U.S. deficit to top $1 trillion, smallest since ’09
The federal budget deficit will top $1 trillion for a fourth straight year, congressional budget analysts said Tuesday, but is likely to be the smallest since the Great Recession began taking a toll on the budget in 2009.
The nonpartisan Congressional Budget Office projected that the gap between government spending and tax collections would continue to fall, dropping sharply in 2013 and through the decade if policymakers follow through with major changes in both tax policy and government spending now on the books.
The $1.1 trillion deficit is the smallest deficit figure — both in nominal terms and as a percentage of the economy — since the Great Recession.
The CBO said that allowing the George W. Bush tax cuts to expire on schedule in January and making deep cuts to the Pentagon and other agency budgets would shrink future deficits and begin to tame the national debt.
full: http://www.washingtonpost.com/business/economy/us-deficit-to-top-1-trillion-for-4th-year-in-a-row/2012/01/31/gIQAWmKweQ_singlePage.html
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Every President, from Truman to Carter, steadily paid down the staggering debt that was run up in our fight against Nazi Germany and Imperial Japan. That pattern came to a screeching halt with Reagan/Bush and Bush. Clinton’s fiscal policy was a brief respite during this orgy of deficit spending.
Clinton's economic policies balanced 5 budgets, which is 5 more balanced budgets than the last 5 Republican presidents combined.
President Obama, like President Clinton, inherited a sea of red ink and a recession from his predecessor. He, like President Clinton, recognizes the importance of getting America back to work and then getting our fiscal house in order.
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cached at: National Debt
http://bureaucountydems.blogspot.com/p/national-debt.html
The policies, however, are hugely unpopular in both parties. Although they would improve the government’s financial status, the CBO said the nation could pay a steep economic price. Unemployment, which has drifted down to 8.5 percent, could rise to 8.9 percent by this fall and jump back up to 9.2 percent by the end of next year, the CBO said.
You might want to read the CBO report if you think everything's under control. It ain't. There is no chance that the scenario described will happen, because Obama doesn't want it to happen, the GOP doesn't want it to happen, and the Democrats don't want it to happen.
http://www.cbo.gov/
What the CBO is predicting is shown in this graph:
Edited to add:
What the CBO is predicting is fiscal disaster within ten years. Here's the Director's Blog on the topic, which includes a link to the Congressional testimony:
http://cboblog.cbo.gov/?p=3230
To keep debt from rising relative to GDP, the deficit would need to be about 3½ percent of GDP smaller in 2022 than we project under this alternative scenario; that’s $900 billion in that year alone. Therefore, to put the federal budget on a sustainable path, policymakers will need to allow federal revenues to increase to a much higher percentage of GDP than the average over the past 40 years, or make very large changes to Social Security and federal health care programs, or pursue some combination of the two approaches.
edited again to add this link to Director's blog, covering the projections:
http://cboblog.cbo.gov/?p=3200
Under that alternative fiscal scenario, far larger deficits and much greater debt would result than are shown in CBO’s baseline. Deficits would average 5.4 percent of GDP over the 2013–2022 period, rather than the 1.5 percent reflected in CBO’s baseline projections. Debt held by the public would climb to 94 percent of GDP in 2022, the highest figure since just after World War II.
What the CBO is actually saying is austerity now, with increased unemployment and much lower living standards, or much greater austerity in a decade, with increased unemployment and much lower living standards:
CBO’s alternative fiscal scenario represents one possible set of changes in fiscal policy. Under that scenario, real GDP would be noticeably higher in the next few years than it is in CBO’s baseline economic forecast: CBO estimates that, with such changes in policy, real GDP in the fourth quarter of 2013 would be between 0.5 percent and 3.7 percent greater than in the baseline forecast, and that the unemployment rate would be between 0.3 and 1.8 percentage points lower. But, over time, the resulting larger deficits would reduce private investment in productive capital and result in real GDP that would fall increasingly below the level in CBO’s baseline projections.
