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Wall Street History
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05/19/2006
Deficits 101
The following is but one way of looking at the fiscal health of the United States Government. I offer it without political opinion.
The Public Debt
Q: What is the difference between the debt and the deficit?
A: The deficit is the fiscal year difference between what the United States Government (Government) takes in from taxes and other revenues, called receipts, and the amount of money the Government spends, called outlays. The items included in the deficit are considered either on-budget or off-budget. [The off- budget items are typically comprised of the two Social Security trust funds and other insurance programs.] Generally, on- budget outlays tend to exceed on-budget receipts, while off- budget receipts tend to exceed off-budget outlays.
You can think of the total debt as accumulated deficits plus accumulated off-budget surpluses. The on-budget deficits require the Treasury to borrow money to raise cash needed to keep the Government operating. We borrow the money by selling Treasury securities like T-bills, notes, bonds and savings bonds to the public. Additionally, the Government Trust Funds are required by law to invest accumulated surpluses in Treasury securities. The Treasury securities issued to the public and to the Government Trust Funds (Intragovernmental Holdings) then become part of the total debt.
Total Public Debt as of 5/17/2006 $8,337,013,432,029
4/28/06 $8.355 trillion 3/31/06 .8.371 2/28/06 .8.269 1/31/06 .8.196 12/30/05...8.170
9/30/05 .7.932 9/30/04 .7.379 9/30/03 .6.783 9/30/02 .6.228 9/30/01 .5.807 9/30/00 .5.674 9/30/99 .5.656 9/30/98 .5.526 9/30/97 .5.413 9/30/96 .5.224 9/30/95 .4.973 9/30/94 .4.692 9/30/93 .4.411 9/30/92 .4.064 9/30/91 .3.665 9/30/90 .3.233 9/30/89 .2.857 9/30/88 .2.602 9/30/87 .2.350 9/30/86 .2.125 12/31/85...1.945 12/31/84...1.662 12/31/83...1.410 12/31/82...1.197 12/31/81...1.028 12/31/80 0.930 12/31/79 0.845 12/31/78 0.789 12/31/77 0.718 12/31/76 0.653 12/31/75 0.576 12/31/74 0.492 12/31/73 0.469 12/31/72 0.449 12/31/71 0.424 12/31/70 0.389 12/31/69 0.368 12/31/68 0.358 12/31/67 0.344 12/31/66 0.329 12/31/65 0.320 12/31/64 0.317 12/31/63 0.309 12/31/62 0.303 12/31/61 0.296 12/31/60 0.290 12/31/59 0.290 12/31/58 0.282 12/31/57 0.274 12/31/56 0.276 12/31/55 0.280 12/31/54 0.278 12/31/53 0.275 6/30/53 ..0.266 6/30/52 ..0.259 6/30/51 ..0.255 6/30/50 ..0.257
Notes: I took slight liberties with the dates, i.e., 6/29 or 9/29 in some years is stated as 6/30 or 9/30 just for ease of viewing. Also the definition of the fiscal year changed as you can see.
The total size of the U.S. economy is $13.020 trillion (as of 3/31/06), which means that the total public debt is 64% of GDP, one common way of looking at the debt. This is a historically high level.
The other way is to look at the size of the fiscal budget deficit vs. GDP, and if you assume a 2006 (fiscal year 9/30) deficit of $350 billion (the White House originally projected it at $423 billion, though now experts peg it anywhere from $300 billion to $350 billion thanks to continued growth in receipts), it is thus 2.6- 2.7% of GDP, or just slightly higher than the 40-year average of 2.3%.
But, any deficits are continually adding to the total public debt and the interest expense on same is huge; anywhere from $211 billion to $350 billion depending on what categories you include. Plus, as you are well aware, the public debt is about to explode further as the Baby Boomers retire and entitlements such as Social Security and Medicare gain steam.
Sources:
Bureau of the Public Debt U.S. Treasury Dept. Office of Management and Budget Bureau of Economic Analysis
Wall Street History returns next week.
Brian Trumbore
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