The US annual deficit was less than $500 billion/year for every year before the first budget of the Obama administration. The current 2009 deficit is projected to be about $2 trillion. In the pictures, you can see the actual deficit spending under President George Bush and the projected deficits under President Obama. The projected deficits under President Obama are now optimistic as they were made assuming unemployment peaks in 2010 at 9% and that GDP growth heads back to 3-4% per year. Interests rates could also go up because of high deficits and again the situation would be worse than what is projected.
If unemployment, GDP growth and interests do not work out to be as good or better than the projections then the deficits will be higher than about $2 trillion in 2010, and $1.4 trillion in 2011 and about $1 trillion out to 2019.
Unemployment rate is at 9.5 percent [July 18, 2009 statistic], a 26-year high and expected to go higher.
The revenue drops from the 2008, 2009 levels of $2.66-2.7 trillion down to an estimated $2.38 trillion while spending goes up $2.8-3.1 trillion to over $4 trillion.
The US goes from spending $1.20 for every $1 of revenue to $1.80-2.00 for every $1 of revenue.
Under its baseline scenario, CBO projects deficits will briefly drop below 2 percent of GDP next decade before rising to above 5.5 percent in 2035, 8 percent in 2050, and over 19 percent by the end of the 75-year window. Under their “Alternative Fiscal Scenario,” which makes policy assumptions consistent with current practices, deficits would never drop below 4 percent of GDP, would hit 15 percent by 2035, and would surpass 45 percent of GDP by the end of the 75-year period. Unfortunately, given current political sentiment, the second scenario appears far more likely.
This outlook is considerably worse than previous projections, with the 75-year fiscal gap increasing from 6.9 percent of GDP to 8.1 percent of GDP since the December 2007 Long-Term Outlook.
“Having spent over a decade worrying about budget deficits, I can quite honestly say that things have never looked as bad as they do now. We need to be focused on slowing spending and finding better ways to raise revenue, not on cutting taxes and introducing new entitlement programs,” said MacGuineas. “We can either make these hard choices now, on our own terms, or we can make them in a panic on the heels of a full-blown fiscal crisis.”
Federal, State and Local Government
Total US government spending of about $6.2 trillion is about 42% of GDP. In 2006, total US government spending was $4.7 trillion and 36% of GDP.
2010 Federal Spending Buckets
Estimated receipts for fiscal year 2010 are $2.381 trillion [Revenue]
Mandatory spending: $2.184 trillion (-17.9%)
$695 billion (+4.9%) – Social Security
$453 billion (+6.6%) – Medicare
$290 billion (+12.0%) – Medicaid
$0 billion (-100%) – Troubled Asset Relief Program (TARP)
$0 billion (-100%) – Financial stabilization efforts
$11 billion (+275%) – Potential disaster costs
$571 billion (-15.2%) – Other mandatory programs
$164 billion (+18.0%) – Interest on National Debt
Discretionary spending: $1.368 trillion (+7.0%)
$663.7 billion (+12.7%) – Department of Defense (including Overseas Contingency Operations)
$78.7 billion (-1.7%) – Department of Health and Human Services
$72.5 billion (+2.8%) – Department of Transportation
$52.5 billion (+10.3%) – Department of Veterans Affairs
$51.7 billion (+40.9%) – Department of State and Other International Programs
$47.5 billion (+18.5%) – Department of Housing and Urban Development
$46.7 billion (+12.8%) – Department of Education
$42.7 billion (+1.2%) – Department of Homeland Security
$26.3 billion (-0.4%) – Department of Energy
$26.0 billion (+8.8%) – Department of Agriculture
$23.9 billion (-6.3%) – Department of Justice
$18.7 billion (+5.1%) – National Aeronautics and Space Administration
$13.8 billion (+48.4%) – Department of Commerce
$13.3 billion (+4.7%) – Department of Labor
$13.3 billion (+4.7%) – Department of the Treasury
$12.0 billion (+6.2%) – Department of the Interior
$10.5 billion (+34.6%) – Environmental Protection Agency
$9.7 billion (+10.2%) – Social Security Administration
$7.0 billion (+1.4%) – National Science Foundation
$5.1 billion (-3.8%) – Corps of Engineers
$5.0 billion (+100%) – National Infrastructure Bank
$1.1 billion (+22.2%) – Corporation for National and Community Service
$0.7 billion (0.0%) – Small Business Administration
$0.6 billion (-14.3%) – General Services Administration
$19.8 billion (+3.7%) – Other Agencies
$105 billion – Other
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
Known for identifying cutting edge technologies, he is currently a Co-Founder of a startup and fundraiser for high potential early-stage companies. He is the Head of Research for Allocations for deep technology investments and an Angel Investor at Space Angels.
A frequent speaker at corporations, he has been a TEDx speaker, a Singularity University speaker and guest at numerous interviews for radio and podcasts. He is open to public speaking and advising engagements.