Federal Deficit Hits All-Time High: $1.42 Trillion

[alp227]

Source: Associated Press

WASHINGTON (AP) -- The federal budget deficit has surged to an all-time high of $1.42 trillion as the recession caused tax revenues to plunge while the government was spending massive amounts to stabilize the financial system and jump-start the economy.

The imbalance for the budget year ended Sept. 30, more than tripled last year's record. The Obama administration projects deficits will total $9.1 trillion over the next decade unless corrective action is taken.

As a portion of the economy, the budget deficit stood at 10 percent, the highest since World War II, according to government data released Friday.

President Barack Obama has pledged to reduce the deficit once the Great Recession ends and the unemployment rate starts falling. But economists worry the government lacks the will to make the hard political choices to cut spending and raise taxes to get control of the imbalances.

Read more: http://www.nytimes.com/aponline/2009/10/16/business/AP-US-Deficit-Danger.html?partner=rss&emc=rss

[Birthmark]

1. Thanks kids!

Now if y'all inflate the currency, you can pay that back in much smaller dollars. ;)

[notesdev]

2. That's after the fraudulent accounting

Before the books are cooked, the figure is $1.8 trillion. Just do the before vs. after math on the net deficit.

Where's the other $400 billion, and how do these guys get away with pretending a sum of that size doesn't exist?

[MercutioATC]

3. Which is exactly why this "recovery" is a complete sham.

We didn't change our habits, we just borrowed even MORE money to "pay" for the money we'd already borrowed and couldn't pay back and gave that money to corporations to artificially inflate their balance sheets.

[Warpy]

4. Not surprising considering how bad the economy is

but if Obama doesn't want the dollar to fall below 0.50 Euros, he's going to have to start figuring out how to raise revenue.

I suggest he start by reversing Reaganomics and making our tax structure more progressive by adding a couple of new tiers at the top.

Stupid's boneheaded tax cuts will expire after next year, but that might be too late to do much good.

[twitomy]

5. Here's an idea...

How we stop spending more money than we take in? Crazy idea, I know. Both parties are to blame. A pox on both their houses.

[Warpy]

10. Where are you going to cut spending?

Everything but the military has been cut to the bone and beyond. It's political suicide to start whittling down the overblown Pentagon budget.

Why not make the tax structure more progressive? After all, the best economies have always coincided with the highest taxes on the ultra rich. When they start paying their way, the government can afford to invest in infrastructure and that's good for all of us.

[twitomy]

11. Ohhh theres PLENTY that can be cut.

But everyones cow is sacred.

[Warpy]

12. I asked you a question

and you dodged.

[twitomy]

14. Ok heres a few....

Lets stop all those "ear marks"...
Lets put Fed employees on defined contribution instead of defined benefit plan.
Lets convert SS to where each persons contribution is THEIR OWN contribution and not used for anybody else or to be robbed. (NOT to be confused with "privatization")
Abolish the Education department
Abolish to Energy Dept
Eliminate AG subsidies
Eliminate Corporate Welfare and Subsidies (yes even those "green" subsidies)
Stop bailing out failing corporations
No JSF alternate engine (7.2 Billion)
Get out of Iraq
Stop defending the free world on our dime. Any country that wants us there to protect us must PAY for it.

[Warpy]

15. Looks like it was cribbed from the libertarian pages

and here is what is wrong:

Ear marks are funds for special projects within a Congressional district. They need to be judged on their own merits. Most of us want the roof repaired on a school in a poor district (yes, that was a real one). None of us want bridges to nowhere or roads to nowhere (other real ones).

Fine if you do it for new hires. People already in the system for many years need to keep what they have.

Social security is an insurance program, not a pension plan or an investment. Please research how insurance works, you're woefully ignorant in this department. Besides, do you really want to cut seniors off and have your mother in law move in with you? I guarantee it would be unpleasant for everyone. However, it needs to be converted back to pay as you go and taken out of the general fund. Congress can't rob what it can't get.

