Nerds – real nerds – know that googoling something means multiplying it times a 1 followed by 100 zeroes. Many can remember when the very idea of a googol dollars seemed laughable. But with compound interest and a Democrat-controlled Congress…
What’s impossible to decipher when forecasting deficits is how and when of all the spending bills actually hit the books. As critics have pointed out, the biggest portion of the stimulus bill won’t be spent this year. So when does it hit the deficit? Same with TARP. Ken Lay is laughing on a beach somewhere over the idea Congress would have the temerity to punish him for financial shenanigans. He’ll turn up for trial as soon as Washington is Sarbannes/Oxley compliant.
The non-partisan Congressional Budget Office had predicted a $1.2 trillion deficit this year. My inner nerd says different. A quick search of various and sundry Internet sources reveals the deficit is already $596 billion for the first four months of fiscal 2009. So,
$596B – current
$410B – Omnibus spending bill now in Senate (i.e. non-war supplemental)
$375B – TARP funds already committed
$75B – Mortgage bailout
$50B – Big 3 Auto bailouts (think it won’t happen?)
$75B – Iraq War supplemental
$150B – Stimulus ($150B down and two easy installments of $318B in 2010/11)
$250B – Wildcard money (disaster funds, health care & education)
$1,981B – That’s a spicy meatball!
On the plus side, tax receipts are down $85B in the first four months of fiscal 2009. We can safely call it $2 trillion. FWIW, the record-breaking Bush deficit of
2009 2008 was $454 billion.
Obama’s budget for 2010 is $650 billion higher than Bush’s for 2009 – and the CBO forecast a $219B deficit in fiscal 2009. Of course, roughly $200B of that was the off-budget Iraq War. So it makes a fair enough baseline since Obama plans to bring the war on-budget.
$650B – New Obama spending
$50B – Additional interest on the $2 trillion of debt from 2009
$130B – Iraq War Supplemental (Yep, already in the works regardless of Obama’s plans)
$318B – Stimuli dollars
$440B – Omnibus spending (non-war supplemental)
$400B – Wildcard money (conservatively…stimuli, bailouts, disasters)
$1,988B – I’m coming, Elizabeth!
So easily another $2 trillion. Which again is a look-on-the-bright-side scenario. If Obama’s 2010 figure of $1.75 trillion is off by the same percentage as the CBO’s 2009 figure we’re looking at $2.91 trillion.
Looking ahead to 2011 is even sketchier, but using the Bush baseline:
$100B – Additional interest on the $4 trillion from 2009 & 2010
$318B – Stimulus phase three
$680B – New Obama spending
$460B – Omnibus spending bill
$500B – Wildcard money
$2,058B – Nowhere to go but down from here, right? Right?
That’s six trillion in new debt before MIDTERM elections. More than most experts say. I’m certainly not an economist and wouldn’t wager the mortgage, but I’d figure a 90% chance I’ve forecast reality within +/-10%. Not that you could get an honest accounting of how much was spent given the government’s skill at moving and laundering money.
Six large in new debt means an additional $150B in interest added to the $250B we pay annually on our current $10.2 trillion National Debt. That’s at a 2.5% rate, mind you, should rates rise the true magic of compound interest would reveal itself.
One bit of my book learnin’ that stuck with me is the Rule of 72 – if x = interest rate, and y = # of years; when x * y = 72 the principal amount will have doubled. So six years at 12%, 24 years at 3%, etc. Figure a 2.5% rate on the debt and it will double in 28.8 years under a perfectly balanced budget.
So we’re pretty much doomed to see the debt double every eight or so years from now on.
One final ray of sunshine courtesy of arithmetic:
2010 – 65 = 1945
Yeah, there’s that little matter of a still-to-be-resolved, unfunded $100 trillion baby boomer/Social Security/Medicaid liability. I hope no one believes allusions Washington will be spending less money anytime soon. Obama seems determined to make his presidency the ledge of authoritarian socialism from which America once-and-for-all backs away or springs forth. It kinda feels like we’re being forced to walk the plank from here.
And now they’re talking about taking away our assault rifles. Coincidence? They should worry about people showing up in Washington brandishing torches and pitchforks. Maybe not us, but our children for sure. Most of them have probably never even used a spading fork, much less a pitch fork. I prefer the feel and aesthetic of a linseed oil-rubbed hickory handle. Ash is another nice, dense, sturdy handle wood.
Nostalgia for frontier-style mob justice aside, it takes a metaphorical angry mob to dislodge even the most free-spending Congress critter. We get the government we deserve. There’s no other explanation for the utter lack of accountability imposed by voters. The government we deserve or want.
I saw Obama’s forecast described as including an “eye-popping” $1.75 trillion deficit. You bet your goo-goo-googly eyes it’s eye-popping. The tingle down my leg is my bladder evacuating itself. When you see your predecessor’s record-setting $454 billion deficit and raise him $1.5 trillion you have a serious spending problem. Seek help. Google it.