The federal deficit hit $1.38 trillion through August. Yes you hard me correctly. The federal deficit surged higher into record territory in August, hitting $1.38 trillion with one month left in the budget year. The soaring deficits have raised worries about the willingness of foreigners to keep purchasing Treasury debt. The Chinese, now the largest foreign owners of U.S. Treasury securities, have expressed concerns about runaway deficits. Treasury Secretary Timothy Geithner and other administration officials have sought to address those concerns by insisting that once the recession is over and the financial system is stabilized, the administration will move forcefully to get the deficits under control.
However, Republican critics contend the administration does not have a credible plan to address future deficits. Private economists worry the country could face the grim prospect of seeing interest rates soar in future years and the dollar weaken as foreigners dump their U.S. holdings. The Treasury Department said Friday that last month's deficit was $111.4 billion, below the $152 billion that economists expected. Still, the imbalance added to a flood of red ink already accumulated through the recession and massive spending needed to stabilize the banking system.
The Obama administration last month trimmed its forecast for this year's deficit to $1.58 trillion, from an earlier $1.84 trillion. The recovery of the banking system led to the reduced estimate as it meant the administration did not need to get an additional $250 billion in bailout support for banks. The $1.58 trillion estimate for the full budget year signals that that administration expects the imbalance in September to be around $200 billion. Still many private economists have slightly smaller deficit estimates for the full year but all agree that 2009 will be a record-holder by a large margin. The previous record deficit in dollar terms was $454.8 billion last year. The administration's revised budget forecasts issued last month also underscored how much the government's fiscal picture has deteriorated. It is now projecting the deficit over the next decade will total $9 trillion, $2 trillion more than its estimates from a few months ago.
The deterioration partly reflects the country's deep recession, the worst since the 1930s. That downturn has cut into government receipts and pushed up spending in such areas as unemployment benefits and food stamps, along with the cost of fighting wars in Iraq and Afghanistan. In addition, the government is using a $787 billion economic stimulus program passed by Congress last February to jump-start growth and is spending massive amounts from the $700 billion financial bailout package passed in October 2008 to stabilize the financial system.
The Treasury Department budget report for August showed the government collected $145.5 billion in revenues, a drop of 7.3 percent from August 2008. It marked the 16th consecutive month that revenues have been lower than the previous year, a string that reflects how much the recession, which began in December 2007, has cut into personal income and corporate taxes. Spending in August totaled $256.9 billion, down 4.5 percent from the year before. However, that comparison was misleading because the deficit last month was lowered by timing shifts which saw some payments shifted into July because Aug. 1 fell on a Saturday.
Primarily because of the timing shifts, last month's deficit was 0.5 percent lower than in August 2008. For the first 11 months of the budget year, spending totals $3.26 trillion, up 18.7 percent from a year ago, while tax receipts fell 16.1 percent to $1.89 trillion. The spending increases include the administration's estimate that $174.2 billion has been tapped from the financial bailout fund and another $84.9 billion went toward propping up mortgage giants Fannie Mae and Freddie Mac. In addition, federal spending on unemployment benefits totaled $104.7 billion through August, up from $41.4 billion in the year-ago period.
So as the U.S. government on Friday posted a smaller-than-expected $111.40 billion budget deficit for August, marking a record-matching 11 straight months of deficits, signaled worry on the markets as stocks plugged. The August budget gap was well below the forecasts of analysts polled by Reuters, who predicted a $152.0 billion deficit for the month. Nonetheless, the deficit was slightly smaller than the year-earlier budget gap of $111.91 billion, but this was due in part to calendar shifts that held down this year's August outlays. A Treasury official said some $25 billion in August 2009 federal benefit payments were shifted to July.
With one month to go in the 2009 fiscal year, which ends September 30, the deficit stood at a record $1.378 trillion, versus a same year-ago deficit of $500.53 billion. So while the White House budget office on August 25 forecast a $1.58 trillion deficit for the full 2009 fiscal year, implying that September -- in normal times a surplus month -- would produce a deficit of more than $200 billion. A September deficit would mark a record 12 consecutive months of deficits. Only three other times has the United States racked up 11 consecutive monthly deficits -- July 1982 to May 1983; May 1986 to March 1987; and May 1991 to March 1992.
So as the Treasury said receipts for August fell to $145.54 billion from $157.02 billion a year earlier, marking a 7.3 percent decline. For the first 11 months of the fiscal year, receipts are down 16.2 percent to $1.885 trillion from $2.251 trillion, as the economy struggled through the worst recession since the 1930s Great Depression. Outlays for August fell to $256.94 billion from $268.93 billion a year earlier. For the fiscal year to date, outlays, driven largely by spending on economic stimulus and financial rescue programs, are up 18.6 percent to $3.264 trillion.
So as America’s federal deficit grows, the national debt for the nation soars higher and higher. Deficit spending by the U.S. government tied an all-time record in August, the product of a recession that has added to a mountain of debt. So even if healthcare reform is passed, it won’t decrease the national debt but could keep the national debt from growing even further out of control. All the information regarding this year’s deficit should make all Americans worry because all though President Obama inherited this debt and deficit, his administration has added to it as well. Obama has been in office a little less than 9 months and much of the deficit for this year is a result of four things, the $700 billion TARP, the $787 billion stimulus package, the $435 billon omnibus bill and all the bailouts to the auto industry and other companies that the government now owns a part of if not all of.