There are good arguments to be made for both the Education and Energy departments. The former sets standards nationwide to reduce jingoistic local education fads. The latter, if run right, will get us off the Arab oil tit and out of wars.

Some agricultural subsidies are necessary. When commodities prices drop below parity, the subsidies ensure the farmer won't lose his farm.

You say "green subsidy," I say seed money for startup companies. We have little enough that hasn't been looted in this country and this is a good program. However, corporate welfare, especially the subsidy for moving manufacturing and jobs offshore, has got to end.

Bailouts are loans. They are repaid. However, the bailout should come with a little more interference than it has, including a strict accounting of why the company is failing and prison for executives who played fast and loose with the company.

A cursory reading makes me think you're right about the JSF program. The DOD needs its budget cut by 10% per year until it's in line with other countries. They need to make stuff fast and cheap that works, not the overengineered crap that's obsolete as soon as the paper on the drawing board is changed. We don't need 170 bases offshore. We really, really don't need to be an Empire. That's a rich man's game and we can't afford it.

We're in total agreement about the last two points.

[Festivito]

19. You're nowhere near 500B$, let alone the 1.8T$ it takes now.

Stopping ear marks.. that have to be stopped by the guys who make earmarks? How about just repealing the law of gravity. We'll save a fortune on gas.

Reduce the salaries of employees across the board. Fun. Think they might notice?

I suppose you mean to change SS so we cannot borrow from it. But, that doesn't reduce our costs, that will increase the cost of borrowing. (SS is separate and is not a part of the budget.) Oh, and I must suppose that when grandmas run out of their contributions barely paying bills along the way, you'd gladly inform them for us that they're cut off? Good. I didn't want that job!

Abolish departments and subsidies! Let me guess: it's government so they do no good anyway. Aside from the down the road social problems, we save, say, 100B$ of the 500B$. Oh, when sectors of the economy go south, food prices become uncontrollable driving inflation and large pockets of unemployed taxpayers paying no taxes, you'll have to come up with a whole other set of cost reductions. It's okay, I'm listening.

7.2B$ from one military project! Can you expand that? We spend more each year on military than the rest of the world combined, and that figure is 500B$. But, would you convince the American dum-dum press. I've had no luck so far. Thanks.

Iraq costs about 200B$/year. And, I'd love to get out. I'd also like to leave them better off than they were, but day by day I'd settle for less and less while becoming embarrassed for my country more and more. Yuch. Maybe if you asked Congress they'd slap their collective foreheads and go for it!

Again with cutting the military. You did expand your idea! Good. I can feel the impetus to convince that pesky media running through your system as I write. Get-R-done!

Hey, we'd all like to believe it's as simple as those right-wing pundits would sell us to believe. But, the truth is that it's hard. This debt is to the US as global warming is to the world - daunting but doable - we hope.

[twitomy]

24. We can argue till the cows come home..

But here we go:

>>"Stopping ear marks.. that have to be stopped by the guys who make earmarks? How about just repealing the law of gravity."

If we had a President with testicular fortitude he would expose these abuses and use the veto pen.

>>"I suppose you mean to change SS so we cannot borrow from it. "

In part yes, there is a supposed "trust fund" full of IOU's..Its not a trust fun when you will have to borrow money to access the "trust fund".

>>"But, that doesn't reduce our costs, that will increase the cost of borrowing. "

Again, we shouldnt be borrowing fun the trust fund.

>>"(SS is separate and is not a part of the budget.)"

And yet the govt is borrowing on it. Remember Al Gores "Lock Box"?

>>"Oh, and I must suppose that when grandmas run out of their contributions barely paying bills along the way, you'd gladly inform them for us that they're cut off?"

And currently we avoid this is by taking from current contributors. Works great until the number
of new contributors exceeds those taking it out. Its known as a Ponzi Scheme.

The way to do this is to have a person contribute as they are now. When they reach the retirement age
their savings are paid out to cover a set number of years. During those years, an insurance policy
can be purchased that would provide the payments should the person outlive their contributions. The
cost of the policy would be regulated.

