The Obama Administration set another record today.
For the second year in a row they passed the trillion dollar deficit mark.
Don’t expect this chart to make it in any front page story.
(USA Today and Heritage)
For the second year in a row the Obama Administration pushed the national deficit above the Trillion dollar mark, further proof that Obamanomics are a complete failure.
Preliminary figures from the Congressional Budget Office (CBO) show that Washington ran a $1.291 trillion deficit in 2010, just slightly less than last year’s $1.416 trillion.
To put these figures in perspective, the annual budget deficit between 1789 and 2008 never reached $500 billion. As a percentage of the gross domestic product (GDP), the past two years’ deficits of 10.0 and 8.9 dwarf all other deficits since World War II.
Recession-damped revenues continued to contribute to the budget deficit, coming in at 14.7 percent of GDP. However, low revenues are only a temporary contributor to the budget deficit. CBO data shows that once the recession ends, revenues should converge back toward their historical average of 18 percent of the economy.
The surging spending will likely be permanent. Federal spending this past year reached 23.6 percent of the economy, which, along with last year’s 25.4 percent, are the highest spending levels in American history outside of World War II. And President Obama’s budget would permanently maintain federal spending at these high levels.
Putting these revenue and spending trends together shows that long-term deficits will be driven exclusively by above-average spending. After all, if revenues revert back to their historical average, yet spending remains 5–6 percent of GDP above its historical average, then it will not take a mathematician or economist to determine which variable is driving the deficit upwards.
Spending dipped 2 percent in 2010, from $3.520 trillion to $3.453 trillion. Unfortunately, this was not the result of actual, repeatable spending restraint. After costing $154 billion in 2009, repayments to TARP lead to a $108 billion “profit” this past year. The cost of bailing out Fannie Mae and Freddie Mac dropped from $91 billion to $40 billion. Deposit insurance costs declined $55 billion. Each of these savings represents one-time offsets from the cost of previous financial bailouts. These better-than-projected results should not, however, be confused with good policy.