Washington Post's graphs of federal budget deficit

The Washington Post has several interesting graphs about federal spending.

Since 1930, the federal government has run deficits in all but eight years. As a percent of the overall economy, the annual gap between spending and revenue is at its highest since WWII.

Explore the various facets of the government's budget and see how revenues and spending have changed over time. Explore the various facets of the government's budget and see how revenues and spending have changed over time

Mark Frauenfelder is the founder of Boing Boing and the editor-in-chief of MAKE and Cool Tools. Twitter: @frauenfelder. Come and hear Mark speak at the ALA conference in Chicago on July 1.

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Anonymous

Given that governments should only have enough income (taxes) to run things without making a profit, the first one to borrow obligates all of his successors indefinitely, unless a double-tax year occurs.

Who to blame then? Possibly the founders. For former colonies, it’s much easier — it’s their overlords. See: Haiti, Zimbabwe, Peru, many others.
freeyourcrt

But the good news is in an economic system based on debt vs. wealth, these deficits make us the the most wonderfullest economy EVER!
cory

I saw a fridge magnet the other day with a picture of Bill Clinton and the motto: “Come back! All is forgiven!”

If you look at that graph, you can pretty clearly see where that sentiment comes from. Nice steep stair step up into fiscal responsibility.
- Ernunnos
  
  The 1990s were not a period of fiscal responsibility. Greenspan expanded the money supply starting 1994. That blew the internet bubble, which also massively enhanced revenues for the government. The government basically printed its way out of debt. And by the end of Clinton’s term, the bubble collapsed. George Bush, wanting a second term, decided to print money even faster and blow an even bigger bubble. It worked. Leaving the next President with another collapsing bubble. Barack Obama just doubled down on Ben Bernanke and the same easy money policies. Looks like he’s creating another stock bubble as we speak.
  
  The only good thing about the 1990s was that the print-and-spend Ponzi scam was still in its early days.
  - rick386
    
    That all sounds good but printing of $ equates to inflation. The ’70′s seen the highest rate of that. This graph is deficit as a percentage of gross domestic product. How much money is in the market has no relevance to that graph.
    They have to print some money, our population keeps growing and other countries use the dollar as their reserves.
    Think about it, national banks all over the world stockpiling trillions of dollars. That effectively takes currency out of circulation. What are we supposed to use to do business? Without the fed printing more money, the dollar would be so valueable you could buy a new car with 2 or 3 of them. The real problem comes when all other countries decide to spend their cash instead of watching it devalue.
- DmrNDrt
  
  @Cory Congress holds the purse strings, not the President. So, the stair-stepped improvement from 1995 to 2001 is more attributable to the Republican controlled Congress than to Bill Clinton, but so is the spending increase during the 2002 – 2005 Bush years.
littlerunninggag

No one finds this terrifying? If an individual used credit to fund their entire life, they’d never survive. How is it that governments can get away with it?
- Gutierrez
  
  Because the governments are too big to fail. That’s what they said about the investment and insurance firms, right?
  
  The fact is if the debts were called in, the United States just wouldn’t pay. And actions like sanctions on imports or outright ban on trade with the US would be called acts of aggression and could be used as an excuse for war from a nation that has already proven more than ready to engage in just about any conflict we deem fit.
  
  Fixed payoff of debt by reduction of military, social security spending, a revamp and cut of medicare and medicaid into a nation health program, and raising taxes to try and eliminate a large portion of our debt sound great but just will not fly now. As much as I’d like them to.
  - Garmt
    
    Because the governments are too big to fail. That’s what they said about the investment and insurance firms, right?
    
    Yes! Just like Iceland! Oh, wait…
    
    The fact is if the debts were called in, the United States just wouldn’t pay.
    Icesave, an Iceland bank, went bust a while ago; some 4 billion euro’s were owed to individuals in the UK and The Netherlands. After the initial “of course we’ll pay everything back!!!”-promises, Icelandic people came to their senses and figured they might as well NOT spend 20 years paying back the debt created by a handful of bankers. So we’ve got at least the UK and The Netherlands who are now in exactly this situation :)
    
    Side note – in an extremely, weird, odd case of good karma, I decided on a whim one friday afternoon to pull all my savings out of Icesave. I hadn’t read newspapers or watched TV for weeks but somehow wanted to move my money to a ‘greener’ bank. I did this on friday afternoon, and on monday morning, the bank was bust.
- freeyourcrt
  
  I am paraphrasing here but I think there is famous quip by John Keynes (Father of Keynesians economics) where he says who cares about debt because â€œIn the long run we are all dead,â€ when the bill comes due. Maybe that’s why many don’t even consider it viable economic theory rather a slight of hand to turn everyone but the ruling elite into indenture servants.
  - dcamsam
    
    I am paraphrasing here but I think there is famous quip by John Keynes (Father of Keynesians economics) where he says who cares about debt because â€œIn the long run we are all dead,â€ when the bill comes due.
    