If we went to a SS set up this way, funding it would be a non-issue, and it would TRULEY be "off-budget"

Ag subsidies are a waste and dont help the small farmer. It only keeps corporate farming and the likes of ADM/Monsanta happy. "Cheap food" has only made us a fat-assed populace. If it wasnt so cheap perhaps we would have such poor diets.

My botttom line is I think the Feds are taking enough money. Taking more is the last thing you want to do in a recession, and the current deficit is inexcusable. Why do you think the dollar is being abandoned? Didnt Obama rail against the Bush deficits? (justifiably so) Obamas deficeit of 1.4 trillion makes Bush a piker by comparison. The great unwashed has to tightened their belts during rough times, and I dont think its asking much for the Fed to do the same.

[Festivito]

27. You're still nowhere near the mark, unless you're from a parallel universe.

A parallel universe where Al Gore did win and the lock box became reality, and Republicans did not take over and bring the borrowing back up again after Clinton brought it down below zero, i.e. surplus.

Where Congresscritters no longer act like vindictive jerks when they don't get their earmarks.

Where we could hand over our money to an insurance company to pay out SS and that insurance company would not screw us the way our, for example, health insurance companies screw us. Wow, what a place you live in.

Where a Bush budget only leads to a 1.4T$ deficit instead of 1.8T$ borrowed, and one can blame that on the new president along with blaming him for spending to solve the further borrowing the banks and nation did because of the policies set up by that previous administration. Gee, that sounds so, so, so, deliciously wrong.

So far, Obama's fiscal year budget, his first, is 17 days old. But, that's enough to completely judge him on...

...At least, in a parallel universe.

Must be nice.

[twitomy]

33. You have a defeatist attitude..

Your saying its impossible to get our government to straightened its act up, so lets just bend over and let them take whatever they want.

Maybe in your world...

[No Elephants]

30. Then tax more. If you tax people to pay for wars, they understand wars better.

[fasttense]

41. I don't care. n/t

[rayofreason]

35. You are wrong about progressivity...

...in our tax code.

Here are the real numbers

http://www.cbo.gov/publications/collections/taxdistribution.cfm

Especially

http://www.cbo.gov/publications/collections/tax/2009/tax_liability_shares.pdf

In 1996 the top 1% on incomes paid 21.8% of total federal tax. In 2006 the top 1% paid 28.3% of total federal tax. That is a 29.8% increase in the relative share of the total federal tax burden.

Use real data to argue for public policy, not ignorance.

[Warpy]

45. That's only because there was a concurrent transfer of wealth to them

by skewed taxes.

It's not the whole picture and you know it.

[rayofreason]

48. Care to explain...

...and provide some real data to support your assertion?

The fact remains - the rich pay the highest fraction of the total federal tax (including payroll taxes) that they have ever paid.

[indepat]

6. The budget-year ending 9-30 was junior's last budget and the $1.42 trillion deficit

was his final "up yours" to our country. :P

[Festivito]

7. It's arguably 1.88T$ FY2009, and it was an "up yours" from Bush.

Well said.

Bad spelling missed first try.

[rayofreason]

49. Wrong.

The $787 billion supplemental ARRA spending that was pushed through in early 2009 was this Administration, period.

Meanwhile, job losses have been higher than expected, driving tax receipts down and expenditures up. I have a number of friends who have small businesses. Every one of them tells me that the last thing they plan to do is hire. They are afraid of the deficit, potentially higher taxes, possible healthcare costs, the effect of higher energy prices, and runaway inflation. Some are struggling to keep afloat. Since small business is the major source of job creation, no wonder unemployment continues to tick up. I argue that spending by Obama has made things WORSE rather than better because small business is rattled by government fiscal irresponsibility and so is not hiring.

