CBO Monthly Budget Review, August 2010
by Gary Therkildsen*, 9/10/2010
Uh oh, the Congressional Budget Office (CBO) just released its Monthly Budget Review (MBR) for August. The report states the federal government has racked up just under a $1.3 trillion deficit so far this fiscal year, which, for those of you paying attention, only has one month left. Are we going to break the $1.3 trillion barrier this year? Sadly, yes.
In fact, CBO estimates that the FY 2010 deficit "will be about $70 billion below last year's total," which was $1.413 trillion. The deficit is going to be a little better this year because, as the last few MBRs have shown, receipts are continuing to be slightly higher and spending slightly lower than they were this time last year.
On his blog, CBO Director Doug Elmendorf writes that this year's deficit will "be the second-largest shortfall in the past 65 years," exceeded only by last year's figure.
Of course, if you follow this blog, you're aware that recent deficits are a direct result of the economic collapse that occurred in late 2008 and the government's efforts to counteract those devastating forces.
Indeed, most economists concede that spending on programs like the Troubled Asset Relief Program (TARP), the American Recovery and Reinvestment Act (ARRA), unemployment benefits, and state Medicaid assistance helped prevent the country from spiraling into another Great Depression.
Unfortunately, counterfactuals are hard to sell, and they don't prevent those who want to argue that President Obama is a failure from using recent deficit figures in unhinged analyses that provide no context.
Much to their credit, the Tax Foundation, a right-leaning research group, recently released an exceptionally cogent rebuttal to this kind of garbage:
Unfortunately, this type of simplistic analysis suffers from two major problems:
- (1) The implication that the entire increase in the debt since January 20, 2009 is Obama's fault is ridiculous
- (2) Budget numbers today are larger in nominal terms as a result of inflation, which means you can do this analysis for almost any modern-day president
Groups that throw out numbers like the recent deficit figures without context expect the information to speak for itself, which is to say they want it to scare people.
Debt and deficit numbers, however, don't speak for themselves. In fact, they require quite a bit of context when discussing. That is unless you want to resemble your crazy uncle that goes on tirades at family gatherings about the good old days when bread was a nickel, children actually respected their elders, and the government wasn't so "big."
Image by Flickr user jmtimages used under a Creative Commons license.