Sunday, December 20, 2009

U.S. Already $296 Billion in Red for 2010

According to the Congressional Budget Office, the government spent $292 billion more than it took in during October and November.

It was a record 14th straight monthly deficit.

However, according to the Treasury Department, the budget deficit was $176.4 billion in October and $120.3 billion in November, meaning that the deficit actually amounts to more than $296 billion.

The 2010 fiscal year began on October 1, meaning that just two months in, the nation is already nearly $300 billion in the red.

The deficit was even worse than the same period last year, when the government was on its way to posting a record $1.4 trillion deficit for the fiscal year that ended Sept. 30.

Tax revenues have plunged just as spending on safety-net programs like unemployment insurance and food stamps have skyrocketed.

The CBO noted that government outlays through the first two months were $559 billion, meaning that the government had already spent more than double what it had taken in.

The Obama Administration expects the 2010 deficit to set a new record at $1.5 trillion.

There is a widespread sentiment among economists that all of this red ink will lead to higher interest rates and borrowing costs. That outcome would hinder any potential recovery, though it would reward savers.

The National Debt is presently $12.1 trillion, and climbing at a rate of $1 million every minute.

Meanwhile, the gross domestic product has been shrinking during the economic contraction, and will be $13.7 trillion for 2009.

Obviously, the National Debt and the GDP are moving in opposite directions. We've been warned repeatedly that this situation is simply unsustainable. None other than the government's former top accountant, David Walker, has made this point numerous times.

The meager economic growth in the third quarter was the result of nothing more than government spending. Any further growth in the fourth quarter will be the result of even more than the same.

No matter how deep the hole gets, our elected leaders can't stop digging.

One in every six dollars in the U.S. economy is now the product of government spending. At a minimum, that is both unhealthy and unproductive.

The government, and the public, can continue to ignore this for a little while longer, but at our own peril. Sooner or later, there will be very uncomfortable, and destructive, implications.

The U.S. debt clock can be seen here.

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