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rant

Les chiffres nouveaux sont arrivees!

Shortly before the government shut down, the Treasury posted numbers for the fiscal year that ended that day. I put them into my spreadsheet and updated the Federal Deficits Page.

The abbreviated version: the U.S. Federal budget deficit continues its unprecedented rate of shrinkage. After adjusting for inflation, it's now down to about a third of what it was in 2008-2009 when Obama took office, and slightly less than the deficit in 2007-2008 when the recession was just starting. In fact, 2012-2013 doesn't even make the "top ten" list.

Slightly more detail: The deficit in 2007-2008 was by far the largest in history up until then, but it doubled again in 2008-2009 (between the recession, TARP, and stimulus spending to try to end the recession). The deficit shrank rapidly for the next two years (presumably due to the repayment of TARP loans, the expiration of stimulus bills, and a little bit of job growth). It then leveled off -- the deficit in 2011-2012 was very slightly larger, after inflation, than that in 2010-2011 -- and, this year, resumed its rapid fall (presumably due to a tax increase, the sequester, and a little bit more job growth). If this rate of deficit-cutting continued, 2014-2015 would show a surplus.

So be sure to tell your Congressbeings that jobs can wait: we desperately need to cut the exploding deficit :-)

Comments

True. $85 billion a month for several years... pretty soon you're talking real money. And there seems to be very little evidence that it's had much effect, except in persuading the markets that the Fed probably won't raise interest rates for a while (and there are cheaper ways to do that).

OTOH, when inflation does rear its ugly head, the Fed now has several $trillion worth of bonds it can sell at the drop of a hat.
A few months later, somebody e-mailed me to point something out. See, normally the national-debt figures vary by ± $10 billion or so from one day to the next. But from June 1 to Sept 30, 2013, the day-to-day variation was a hundred times smaller, ± $100 million, as the Treasury used "extraordinary measures" (i.e. shuffling money from account to account) to stay just below the limit and avoid default. On Oct. 17, 2013, after the debt-ceiling deal, the official debt figure jumped by $328 billion in one day, presumably "unwinding" these "extraordinary measures", and then returned to its normal ± $10 billion/day variation.

I still don't know what number to say is the "real" 2012-2013 deficit, but my best guess now is to extend that year to the end of October (13 months) and interpolate linearly; 2013-2014 will similarly be shortened to 11 months. Those results are now shown on the web page.

With these adjustments, the years 2011-2014 show a slow but steady decline in deficits; if this rate continued, it would take ten years to balance the budget.