    Well, you have the quote correct, but the context entirely wrong.
    
    many don’t even consider it viable economic theory
    
    Many also think that climate change and evolution do not occur. Many are stupid.
    - freeyourcrt
      
      Would anyone who stated the opinion that communism isn’t viable as a long-term political system also be “stupid?” States inevitably move toward corruption and tyranny. That pace is only increased relative to the amount of power the citizens yield. A system or theory of economics based on the presumption that the most powerful who ultimately are in charge of “managing” it will serve any interest but their own is not only stupid in my opinion but fatal.
    - djn
      
      Right, let’s get that Keynes quote clarified.
      
      The long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is past the ocean is flat again. (A Tract on Monetary Reform (1923) Ch. 3)
      
      If we are to believe the wikiquote commentary:
      
      Many have thought this meant Keynes supported short terms gains against long term economic performance, but he was actually criticizing the belief that inflation would acceptably control itself without government intervention.
      
      I wonder if the full text of that is available?
Anonymous

William Greider brings up an interesting idea in his “Dismantling the Temple” article: “Congress should create a stand-alone development fund for long-term capital investment projects (this would require the long-sought reform of the federal budget, which makes no distinction between current operating spending and long-term investment). The Fed would continue to create money only as needed by the economy; but instead of injecting this money into the banking system, a portion of it would go directly to the capital investment fund, earmarked by Congress for specific projects of great urgency.”
Anonymous

and to put the current deficit further in context, heres a graph showing which parts of teh deficit are coming from obama vs the bush wars, bush tax cuts, and bush depression:

http://img.skitch.com/20100202-jwb4wwjk162th5mmn6uhbc25ei.gif
Joe

It looks like they are following George W. Bush’s spin and not including the war expenses in the deficit: he financed the wars “off the books” by calling it an “emergency” supplemental expenditure.

Otherwise I think the deficits for most of the 2000s would be much larger.
- HarveyBoing
  
  It looks like they are following George W. Bush’s spin and not including the war expenses in the deficit
  
  Actually, it’s worse than that, and not entirely W’s fault (as much as I might like to blame him). The government has been using increasingly arbitrary techniques to overreport GDP and underreport inflation and unemployment. More realistic estimates of GDP growth are more like 1-2%, of inflation more like 8-12%, and unemployment well into the low double-digits, if not higher.
  
  So, a graph that represents the deficit as a percentage of GDP is going to drastically underreport the deficit in recent years (the last two to three decades, with the disparity being worse more recently).
  
  As for our “debt being called”, inasmuch as some debt is represented as bonds, sure. We’re not in risk of having to pay off a big loan.
  
  But the US dollar is the reserve currency around the world, and as countries see the value of the dollar falling and decide it’s no longer an appropriate investment, they sell those dollars back to us. This, at the same time that the Federal Reserve is basically adding a large volume of new dollars to the supply.
  
  More dollars in circulation means each dollar is worth less, means higher inflation. And of course, higher inflation means higher prices, with less spending power for a given dollar.
  
  In fact, one way one can see that the reported inflation numbers don’t add up is to compare them to the actual new dollars added to the economy through lending by the Federal Reserve (the Federal Reserve, unlike any other bank, can lend money it doesn’t actually haveâ€¦thereby creating new money out of nothing).
  
  We’re already in big trouble inflation-wise, and if the government keeps up this huge deficit spending, so-called “stimulus” approach, we’re screwed.
  
  See authors such as Jim Rogers, Peter Schiff, Chris Martenson, and Thomas Woods for details.
- Winston-Smith
  
  You are so right. All those nasty neocons at the Washington Post can always be counted upon to spount pro-Bush propaganda. Good grief.
cory

Dear Internet,

Please stop fretting about the US’s debt being “called in”. The deficit spending is financed with bonds. To the extent that China “owns” US debt, what it actually owns is US bonds, which are paid off on a fixed schedule over decades. They cannot suddenly demand payment, that is not how bonds work.

