$1.3 trillion Bush deficit forecast to fall over 30% in 2012

"The Treasury Department forecast Monday that the budget deficit for fiscal 2012 will come in at $996 billion, the first time President Obama has presided over an annual deficit of less than $1 trillion.

The budget deficit in fiscal 2011 and 2010 was $1.3 trillion, while the Obama stimulus law pushed the deficit up to $1.4 trillion in fiscal 2009."

Obama was handed a huge deficit, of course.

Obama needs to WIN BIG on this issue in 2012.

You know that’s the only part RWs are gonna hear/see.

Of course. Wingnuts possess selective amnesia.

But it is true that a $1.3 trillion Bush deficit X 3 = $3.9 trillion Obama debt.

Obama is stuck with that fact.

Is this due to the end of the Iraq War?

I believe it’s due to super-committee deadlock. Not addressed in the article, but the Bush tax cuts will also sunset in 2012, which will also be a bazillion dollars in new revenue, cutting the deficit. This is all based on current law, which will likely change one way or another during 2011 or 2012, for various reasons.

Well, his promise was to cut the deficit in half by the end of his first term. 30% isn’t half, but it’s a nice start. If only the Senate Dems hadn’t caved on repealing the Bush-era tax cuts, I think we’d be there by now.

Darn the Democrats for caving to the hostage-takers!

Not really and no. The end of the war in Iraq will save tens of billions of dollars, and the spending cuts required by the supercommittee stalemate do not happen until January 2013. Also, the tax cuts will expire at the end of December 2012. The deficit numbers are estimated through October 1, 2012, before either one of those things happen.

The main reasons for the shrinking deficit in the next year are somewhat modest spending reductions with an economy that continues to expand and unemployment slowly trending downward.

I agree it is entirely Obama’s fault that he extended the Bush tax cuts and didn’t wind down Iraq and Afghanistan sooner. There is noone in DC who is proposing to cut medicare or social security in a way that would affect any budgets for at least the next 5 or 10 years so you weren’t going to get a deficit reduction through spending cuts (other than winding down Iraq and Afghanistan and maybe a few other military projects).

We should take them out back and beat the shit out of them. I’m only half kidding.

Quoted for truth.

All of this talk about spending cuts is retarded. We simply cannot cut enough spending to significantly bring down the deficit unless we are willing to make IMMEDIATE cuts to medicare and social security benefits.

The single biggest factor in the current deficit is the economy. We collect less in taxes and we pay out more in unemployment and food stamps.

Next is are the Bush tax cuts. Then comes Medicare part D. Then comes the wars in Iraq and Afghanistan.

I’m pretty sure cutting Social Security won’t do anything to reduce the paper deficit. Social Security funds are counted separately (aren’t they?)

The way I understand it, LBJ was concerned about the budgetary effects of the Vietnam War so he took the annual social security surplus and wrapped into the budget for purposes of measuring deficits and surpluses. So now our deficit/surplus reflects social security receipts net of social security payments. At least I think thats the way it works.

That’s called the “unified budget”, but that’s not the number usually reported (and not the one that’s underlined and circled in red when the budget is issued).

It didn’t work quite that way. The government used the Social Security surplus to buy Treasury bonds. In that sense, Social Security now adds to the deficit because the Treasury is paying it interest on those bonds. The surplus isn’t credited, though.

Well, for anyone who does not think that the deficit is dropping fast enough under the Obama administration, they can alway look at what the Republican candidates propose:

Under a Gingrich plan, rather unsurprisingly, the solution to economic problems is… <drumroll>

Tax Cuts!

  • taxes on capital gains, dividends and interest would be eliminated.
  • the corporate income tax rate would drop from 35 percent to 12.5 percent.
  • a household making between $40,000 and $50,000 would get an average tax cut of 12.1 percent
  • a family making between $200,000 and $500,000 would get a tax cut of 27.3 percent
  • Households making more than $1 million would see their federal income taxes reduced by an average of $607,000
  • reduce federal tax revenue by $850 billion in 2015
  • Lead to trillion dollar deficits in perpituity
  • Triple the current debt by 2024, leading to Trillion dollar interest payments.

Not to worry though. Newts people assure us that all of those economists are just plain wrong because they “don’t account for the economic and job growth that such a tax system would generate.” And I’m sure they don’t account for the magic pixies that will put money in your wallet while you sleep either.

You know, because it worked so well all the other times they tried this. <sarcasm>

I guess the great thing about Newt is that we can go back in time, back when deficits did not matter.

Actually, when deficit numbers are reported, they typically reflect the revenue surpluses from the Social Security Trust Fund, event though they are technically separate. See table 1-2. You can see there that both the “Total Revenues” and the “Total Outlays” rows include Social Security receipts and spending, which combined with the on-budget items, equal a projected deficit of $973 billion in 2012.

Excluding Social Security, the deficit would be estimated to be $1.04 trillion.

Oops. What else is included in the “off budget” stuff?

ETA: Never mind, it’s explained in the .pdf. Social Security disability and retirement, and the postal service.

Forgive me for not being elated. So next year we only have to borrow slightly less than $1 trillion to pay our bills for the year. I remember when $1 trillion was the total national debt for about 205 years.

Real fiscal discipline there. Let’s celebrate with champagne and caviar. Buy it on credit.

Hey, it’s certainly an improvement. Under Bush we went from adding $133 billion to the debt in 2001 to adding $1 trillion in 2008. Under Obama we have gone from $1.4 trillion in 2009 to $996 billion in 2012 (projected).

Nothing tops Reagan, who managed to almost triple the debt in 8 years. At least Bush only almost doubled it in his 8. Thank God for Clinton, who managed to only take it from $4 trillion to $5.6 trillion in his 8 years.

Yeah, then Reagan went and tripled in in eight years. Then Bush II doubled it again in six years.

ETA: Is a trillion still a lot when it comes to the price tag on Bush’s tax cuts?

And if Newt gets in, it’s projected to triple again by 2024. It seems that deficits only matter when a Democrat is in the president’s seat.