Remember Bush's "Jobless Recovery" in 2004 when the unemployment rate was 5.4%? Those are going to look like the good ole' days. What will we call this period now since Biden and the rest (who have never run a business) say "Its working"? But don't worry. The BEST AND THE BRIGHTEST are in charge, and they says they are doing the right thing.

http://www.reuters.com/article/ousivMolt/idUSTRE59B1DO20091012

So what could go wrong.....OOPS

http://www.boston.com/business/articles/2009/10/17/harvard_loses_18b_in_cash_placed_in_high_risk_investments/

[mother earth]

8. There's no recovery, it's a lie, they borrowed time is all.

And the bump in the stock market was like the bump before the Great Depression, what goes up, can come down just as shockingly quick. Without jobs our people are screwed, the country is screwed. The backbone of the US is giving out. Without a strong middle class we've got nothing.

[mule_train]

20. 'Without a strong middle class we've got nothing' ->why do you think they've pushed globalism so har

hard?

the parasite knew the host was dying

[bemildred]

9. Yippee. We're winning, we are number one!

"Great recession".
:thumbsup:

[Socal31]

13. It is all OK guys....

We are throwing the Chinese some missle technology. I'm sure they will be present at the next bond auction! Oh happy days!

[mule_train]

16. but it's down from 1.8 trillion

yippeee!!

[mule_train]

17. Greenspan 'cautioned' against paying down the US debt too fast in 2000

citing the need for US debt

and that sums up the fed reserve

they need for us to be in debt

[Warpy]

23. It took until 2008 for Greenspan to expose himself for what he is

to everybody who doesn't post on DU.

He was truly astonished that deregulation would lead to fraud and theft in the banking industry. Truly astonished!

That means he's a fool.

We knew that for years. Now everyone else does. Too bad it's too late.

[mule_train]

18. and you know what that means.....BONUSSES FOR WALLL STREET!!! nt

[mule_train]

21. let's borrow another trillion from china, and go to war with Iran

I think Israel wants us to

[mule_train]

22. for 1.4 trillion, no jobs and $700,000 bonusses for Goldman Sachs

looks like we DID get change

[rayofreason]

38. No...

Hope AND Change!

[Mari333]

25. How about we eliminate 2/3 of the Defense budget?? which eats up 57 percent of US budget?

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=6787034&mesg_id=6787034

[rayofreason]

37. Correct numbers from the CBO...

...are better than incorrect ones

http://www.cbo.gov/ftpdocs/88xx/doc8877/Chapter4.7.1.shtml

Also look here

http://www.gpoaccess.gov/usbudget/
http://www.whitehouse.gov/omb/budget/fy2010/assets/summary.pdf

The WH documents indicate that defense is about 20% of total outlays. Perhaps you think that the Obama administration is lying.

[Mari333]

39. ..

The 2009 U.S. military budget is almost as much as the rest of the world's defense spending combined and is over nine times larger than the military budget of China (compared at the nominal US dollar / Renminbi rate, not the PPP rate). The United States and its close allies are responsible for about two-thirds of the world's military spending (of which, in turn, the U.S. is responsible for the majority).

[rayofreason]

46. That may be true...

...though you provide no data to support your assertion. However, a quick look confirms your figures.

http://en.wikipedia.org/wiki/Military_budget_of_the_People's_Republic_of_China

The fact remains that your earlier post was grossly in error according to data posted by the White House and the CBO to which I linked. Military spending is about 20% of the federal budget, not 57%. It is also at historically low levels as a percentage of GDP, despite the uptick in recent years.

http://en.wikipedia.org/wiki/Military_budget_of_the_United_States
http://en.wikipedia.org/wiki/File:U.S._Defense_Spending_-_%25_to_Outlays.png
http://www.truthandpolitics.org/military-relative-size.php

If the military budget went away completely this administration would still post a $1,000,000,000 deficit with no end in sight for the future.

[AngryAmish]

26. Way to go, Bush!

[Dreamer Tatum]

28. What are you going to say in

2010, 2011, 2012, 2013, 2014, 2015...and beyond?


Call me whatever you want, but it's going to be VERY hard to pin much of the deficit on Bush.

