The U.S. Deficit by definition is the difference between what the federal government collects and what it spends. Over the past 30 years we can see that there has been moderate growth prevalent from the Reagan and Bush Administrations. However, nothing compares to what we have currently under the present Obama Administration where the Great Recession has loomed with reducing tax revenues, rising unemployment and incomes falling. As a result of the Obama Administration, there have been budget shortfalls that have toppled the $1 trillion mark in each of his first three years.
Presently, we sit at $15.7 trillion dollars growing at a rate of about $10 million a week. What is equally disturbing is when you look at the 30 largest banks in the U.S. and find out as of 2011 they represent a little over $11 billion dollars. So on a weekly basis the U.S. deficit grows at a rate the equivalent of about 10% of the total of these banks combined.
From a historical perspective, the U.S. deficit during World War II in 1945, represented an alarming 112.7% of the GDP and dropped sharply thereafter to a level in 2010 of only 62% of the GDP. The U.S. has had a long public debt history since its founding in 1791 but aside from its long history, the current economic figures present a continual message of the federal governments long-term instability with its fiscal policies.
In April 2012, the federal government took more than it spent and ended with a surplus, a first in nearly four years. But one month is not making significant strides in a escalated debt that would take more than the period since 1 AD to the present if $1 million a day was being spent toward its payoff!
The Treasury Department said Thursday that the U.S. deficit totaled $719 billion through the first seven months of the budget year, which began on Oct. 1. That’s $150 billion lower than a year ago, but still large by historical standards.
Even when there are improvements being made to the current situation, the Congressional Budget Office is forecasting the deficit will total $1.17 trillion for the entire 2012 budget year. Which is not much of change from $1.3 trillion from last years deficit.
Bipartisan response to the deficit has also offered conflicting strategies to reducing the deficit.
President Obama’s budget is calling for a mix of spending cuts along with revenue increases, by allowing the Bush-era tax cuts for couples making more than $250,000 a year to expire. At the same time imposing a 30 percent tax rate on those making more than $1 million.
Mitt Romney, on the Republican presidential ticket has presented unspecified large spending cuts and is opposing the Obama tax increases on the wealthy. Romney has offered to include in his spending cut plan the reduction of the federal work force by 10%.
The last recorded surplus the government recorded was in 2001 during the Clinton Administration, but soon returned the deficit under George Bush Administration even with his broad tax cuts. They were erased by Bush pushing of the senior drug benefit program and then the wars that launched in Afghanistan and Iraq.
So the ending message is what has grown in the last thirty years with the Gross Public Debt of several billion dollars would take more than twice as long to resolve under the rising financial debt of the U.S. economy.