Deficit poll

Although we discussed the federal deficit in another thread, I thought I would repost to add a poll question. The graph shows revenue (black) and expenditures (green) as %/GDP for the last 60 years. Although the budget almost balanced in FY1974 (Nixon resigned 52 days before the end of the fiscal year), it didn't balance until fiscal years 1998, 1999, 2000, and 2001.

It seems to me that the expenditures are too high, but revenue is also too low. It is impossible to change only spending without raising taxes. But with interest payments set to pass military expenditure in a few years, and baby boomers retiring, the budget may not balance until it is well over 20%.

In 1940 revenue was 6.8% and expenditure were 9.8%. The lowest number for revenue was 2.8% in 1932.

In 2012 Interest on debt held by the public is 1.7% of GDP.

The combined fortunes of the Forbes 400 are about 8% of GDP (Warren Buffet is about 0.3% of GDP).

If the budget is balanced, where will it balance (as a % of GDP)?

I don't see any graph.

Quote: pacomartin

Although the budget almost balanced in FY1974 (Nixon resigned 52 days before the end of the fiscal year), it didn't balance until fiscal years 1998, 1999, 2000, and 2001.

Really? Paco, You buy into the balanced budget for 1998 to 2001?
Not me.
I studied this topic in school last year before I graduated.
This subject pissed off most of the students in class because we are supposed to believe in what we are told, but most times we are not told all the truth when it comes to understanding what the data is trying to tell us.

I had to find this link
The True Federal Deficit
"As can be seen very clearly in the table, every year the "official" claimed deficit is smaller than the amount by which the national debt went up."

To me this all looks like some simple accounting tricks that people play with data and statistics.
Sally

There are two solutions to the issue. All republicans in Congress and the senate as far as I know have signed the pledge not to raise taxes. If they break the pledge, they will be subject to some pretty heavy anti-lobbying and likely would run the risk of losing the renomination at election time, so I wouldn't expect ANY tax increase to come into effect while the Republicans control Congress. If the Democrats control the Congress and the Senate, then taxes will be raised. I'm not going to really entertain or discuss the merits of raising taxes -- we know how most forum members feel about that and we've discussed this, ad nauseum.

IMO, spending also needs to be reduced, drastically. There have been a number of programs introduced in the past few years (by both Bush and Obama) which has raised spending out of control. Americans have to accept that either taxes must be raised (to raise revenue) or expenditures must come down. Of course a robust economy only raises GDP and therefore tax revenue, but I think that the difference between revenue and expenses is too far gone to be overcome by a growth in GDP.

Quote: Doc

I don't see any graph.

Link to graph

I'm not sure when it is visible to other people, and when it isn't.

Quote: mustangsally

Really? Paco, You buy into the balanced budget for 1998 to 2001?
Not me.

There is certain spending (supplemental appropriations) that add to the debt but are excluded from the deficit. The deficit is presented on a cash rather than an accruals basis.

Hence, even though there was a surplus of $236 billion in fiscal year 2000, the public debt went up by $23 billion. But that difference in accounting is gone in FY2011.

Fiscal	Change in debt	Official Cash deficit
2003	-$561,613	-$157,758
2004	-$594,643	-$377,585
2005	-$550,643	-$412,727
2006	-$546,050	-$318,346
2007	-$499,394	-$248,181
2008	-$1,035,338	-$160,701
2009	-$1,889,769	-$458,553
2010	-$1,652,956	-$1,412,688
2011	-$1,235,415	-$1,293,489

Let me change the question to say "balanced on an official basis", and we note that does not actually make the debt go down.

Quote: boymimbo

IMO, spending also needs to be reduced, drastically. There have been a number of programs introduced in the past few years (by both Bush and Obama) which has raised spending out of control. Americans have to accept that either taxes must be raised (to raise revenue) or expenditures must come down. Of course a robust economy only raises GDP and therefore tax revenue, but I think that the difference between revenue and expenses is too far gone to be overcome by a growth in GDP.

I don't think anyone would disagree with you that spending needs to be reduced. But the President's projection has a large increase in revenue coupled with a large spending decrease, but the deficit is still at historically high levels (3% of GDP by 2017).