A Few Facts on the Deficit

Flickr/<a href="hhttp://www.flickr.com/photos/cobalt/425231414/">cobalt123</a> (<a href="http://www.creativecommons.org" target="_blank">Creative Commons</a>).


The big Friday news dump this week is the Obama administration’s projection that the federal budget deficit will reach a record $1.47 trillion this fiscal year. That is, the government will spend $1.47 trillion more than it takes in this fiscal year. There are a few things you should remember when you read about this:

  • The current deficit can be attributed almost entirely to the effects of the economic downturn (reduced tax revenue, increased transfer payments), the Bush tax cuts, and the wars in Iraq and Afghanistan. David Leonhardt and the Center for Budget and Policy Priorities both have good articles and charts on this.
  • The $1.47 trillion number is actually slightly better than the White House’s February prediction. But the forecast for next year looks worse.
  • Despite stimulus spending, which most independent experts believe improved the job picture, there is still massive unemployment in the United States.
  • The median duration of unemployment is at its highest in 50 years.
  • Liberals and conservatives will be arguing about what all this joblessness means. Derek Thompson explains: “Does it mean we must increase the duration of unemployment benefits to protect this new class of unemployed, or does it mean we need to stop subsidizing joblessness? Does it mean we need to expand federal retraining programs, or does it mean federal retraining programs aren’t working? Does it mean we need more stimulus, more state aid, more infrastructure projects, more public works…or does it mean it’s time to stop everything, stand back, and let business be business?” (Liberals go for the first option in each pairing.) This argument can be summed up simply as stimulus vs. austerity. Right now, stimulus seems to be fighting a losing battle.
  • Conservatives don’t have a record of caring about or reducing the budget deficit. They do have a record of caring about and reducing taxes on rich people.
  • We spend almost as much on our military as the rest of the world combined. (A lot of the other countries that are spending big bucks are our allies.) If you include non-Pentagon defense-related expenditures, US defense spending in fiscal year 2010 will be somewhere between $880 billion and $1 trillion—even more if you include the interest we’re paying on debt from past wars. Even if you strip out all that stuff, we’re going to be spending north of $700 billion on the Pentagon and the wars in Iraq and Afghanistan next year.
  • Long-term deficits are not the same as single-year deficits, and they have different causes. Our projected long-term deficits are driven almost entirely by the rapidly increasing cost of health care. (We’re talking about increases driven by things other than the aging of the population.) If we could hold our health care costs at levels comparable to other countries’, our long-term deficits would basically disappear. You can see this for yourself by using the Center for Economic and Policy Research’s health care budget deficit calculator.
  • Social Security is not the problem.

THANK YOU.

We recently wrapped up the crowdfunding campaign for our ambitious Mother Jones Corruption Project, and it was a smashing success. About 10,364 readers pitched in with donations averaging $45, and together they contributed about $467,374 toward our $500,000 goal.

That's amazing. We still have donations from letters we sent in the mail coming back to us, so we're on pace to hit—if not exceed—that goal. Thank you so much. We'll keep you posted here as the project ramps up, and you can join the hundreds of readers who have alerted us to corruption to dig into.

We Recommend

Latest

Sign up for our newsletters

Subscribe and we'll send Mother Jones straight to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate

Share your feedback: We’re planning to launch a new version of the comments section. Help us test it.