Ten years ago, the federal government reached a dismal milestone: a one-year deficit of $1 trillion. Now, like too many movie franchises, we’re getting the sequel whether we want it or not.
A new Congressional Budget Office report reveals that the federal deficit for the current fiscal year has once again exceeded $1 trillion.
The driving force behind America’s astronomical deficit is the rapid increase in spending. Federal outlays are up 7% compared to 2018, which far outstrips inflation, population growth, and the economy.
It is worth comparing America’s situation to that of similar nations, both in 2009 and today, to see why the current deficit is so unacceptable.
The Great Recession of 2008 ate into tax revenue. At the same time, the wasteful and ineffective stimulus legislation generated a record high for spending. Trillion-dollar deficits, which were a factor in launching the Tea Party movement, lasted from 2009 through 2012.
The U.S. was hardly alone in this. The recession devastated the global economy and damaged the bottom line of other nations a result. Most were able to rein in deficits as the economy rebounded.
With robust global growth over the last several years, a majority of developed nations are taking advantage by shrinking the size of their debt relative to the size of the economy. This ratio, often written as “debt-to-GDP”, is important because it points to how well a nation can afford its current level of debt.
The International Monetary Fund projects that of the 10 largest advanced economies, the U.S. will have by far the largest debt growth relative to its economy over the next five year.