The downside of bonds is it costs more and more every year to pay off those bonds, meaning a larger and larger portion of our budget is dedicated to paying the debt, meaning a smaller and smaller portion is available for actual work.

Deficit spending is important and undesirable, but it does not come with a threat of instant financial annihilation.

Thank you.
- Ernunnos
  
  Bonds have to get rolled over. Practically speaking, that means every new bond auction is an opportunity for the debt to be called in. All the market (foreign governments) have to do is refuse to buy the next time we sell. Or refuse to buy at a low interest rate, which amounts to the same thing, as a higher interest rate would consume an even larger portion of our budget. When that goes over what we can afford, game over.
- Steaming Pile
  
  Interest on the national debt now runs something like a half-trillion dollars a year. A very, very large majority of this is due to deficit spending by Ronald Reagan and the two Bushes. Those at the top of the income food chain are basically looting the treasury in the form of tax cuts enacted by these three people. If you want to know the real reason behind the irrational hatred of Bill Clinton in the 90s, you need look no further than those who were effected by the 39.5% marginal tax rate enacted in 1993.
dunnright

If you haven’t already, go see the documentary IOUSA.
Anonymous

Wow! The problem here (and this applies to any country with a running deficit) is that the financing of the accumulated drains more money from the budget, so less money for services. Eventually the weight of debt .becomes crushing. That’s when the revolution happens. Do you think France paid off its old debts after the revolution?
rick386

look at the last 30 years and think about who was in office. Notice the 90′s? that was Clinton. The ’80′s I find particulatly facinating because Reagan (God rest his soul) campaigned on the promise of reducing the deficit 30% over 3 years. He tripled it in 8. This man is now the hero of the Republican party. The party of fiscal responsibility. What a joke.
- Xopher
  
  Reagan (God rest his soul) campaigned on the promise of reducing the deficit 30% over 3 years. He tripled it in 8.
  
  Actually, it’s worse than that. He didn’t just triple the deficit; he tripled the National Debt. Jaw-droppingly impossible as that may seem.
  
  One other friendly amendment I’d propose to your post above, if you’re willing: change ‘God rest his soul’ to ‘may he shriek in the bowels of Eater of Souls for ten thousand years’. Would that be OK? :-)
Pliny the Elder

The Washington Post has a serious obsession with the deficit, along with an inability to keep editorial comments out of their news stories about it.

The fact that they printed an obviously biased, breathless “news article” regarding the deficit from the Peter Peterson Foundation (without mentioning the conflict of interest) displays its lack of integrity. The fact that it continues to ignore the bursting of an $8 trillion housing bubble as the primary driving factor behind the recession displays its complete and total ignorance of basic economic facts.

Economist Dean Baker, in his blog Beat the Press, routinely slams the Washington Post for its complete lack of journalistic integrity and economic reporting. Check it out before taking anything the Washington Post says about economics seriously.
Anonymous

Actually, Bill Clinton’s budget was only balanced by off balance sheet borrowing from Social Security. Most of the years when the budget was acknowledged to be unbalanced (under any President in the last 70+ years), it was farther out of balance than we were told. Now that SS and Medicare are heading negative, we’ll soon be exposed to the fallout from the games that we’ve played over the years.

As far as I recall (from school), the last true balanced budget was when John F. Kennedy was President.
dcamsam

OH NOES, DEFICIT!

It is, at times, necessary to run a deficit. For America, for now, it is one of those times.

The problem is that even when it is not necessary to run a deficit, America still does, because the American people want the services of a European-style social democracy and the taxes of . . . American-style capitalist plutocracy. Which does not work.

But I’m sure that this will be resolved should the Republican Party return to power, because as everyone knows, their supporters would punish them if they put tax cuts before a balanced budget:

http://tpmdc.talkingpointsmemo.com/2010/02/poll-republians-prefer-having-a-deficit-with-tax-cuts-over-a-balanced-budget-and-higher-taxes.php

Oh, wait.
Ugly Canuck

Looks like corporate welfare queens getting piggishly fat on pork & living high off the hog.

Since it seems to me that at the times when them deficits were “going on up”, that the social programs (and income supports like welfare and moderate bankruptcy law) were “coming on down”.

