Michael McKelvy
October 11th 04, 02:53 AM
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Biggest Deficit in History? Yes and No
Half a trillion dollars is the most ever, but several others have been
worse relative to the size of the economy.
February 27, 2004
Modified: February 27, 2004
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Summary
Kerry said Feb. 26 that Bush?s budget deficit is ?the largest in
history.? But by the most important measure that?s not quite true.
This year the deficit is projected to be in the neighborhood of half a
trillion dollars, a record. That?s 4.5% of the entire economy, a figure
large enough to worry Alan Greenspan and others concerned about a drag
on future economic growth. But it was even higher in both the Reagan
administration and in the term of Bush's father.
Analysis
The federal deficit for fiscal year 2004 (which ends Sept. 30) is
projected by the President?s Office of Management and Budget
<http://www.whitehouse.gov/omb/budget/fy2005/sheets/hist01z3.xls> to be
$521 billion. The Congressional Budget Office
<http://www.cbo.gov/showdoc.cfm@index=5003&sequence=0> is predicting a
somewhat lower total of $477 billion. But either would easily exceed the
previous record deficit of $375 billion set last year. That in turn
broke the previous record of $290 billion, which was reached under
Bush?s father in 1992.
*Bush in red: Clinton in dark blue*
Source: Table 1.3
<http://www.whitehouse.gov/omb/budget/fy2005/sheets/hist01z3.xls> Budget
of the United States Government: Fiscal Year 2005 Historical Tables
But the most important measure of the deficit is not the size in
dollars, or even the size in dollars after adjusting for inflation. The
most important measure is the size relative to the nation?s economic
output, what economists call Gross Domestic Product or GDP. And in fact,
the current projected deficit was equaled or exceeded in four years
during the Reagan administration and two years in the term of Bush?s father.
Source: Table 1.3
<http://www.whitehouse.gov/omb/budget/fy2005/sheets/hist01z3.xls> Budget
of the United States Government: Fiscal Year 2005 Historical Tables
Still, there's little question that the deficit is far too big by any
measure. President Bush himself admits as much, and is promsing to
cut the deficit in half within two years. And on Feb. 25 Federal Reserve
Chairman Alan Greenspan
<http://www.federalreserve.gov/boarddocs/testimony/2004/20040225/default.htm>
said he feared deficits are again becoming chronic, and threatening to
drag down economic growth in the future.
Footnote: The biggest deficits by far -- measured as a percentage of the
economy -- came during World War II. In 1943 the deficit was $54.3
billion -- which today would amount to little more than rounding error.
But back then it amounted to more than 30% of the wartime economy.
Nothing since the war years has come close.
Sources
_Budget Of The United States Government: Fiscal Year 2005_ Historical
Tables "Table 1.3
<http://www.whitehouse.gov/omb/budget/fy2005/sheets/hist01z3.xls>
?Summary Of Receipts, Outlays, And Surpluses Or Deficits (?) In Current
Dollars, Constant (FY 2000) Dollars, And As Percentages Of GDP:
1940?2009" Jan 2004.
US Congress, Congressional Budget Office ?Monthly Budget Review
<http://www.cbo.gov/showdoc.cfm@index=5003&sequence=0> ? 6 Feb 2004.
Copyright 2004 Annenberg Public Policy Center of the University of
Pennsylvania
FactCheck Home <default.aspx.html>About Us
>Archive <archive.aspx.html>Privacy
Policy >Copyright Policy
>Contact Us >
Biggest Deficit in History? Yes and No
Half a trillion dollars is the most ever, but several others have been
worse relative to the size of the economy.
February 27, 2004
Modified: February 27, 2004
eMail <sendlink/form.php> eMail to a friend <sendlink/form.php> Print
<#> Printer Friendly Version <#>
Summary
Kerry said Feb. 26 that Bush?s budget deficit is ?the largest in
history.? But by the most important measure that?s not quite true.
This year the deficit is projected to be in the neighborhood of half a
trillion dollars, a record. That?s 4.5% of the entire economy, a figure
large enough to worry Alan Greenspan and others concerned about a drag
on future economic growth. But it was even higher in both the Reagan
administration and in the term of Bush's father.
Analysis
The federal deficit for fiscal year 2004 (which ends Sept. 30) is
projected by the President?s Office of Management and Budget
<http://www.whitehouse.gov/omb/budget/fy2005/sheets/hist01z3.xls> to be
$521 billion. The Congressional Budget Office
<http://www.cbo.gov/showdoc.cfm@index=5003&sequence=0> is predicting a
somewhat lower total of $477 billion. But either would easily exceed the
previous record deficit of $375 billion set last year. That in turn
broke the previous record of $290 billion, which was reached under
Bush?s father in 1992.
*Bush in red: Clinton in dark blue*
Source: Table 1.3
<http://www.whitehouse.gov/omb/budget/fy2005/sheets/hist01z3.xls> Budget
of the United States Government: Fiscal Year 2005 Historical Tables
But the most important measure of the deficit is not the size in
dollars, or even the size in dollars after adjusting for inflation. The
most important measure is the size relative to the nation?s economic
output, what economists call Gross Domestic Product or GDP. And in fact,
the current projected deficit was equaled or exceeded in four years
during the Reagan administration and two years in the term of Bush?s father.
Source: Table 1.3
<http://www.whitehouse.gov/omb/budget/fy2005/sheets/hist01z3.xls> Budget
of the United States Government: Fiscal Year 2005 Historical Tables
Still, there's little question that the deficit is far too big by any
measure. President Bush himself admits as much, and is promsing to
cut the deficit in half within two years. And on Feb. 25 Federal Reserve
Chairman Alan Greenspan
<http://www.federalreserve.gov/boarddocs/testimony/2004/20040225/default.htm>
said he feared deficits are again becoming chronic, and threatening to
drag down economic growth in the future.
Footnote: The biggest deficits by far -- measured as a percentage of the
economy -- came during World War II. In 1943 the deficit was $54.3
billion -- which today would amount to little more than rounding error.
But back then it amounted to more than 30% of the wartime economy.
Nothing since the war years has come close.
Sources
_Budget Of The United States Government: Fiscal Year 2005_ Historical
Tables "Table 1.3
<http://www.whitehouse.gov/omb/budget/fy2005/sheets/hist01z3.xls>
?Summary Of Receipts, Outlays, And Surpluses Or Deficits (?) In Current
Dollars, Constant (FY 2000) Dollars, And As Percentages Of GDP:
1940?2009" Jan 2004.
US Congress, Congressional Budget Office ?Monthly Budget Review
<http://www.cbo.gov/showdoc.cfm@index=5003&sequence=0> ? 6 Feb 2004.
Copyright 2004 Annenberg Public Policy Center of the University of
Pennsylvania