The figure shows projected federal spending and revenues in coming years, according to the administration’s new budget figures. The deficit is the gap between the lines:
Federal spending reached $1 trillion in fiscal year 1987. Then it took fifteen years for spending to reach $2 trillion in 2002. Then it only took six years to reach $3 trillion in 2008. President Obama’s new midsession budget projections show that it will reach $4 trillion in 2014 and take only four more years to top $5 trillion in 2018. Meanwhile, the Washington establishment is getting all worked up about the deficit effects of extending recent tax cuts, which amount to just a few hundred billion dollars a year.
Greece’s fiscal meltdown could be a sign of things to come in the U.S. if we don’t get our own fiscal house in order. The images of Greek unions rioting against desperately needed government reforms bring to mind our own problems with public sector unions.
Voters who recognize the need to make major cuts to federal spending and think returning Republicans to power will accomplish this feat could be in for a big disappointment. Recent comments to the Washington Post made by former Senate majority leader Trent Lott (R-MS) make it clear that anti-spending candidates elected in November will be fighting against their own party – not just the Democrats.
The following chart show federal spending over the past decade on a per-household basis, adjusted for inflation:
The economy remains weak and the administration’s stimulus has been a bust. To counter the growing unpopularity of his economic policies, the president is traveling around the country handing out government checks to anointed industries.
The Council of Economic Advisors’ latest analysis of the $862 billion stimulus bill figures that it created 2.5 to 3.6 million jobs. How good is this estimate? The same CEA told us that the stimulus bill would keep the unemployment rate below 8 percent. Almost a year and a half later unemployment is still above 9 percent.
The Department of Housing and Urban Development is pushing legislation that would enable public housing projects to access private financing. Due to limits on how much of a tenant’s income can be used for rent, public housing authorities have been reliant on billions of dollars in annual federal operating and capital subsidies.
A recent paper by Veronique de Rugy examines how policymakers use various budgeting gimmicks to increase spending and obscure liabilities. One particularly abusive mechanism is the designation of supplemental spending as an “emergency.” The emergency designation makes it easier for policymakers to skirt budgetary rules, particularly “pay-as-you-go” (PAYGO) requirements.
Republicans on the Senate Appropriations Committee have announced support for caps on the discretionary spending portion of the federal budget. According to press reports, discretionary spending under the cap for fiscal year 2011 would be approximately $20 billion less than what the president has proposed.