For the federal government, the sharply lower revenues and elevated spending deriving from the financial turmoil and severe drop in economic activity—combined with the costs of various policies implemented in response to those conditions and an imbalance between revenues and spending that predated the recession—have caused budget deficits to surge in the past two years. The deficits of $1.4 trillion in 2009 and $1.3 trillion in 2010 are, when measured as a share of gross domestic product (GDP), the largest since 1945—representing 10.0 percent and 8.9 percent of the nation's output, respectively.
Uh, no. First, calendar years guys. Second, here's the chart:
There's the real numbers, from Treasury itself. Those are not estimates, they're actual daily figures.
For 2011, the Congressional Budget Office (CBO) projects that if current laws remain unchanged, the federal budget will show a deficit of close to $1.5 trillion, or 9.8 percent of GDP.
That's $500 billion more than previously estimated. I wrote about it at the time, since when the FICA tax reductions were passed the "contribution" to the deficit (which was easily calculable at about $450 billion, all in) were trivially able to be figured. This of course meant that the alleged $1 trillion would not be $1 trillion, but rather would be $1.5 trillion, and that's if you believe the CBO's alleged "Deficit" numbers, which are bogus - as they account for cost-shifts and off-balance-sheet games.
In point of fact you have to look at the actual numbers "as borrowed"; when you do this you wind up with $1.7 trillion for calendar year 2010, and this means we're rather likely to post a $2 trillion number for calendar year 2011.
That is, if we get away with it, and I don't believe we will. From the Annual Ticker:
We're not going to get away with spending another $450 billion in deficits on top of the $1.6 trillion we blew last year. $2 trillion in deficits? Not a prayer.
The CBO now agrees with me on the size of the deficit. They were late, but better late than never.
The deficits in CBO's baseline projections drop markedly over the next few years as a share of output and average 3.1 percent of GDP from 2014 to 2021. Those projections, however, are based on the assumption that tax and spending policies unfold as specified in current law. Consequently, they understate the budget deficits that would occur if many policies currently in place were continued, rather than allowed to expire as scheduled under current law.
There will be no "expiration" as that term assumes we will get to 2014-2021 before this entire fraudpile blows up in our faces.
That's not going to happen, and the orgasmic reaction you're seeing in the market to the supposed "liquidity-driven rally" is amusing. Let's face reality here folks - liquidity is debt, not growth.
Debt has to be paid back - or defaulted.
Guess which one we'll be doing?