If the poor & middle class did not “get the juice”,then who in fact did?
Seems we’ll never know: some facts on he budget:

http://www.counterpunch.org/spinney02032010.html

Peace out!
gigamugged

Interesting graph, but it doesn’t account for government’s shifting of public debt to intergovernmental holdings (i.e. robbing Social Security):

http://www.craigsteiner.us/articles/16

With that proper accounting in place, there hasn’t been a surplus since the 60s. Those chickens are coming home to roost sooner rather than later too (like, this year):

http://finance.yahoo.com/focus-retirement/article/108747/next-in-line-for-a-bailout-social-security?mod=fidelity-readytoretire
ill lich

Note the surplus at the end of the 1990′s– the GOP is quick to decry Obama running up the deficit, but when Bush did it, it was A-OK. In 1993, when Clinton took office the GOP was clamoring for a “balanced budget amendment”, then Clinton balanced the budget, then Bush took over and frittered the surplus away on tax cuts/rebates. Ain’t partisan politics grand?
yragentman

While the WWII deficits were clearly accounted for, the Bush junta assault on the Treasury is unprecedented criminal and treasonous.

The entire agenda to “kill government” was the foundation for no-bid contracts, wanton disregard for oversight, appointment of unqualified hacks to regulatory positions, the Fed cheerleading of excessive debt/mortgage practices with the coup de grace of a 3 page Paulson $700B ransom note.

Geitner sheparding $150B through AIG straight into Goldman Sacks, the $9B of cash currency that left NY Federal Reserve bank on pallets and “disappeared” in Iraq, and the rest.

Crimes have been committed. The Treasury has been robbed.

Where is the investigation?

chirp chirp chirp
Anonymous

I am shocked shocked shocked that rich bastards are behaving unethically and ripping each other off. Also, that the system as a whole doesn’t make any sense. Somebody Should Do Something!!1!

Or not. Whatever. Good luck with all that.
Anonymous

Check out this great interactive exercise in Balancing The Budget on AARP’s website;

http://www.aarp.org/politics-society/government-elections/info-01-2011/deficit-calculator.html

Great fun and educational
Anonymous

Now get the dates of all wars the USA was involved in since WW2 to nowadays and mark them on that chart. Do you notice anything interesting?
This pretty much explains why the USA love so much going at war every few years and why we must abandon our corrupt economic system before it’s too late.

Oh, and it also indirectly explains why the above lines would have been more than enough a few decades ago to arrest a peaceful citizen and destroy his life forever just calling him a communist.
Anonymous

During a recession, GDP goes down. That means tax revenue also goes down. At the same time there are increases in spending on things like food stamps, unemployment benefits, etc. In short, the same things causing the numerator to decrease are also causing the denominator to increase. This is exactly what we should expect during a severe recession. Do people really think that during a recession the government should cut spending? You do realize that ever dollar spent ends up as SOMEONE’s wage, if no their job. Forcing pay cuts and lay offs during a recession is not good economics.

Now during economic expansions, there really is no excuse.
Anonymous

Anyone see that wonderful increase in debt starting in 99 and running straight through until present? Thanks Gee Dubya!
EvilSpirit

The infographic is biased on its face. Using “worst deficits” synonymously with “biggest deficits” implies that all borrowing is a bad thing by its nature, regardless of what it’s buying you or your ability to pay later. And yet, American consumers are encouraged to borrow money for every purchase they make.

In reality, a deficit is “worse” if it’s either more or less than circumstances call for.
Anonymous

May I ask why we blame the Government for there out of control spending. When we the people are the Government that vote these politicians into office based on there campaign ads. When are we ever going to get smart and make our government officials face the fact that we the people are fed up with their lies and empty promises. When is it going to not matter weather we are a republican or democratic majority in congress? What we need is a generation of politicians that can look at our history and realize that we are just going to repeat our selves time and time again unless we learn how to work together the way our four fathers wrote the us constitution. We are by no means running this country the way they intended for us. Our government is only worried about their own pockets and we as a nation do nothing about it. We sit here and watch our homes be taken from us. We watch the economy crash further and further and yet we as a nation allow it to continue. Well lets wake up America and smell the coffee. We really need an independent generation of officials that are not worried about political agendas and know what it really takes to fix this problem. We have an all time record high unemployment rate in our nation since the great depression. I’d like to know what we are going to do now that the number is going to increase drastically once our troops are home from this unnecessary war that has crippled our nation. I’d like to know how we can go over seas and force a nation to have democracy, civil rights, ect. When as a nation we can’t fix our own problems here. We say we are the strongest nation in the world how can that be? When our government is more worried about fixing nations abroad rather than our own. I once was told that to be a great leader you need to lead by example. Our example isn’t looking so great..