From the Financial Times:
Barack Obama will this week set the goal of halving the budget deficit he inherited by the end of his first term, while pushing ahead aggressively on healthcare reform, climate change and education.From President Bush's 2004 State of the Union speech:
His first budget, released on Thursday, will show the deficit falling to $533bn (€415bn, £369bn) by fiscal year 2013, compared with an inherited deficit aides estimate at $1,300bn.
And we should limit the burden of government on this economy by acting as good stewards of taxpayer dollars. In two weeks, I will send you a budget that funds the war, protects the homeland, and meets important domestic needs, while limiting the growth in discretionary spending to less than 4 percent. This will require that Congress focus on priorities, cut wasteful spending, and be wise with the people's money. By doing so, we can cut the deficit in half over the next five years.Keep in mind that cutting the deficit in half is far different than cutting the national debt in half. Cutting the deficit in half means that government spending will still be contributing to the national debt. In order to reduce the national debt, we need to have a budget surplus, not a deficit.
The $533 billion deficit that Obama hopes for would rank among one of the worst deficits experienced under George W. Bush. In other words, it would be no great accomplishment. Even so, I think Obama is unlikely to achieve it.
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Of course, one should keep in mind that Bush inherited a budget surplus which became a deficit of 400 billion at it's peak. He was on his way to cutting his peak deficit in half before the financial crisis necessitated the TARP program.
ReplyDeleteAnother note is that the presidency covers the calendar year, Jan - Jan, while the budget is a fiscal year.
This puts the last three months of the last Presidency's actual deficit spending into the budget of the next Presidency.
I only noticed this issue recently as the $750 billion TARP program in December, under Bush, added $750 billion to the deficit under Obama.
With about 150 million employed, the 1.4 Trillion deficit is about $9333 per taxpayer.
If I could only scrounge up an extra $1,000 a year to send the IRS I'd be happy to help. Should only take ten years. Anyone making bank that cares to match me 5:1?