Remember the Regan years? Remember all the pundits and Democrats screaming about the horrible deficits? Remember the George W. Bush years? Remember all the pundits and Democrats screaming about the horrible deficits?
So how about now? Why aren't the usual suspects screaming that deficits are going to ruin us all? Especially since right now deficits are looking HUGE. Huge as in $1.19 trillion this year alone. As the Wall Street Journal reports:
Thanks to a 6.6% decline in revenues due to recession, a spending increase of some $500 billion or 19%, and assorted federal bailouts, the U.S. deficit for fiscal 2009 (ending September 30) will nearly triple to $1.19 trillion. That's 8.3% of GDP, which CBO says "will most likely shatter the previous post-World War II record high of 6.0 percent posted in 1983." It certainly blows away any deficit this decade, not to mention the Reagan years when smaller deficits were the media cause celebre.
But that's just the deficit as it stands right now. Add in Mr. Obama's stimulus plans (another trillion dollars maybe) and the deficit will grow to Brobdingnagian size:
[I]f the economy stays slow the deficit could reach $1.8 trillion, or a gargantuan 12.5% of GDP. That 2006 Democratic vow to pass "pay as you go" budgets seems like a lifetime ago, which in political terms it was.
So what will all this deficit spending do to the economy?
Does the word "inflation" mean anything to you? As government spends more money than it takes in, it devalues the dollar. I wouldn't be surprised (unhappy, but not surprised) to see double-digit inflation by the end of the year. Add that to the probably double-digit unemployment and we'll have a misery index that will make the Carter years look prosperous.
The other danger is that government will grow used to spending a lot of money and this will put demands on taxpayers on the future to foot the bill for what could become a $4 trillion annual government budget. And it wasn't that long ago I was complaining about a $2.9 trillion budget. Well, to paraphrase Reagan: a trillion here and a trillion there and pretty soon you're talking about real money.
4 trillion dollars? That's only 4,000,000 mega dollars. That's only $26,667 per worker. What's the big deal? Aren't you feeling patriotic?
Posted by: FreddyB | January 08, 2009 at 08:09 PM