US Budget

Income
Expenditure

What a mess. A cool $12Tn-$13Tn in debt, and increasing at $0.5Tn to $1.5T a year.

Wow.

But where has this deterioration come from? Some of it is inflation, the numbers get bigger over the years. But Wiki reports on the present causes, comparing 2001 with 2009: the position deteriorated very seriously under George Bush following surpluses under Clinton:

2001 vs. 2009

According to the CBO, the U.S. last had a surplus during fiscal year (FY) 2001. From FY2001 to FY2009, spending increased by 6.5% of GDP (from 18.2% of GDP to 24.7%) while taxes declined by 4.7% of GDP (from 19.5% of GDP to 14.8%). The drivers of the expense increases (expressed as % of GDP) are Medicare & Medicaid (1.7%), Defense (1.6%), Income Security such as unemployment benefits and food stamps (1.4%), Social Security (0.6%) and all other categories (1.2%). The drivers of tax reductions are individual income taxes (-3.3%), payroll taxes (-0.5%), corporate income taxes (-0.5%) and other (-0.4%). The 2009 spending level is the highest relative to GDP in 40 years, while the tax receipts are the lowest relative to GDP in 40 years. The next highest spending year was 1985 (22.8%) while the next lowest tax year was 2004 (16.1%)
SOURCE

So, spending increased and tax-cuts meant receipts declined. Then there was a financial crisis, and a recession.

How much has that effected the position?

2001 vs. 2012
Causes for Changes in CBO Forecasts.

The U.S. budget situation has deteriorated significantly since 2001, when the Congressional Budget Office (CBO) forecast average annual surpluses of approximately $850 billion from 2009-2012. The average deficit forecast in each of those years as of June 2009 was approximately $1,215 billion. The New York Times analyzed this roughly $2 trillion "swing," separating the causes into four major categories along with their share:

* Recessions or the business cycle (37%);
* Policies enacted by President Bush (33%);
* Policies enacted by President Bush and supported or extended by President Obama (20%); and
* New policies from President Obama (10%).

CBO data is based only on current law, so policy proposals that have yet to be made law are not included in their analysis. The article states that "President Obama’s agenda ... is responsible for only a sliver of the deficits", but that he "...does not have a realistic plan for reducing the deficit..." Presidents have no Constitutional authority to levy taxes or spend money, as this responsibility resides with the Congress, although a President's priorities influence Congressional action.

Peter Orszag, the OMB Director under President Obama, stated in a November 2009 that of the $9 trillion in deficits forecast for the 2010-2019 period, $5 trillion are due to programs from the prior administration, including tax cuts from 2001 and 2003 and the unfunded Medicare Part D. Another $3.5 trillion are due to the financial crisis, including reductions in future tax revenues and additional spending for the social safety net such as unemployment benefits. The remainder are stimulus and bailout programs related to the crisis
SOURCE

So, of a $9T deficit projected for 2010-2019 - $5T is due to previous administration, $3.5T is the financial crisis, and the remaining $O.5 Bn is the bailout and 'stimulus'. Hmmm. Obama's fault, eh? Sure.

A couple of things stand out for me:

1) the relatively low level of interest payments. It's a drag on the US economy, no doubt. But it certainly isn't a critical component by size. This alone refutes all the conspiro bullshit about how America is going broke because of interest repayments etc. Rubbish. Plus, apparently half of the debt remains held domestically, so any interest payments go back into American income somewhere.

2) the implication that taxes need to rise substantially across the board - or massive spending cuts. Probably both. No, not much of a novel insight, I know.

So, how to alter spending so as to improve the annual position by, say, $1 Trillion? That should at least be break-even on the current account deficit, and even provide for a surplus. That's 1,000,000,000,000 dollars, divided by US population (300 million). That's $3333 per person in the US. That makes circa $6666 per person in the working population. Per year. Woah!

And it keeps getting worse?

Of course, America's such a strong society, it's so well integrated and social that everyone will readily agree on the necessary measures and they'll soon be pulling together to get the job done. I'm sure. Gulp.