II, and bigger in nominal terms than the past four years of deficits combined. Next year is unlikely to be much better, budget analysts say. And Obama's current policies would drive the budget gap into the trillion-dollar range for much of the next decade.
As they unveiled the final 2009 figure, administration officials argued that expensive emergency programs -- such as the $700 billion bank bailout requested by the Bush administration and the $787 billion economic stimulus package Obama signed during his first days in office -- were essential to halting a frightening economic slide earlier this year. The deficit ultimately was lower than expected because those programs worked, they said.
But they tacitly acknowledged that the administration has yet to chart a clear path through the fiscal thicket.
"This year's deficit is lower than we had projected earlier this year, in part because we are managing to repair the financial system at a lower cost to taxpayers," Treasury Secretary Timothy F. Geithner said in a statement. "But future deficits are too high, and the president is committed to working with Congress to bring them down to a sustainable level as the economy recovers." [BULLSH*T]
White House budget director Peter Orszag added: "The president recognizes that we need to put the nation back on a fiscally sustainable path." As Obama draws up his second budget blueprint, due to be delivered to Congress in February, Orszag said, "we are considering proposals to put our country back on firm fiscal footing." [BULLSH*T]
Revenue Down, Outlays Up <<<<<<<<<< [We need JOBS JOBS JOBS!]
A combination of factors combined to produce the $1.4 trillion gap. A deep recession caused tax revenue to plummet by more than $400 billion this year, while the government's economic rescue efforts swelled federal spending. In all, the government spent $3.5 trillion in fiscal 2009, while taking in only $2.1 trillion in taxes, the Treasury Department said. Among the outlays: $113 billion in stimulus cash, $154 billion for the bank bailout and nearly $96 billion in capital payments to Fannie Mae and Freddie Mac, the troubled mortgage insurance giants that the government took over last year.
If the economy rebounds strongly, tax revenues would surge, automatically driving the deficit lower. The more difficult question is what to do if the economy remains sluggish or dips back into recession.
Please click HERE to read the entire article...
Record-High Deficit May Dash Big Plans
written by Lori Montgomery and Neil Irwin
Friday October 16, 2009
The federal budget deficit soared to a record $1.4 trillion in the fiscal year that ended in September, a chasm of red ink unequaled in the postwar era that threatens to complicate the most ambitious goals of the Obama administration, including plans for fresh spending to create jobs and spur economic recovery.
Still, the figure represents a significant improvement over the darkest deficit projections, which had been as much as $400 billion higher earlier this year, when the economy was wallowing in recession. Since then, the outlook has brightened and a government bailout has successfully stabilized the nation's troubled financial sector. In a report released Friday, Treasury officials said the government had spent $132 billion less than expected in August, due primarily to a drop in anticipated spending on the banking bailout.
At about 10 percent of the overall economy, the gap between federal spending and tax collections is the largest on record since the end of World War II, and bigger in nominal terms than the past four years of deficits combined. Next year is unlikely to be much better, budget analysts say. And Obama's current policies would drive the budget gap into the trillion-dollar range for much of the next decade.
As they unveiled the final 2009 figure, administration officials argued that expensive emergency programs -- such as the $700 billion bank bailout requested by the Bush administration and the $787 billion economic stimulus package Obama signed during his first days in office -- were essential to halting a frightening economic slide earlier this year. The deficit ultimately was lower than expected because those programs worked, they said.
But they tacitly acknowledged that the administration has yet to chart a clear path through the fiscal thicket.
"This year's deficit is lower than we had projected earlier this year, in part because we are managing to repair the financial system at a lower cost to taxpayers," Treasury Secretary Timothy F. Geithner said in a statement. "But future deficits are too high, and the president is committed to working with Congress to bring them down to a sustainable level as the economy recovers." [BULLSH*T]
White House budget director Peter Orszag added: "The president recognizes that we need to put the nation back on a fiscally sustainable path." As Obama draws up his second budget blueprint, due to be delivered to Congress in February, Orszag said, "we are considering proposals to put our country back on firm fiscal footing." [BULLSH*T]
Revenue Down, Outlays Up <<<<<<<<<< [We need JOBS JOBS JOBS!]
A combination of factors combined to produce the $1.4 trillion gap. A deep recession caused tax revenue to plummet by more than $400 billion this year, while the government's economic rescue efforts swelled federal spending. In all, the government spent $3.5 trillion in fiscal 2009, while taking in only $2.1 trillion in taxes, the Treasury Department said. Among the outlays: $113 billion in stimulus cash, $154 billion for the bank bailout and nearly $96 billion in capital payments to Fannie Mae and Freddie Mac, the troubled mortgage insurance giants that the government took over last year.
If the economy rebounds strongly, tax revenues would surge, automatically driving the deficit lower. The more difficult question is what to do if the economy remains sluggish or dips back into recession.
Please click HERE to read the entire article...
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