[AngryAmish]

29. Bush is Hitler

[Dreamer Tatum]

31. That's a rational answer for this great republic nt

[No Elephants]

32. Really? Because the situation in which he left us can be easily turned around?

I don't agree. He left us in a black hole.

to be sure, it was not ENTIRELY his fault. He had some help from the Reagan and Clinton administrations. But, he and his Congress probably did more to turf us in eight years than had been done in the 16 years of the Reagan and Clinton administrations combined.

The only people who don't get that are the ones who don't want to get it.

[alp227]

34. Clinton? Under his admin there was a surplus the FIRST TIME EVER

Heck in 2000 he was talking about going "debt free by 2013" given that the surplus allowed debt paybacks. Now Clinton's dream has been shattered by Bush 43 (non-stop Iraq/Afghanistan war spending, 2001 tax cuts, 2008 bank bailout) and in some part Obama (stimulus package, auto industry bailout). And yes Reagan did stretch the national debt, with a defense-heavy budget like that of GWB.

[rayofreason]

36. I hated Bush's $400B deficit...

...and I hate Obama's 1.4/.4=3.5 times as much!

And how has this money been spent? To bail out fat cats, and companies that should by all rights go under, and to pay back important political allies like the UAW. And what about all those jobs "created or saved"

http://thehill.com/blogs/blog-briefing-room/news/63299-first-hard-stimulus-data-finds-only-30000-jobs-saved-or-created-

Never has anyone spent so much to achieve so little with money we didn't have to begin with. Now I read that Congress has been loosening mortgage rules to try to inflate the housing market -setting us up again!

http://www.businessweek.com/the_thread/hotproperty/archives/2009/10/will_risky_fha.html
http://patrick.net/housing/crash.html

You can't get out of one bubble crash by trying to create new bubbles. There is no free lunch.

[fasttense]

40. I don't care about the budget deficit.

If it wasn't important when the bushes, and dick the face shooter, were giving away our tax dollars to contractors, mercenaries, oil corporations, Republicon friends, families, neighbors and churches, it's not important now.

It only seems to come up when the government attempts to help the middle class.

[rayofreason]

47. Help the middle class???!!!

Can I have some of what you are smoking?

Bailouts to the UAW to keep the fat cats who scratch the politicians backs in power. Bailouts to Wall Street. And what about those millions of jobs "created or saved" we heard about? Oh, "Its working" says Biden. Talk about Enron-style accounting. What is the reality?

http://thehill.com/blogs/blog-briefing-room/news/63299-first-hard-stimulus-data-finds-only-30000-jobs-saved-or-created-
http://www.mlive.com/michigan-job-search/index.ssf/2009/10/in_michigan_120m_in_stimulus_spending_so.html

Meanwhile the dollar goes down, down, down, driven by government policy. In fixed terms (taking into account the decline of the dollar), the stock market increases have not kept pace, so if you bought stock with Yen, or Euro, or Canadian dollars you lost money! Before long we will see inflation ripple through the economy. Prices will rise, savings will diminish in value and the middle class will get really squeezed. Inflation is the way we will pay off the debt and the people hurt most will be the middle class who cannot afford to shelter assets or would have difficulty in doing so because they don't have large amounts to take off the table and put into cold storage (buy gold? hold Euros and Yen?).

And what do you think is going to happen when the rest of the world stops lending us a trillion or more very year? Nothing in your adult life will come even close to the disaster that will unfold (unless you are >100 years old).

[Cleobulus]

42. Let us give thanks to Reagan, Bush the First and Bush the Lesser...

for this deep motherfucking hole they all put us in.

[mule_train]

43. absolutely true, but the $700,000 Goldman bonusses are on Obama's watch

nobody has to convince me that obama inherited a disaster - i already knew it

but that doesnt mean he isnt accountable for what goes on during his watch

[L. Coyote]

44. I warned about the Bush tax cuts, but who listened then?

Everyone said, "What is a feedback loop?"