Therefore o date, the fiscal 2009 deficit totals $1.378 trillion and it could hit as high as $1.58 trillion according to administration officials. As a stark illustration of what a lousy economy and a financial crisis did to Washington's pocketbook, the deficit for the first 11 months of 2008 was $500.53 billion. As mentioned before the biggest deficit for any fiscal year on record is $454.8 billion, rung up in fiscal 2008. Thus, the $1.580-trillion forecast was lower than the $1.84 trillion estimated in February but the new forecast, given three weeks ago by the White House, accompanied projections the U.S. will rack up larger-than-previously-expected budget shortfalls over the next decade, pushing the 10-year deficit forecast up by $2 trillion, to $9.05 trillion.
Over the next decade, America will add $9.05 trillion to its already ballooning national debt. This is not good news for future generations of Americans both born and unborn right now. The mounting deficits this year have added to the national debt, which totaled $11.8 trillion this week, and raised questions as to how all the red ink will be financed. The government sells bills, notes and bonds to pay for its operations and maturing debt. A rising supply of debt has led to concerns of poor auctions. Yet in recent weeks investors have sought refuge in low-risk Treasury’s, skeptical of the strength of an economic recovery. The 30-year bond sold Thursday with a bid-to-cover ratio of 2.92, exceeding the 2.54 ratio in the last long-bond auction, held Aug. 13. Because of the long recession, the outlook for inflation is tame, enticing buying for long-dated bonds; a rise in consumer prices erodes bonds' fixed interest payments over time.
"There is insatiable demand for Treasury’s now," said Brian Edmonds, head of interest rates at Cantor Fitzgerald LP in New York. "The incredible amount of supply doesn't matter for the time being." Friday's Treasury statement on the budget showed August 2009 federal government spending totaled $256.94 billion, compared to $268.93 billion in August 2008. Year-to-date federal government spending totaled $3.26 trillion, compared to $2.75 trillion in the first 11 months of fiscal 2008. Gross spending on the Troubled Asset Relief Program totaled $174.20 billion year to date. TARP was created late last year to rescue Wall Street and stem a financial sector meltdown. Spending for benefits to the nation's jobless totaled $100.70 billion. Since the recession began in December 2007, 6.9 million jobs have been lost.
Federal government interest payments on the national debt year to date were $189.39 billion. Defense spending ran at $599.82 billion. Veterans’ benefits were $87.21 billion. Social Security totaled $625.17 billion. The Treasury report said it bought $6.98 billion in agency mortgage-backed securities during August; year to date, purchases totaled $160.24 billion.
August federal government receipts totaled $145.54 billion, down from $157.02 billion a year earlier. Year-to-date federal government revenues totaled $1.89 trillion, compared to $2.25 trillion for the first 11 months of fiscal 2008. Individual income-tax receipts totaled $812.87 billion, compared to $1.01 trillion. Corporate taxes totaled $109.44 billion, compared to $250.72 billion.
With all of these numbers and information, it is clear that today’s federal deficits will continue to grow as the national debt could grow to $20 trillion by 2019 which is just shameful. Right now our national debt is $11.8 trillion and the Obama administration expects for it to grown $9.05 trillion over the next decade thus adding to the nation’s debt. This should make all Americans outraged. Who will pay for this mounting debt that seems to get larger and larger as the years go on? All of this makes me reflect on an article written years ago by Charlie Reese called 545 People, I encourage all of you to read it but in the beginning of it, Mr. Reese says:
Politicians are the only people in the world who create problems and then campaign against them..
Have you ever wondered, if both the Democrats and the Republicans are against deficits, WHY do we have deficits?
Have you ever wondered, if all the politicians are against inflation and high taxes, WHY do we have inflation and high taxes?
You and I don't propose a federal budget. The President does.
You and I don't have the Constitutional authority to vote on appropriations. The House of Representatives does.
You and I don't write the tax code, Congress does.
You and I don't set fiscal policy, Congress does.
You and I don't control monetary policy, the Federal Reserve Bank does.
One hundred Senators, 435 Congressmen, one President, and nine Supreme Court Justices equates to 545 human beings out of the 300 million are directly, legally, morally, and individually responsible for the domestic problems that plague this
country.
I excluded the members of the Federal Reserve Board because that problem was created by the Congress. In 1913, Congress delegated its Constitutional duty to provide a sound currency to a federally chartered, but private, central bank.
I excluded all the special interests and lobbyists for a sound reason. They have no legal authority. They have no ability to coerce a senator, a congressman, or a president to do one cotton-picking thing. I don't care if they offer a politician $1 million dollars in cash. The politician has the power to accept or reject it. No matter what the lobbyist promises, it is the legislator's responsibility to determine how he votes.
Those 545 human beings spend much of their energy convincing you that what they did is not their fault. They cooperate in this common con regardless of party.
Those lines there pretty much sum up why we have federal deficits and a national debt that is so out of control that anyone who is currently in D.C. knows how to fix. Well let me take that back, there are a few Congressional leaders who are against deficits and the mounting national debt but they are just a select few. Therefore we as a nation must ask ourselves what type of future are we living for generations of Americans if our deficits are expected to grow to $9.09 trillion over 10 years thus creating a national debt of nearly $20 trillion by 2019. What type of future will we create with generations of Americans having to pay for what we do or use today? What programs or future spending projects will we prevent future generations of Americans from having due to them worrying about finding ways to pay off the huge deficits and debt that we have created today? America we have to fix this problem because the future looks gloom for future generations of Americans and as some have called it, it is truly generational theft when hearing these numbers and what the future deficits and debt might look like 10 years from now if something isn’t done now.
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