US Runs 4th Straight $1 Trillion-Plus Budget Gap; More Stimulus? You Already Got It; Welcome to Slow Growth
If stimulus worked, then why isn’t it? The US has $1 trillion deficits for four years in a row. If that’s not stimulus, what is? Since it isn’t working, the next question is how are we going to pay for it?
While pondering those questions, please note US runs a 4th straight $1 trillion-plus budget gap.
The United States has now spent $1 trillion more than it’s taken in for four straight years.
The Treasury Department confirmed Friday what was widely expected: The deficit for the just-ended 2012 budget year — the gap between the government’s tax revenue and its spending — totaled $1.1 trillion. Put simply, that’s how much the government had to borrow.
It wasn’t quite as ugly as last year.
Tax revenue rose 6.4 percent from 2011 to $2.45 trillion. And spending fell 1.7 percent to $3.5 trillion. As a result, the deficit shrank 16 percent, or $207 billion.
When Obama took office in January 2009, the Congressional Budget Office forecast that the deficit that year would total $1.2 trillion. It ended up at a record $1.41 trillion.
Debt piles up, year after year. It’s reached $11.3 trillion — $16.2 trillion if you include money the government has borrowed from itself, mostly revenue from Social Security.
Unless something changes, the Congressional Budget Office warns, the federal debt would reach a level that is “unsustainable from both a budgetary and an economic perspective.”
Over time, big government debts can damage the economy. The economists Kenneth Rogoff of Harvard University and Carmen Reinhart of the Peterson Institute for International Economics have found that growth tends to slow sharply once national government debt reaches 90 percent of GDP.
Welcome to Slow Growth
Welcome to slow growth for as far as the eye can see. Unfavorable demographics coupled with a mountain of debt seals the fate.
Ironically, Keynesian clowns are begging for stimulus, as if we don’t have it already. But no! $1 trillion in deficit spending is not enough for them. They want to spend still more as if they can overcome demographics, debt deflation, interest on the national debt, and the simple fact that the government can never spend money wisely.
Want proof? The $16 trillion in debt speaks for itself. What do we have to show for that debt other than an enormously well off 1% vs. everyone else?
Mike “Mish” Shedlock