Washington’s done it again: another $1 trillion-plus deficit. The federal government’s new fiscal year begins today, and you can be forgiven for overlooking it — we all would like to.
How much has Washington’s spending gone up in recent years? In 2008, the federal government spent $2.983 trillion, the largest amount in its history up to that point. In 2009, federal spending jumped to $3.518 trillion — an 18 percent increase and equal to 25.2 percent of GDP. This year the Congressional Budget Office estimates federal spending to be $3.563 trillion and 22.9 percent of GDP.
Over the past four years, federal spending has averaged $3.534 trillion and 24 percent of GDP. That’s far more than Washington has ever spent before and a quarter of everything America produced. The only precedent for such spending is WWII. There is no peacetime precedent.
To put that figure in perspective, the total level of debt held by the public did not reach $3.5 trillion until 2002.
How much has Washington’s deficit gone up? In 2008, the federal deficit was $459 billion, the largest in its history up to that point. In 2009, the federal deficit tripled to $1.413 trillion — equal to 10.1 percent of GDP. Over these past four years, the federal deficit has averaged $1.283 trillion and 8.8 percent of GDP. The nation’s entire debt held by the public did not reach this level until 1984. Total federal spending did not reach that point until 1991.
Of course, Washington’s debt has accumulated accordingly. At the end of 2008, debt held by the public equaled $5.8 trillion. CBO estimates that at the end of 2012 it will equal $11.3 trillion — just short of doubling in four years.
Put another way, Washington racked up as much debt in the last four years as it had accumulated over all of America’s previous history. And as a percentage of everything America produces, debt held by the public increased from 40.5 percent to 72.8 percent — from well under half, to almost three quarters — over just the last four years.
And what has America gotten from Washington’s enormous “investment?” The worst economic recovery since the Great Depression.
In 2009, the nation’s economy shrank 3.1 percent. In 2010, it grew just 2.4 percent. In 2011, it grew even less: 1.8 percent. Thus far this year, it grew just 2 percent in the first quarter and just 1.3 percent in the second quarter. Of the past fourteen quarters, just two have registered growth above 2.6 percent.
Unemployment has been just as bad — and would be even worse if people had not simply quit looking for work, thereby dropping out of the official calculations. According to the Bureau of Labor Statistics, unemployment was 5.8 percent in 2008. In 2009, it was 9.3 percent. In 2010, 9.6 percent. In 2011, 8.9 percent, and as of August, 8.1 percent. One out of every twelve Americans looking to work cannot find it. And it would be one out of nine, if all the Americans originally looking were still looking.
So if you are not celebrating the end of Washington’s fiscal year, you are in good company. There has been nothing to celebrate over the past four fiscal years. Washington had the party, America’s economy got the hangover, and the taxpayer gets the bill. To rephrase Churchill’s famous quote: “Never have so many owed so much for so little.” Happy New Year indeed.
— J. T. Young served in the Treasury Department and the Office of Management and Budget from 2001 to 2004 and as a congressional staff member from 1987 to 2000.