The Congressional Budget Office released its Monthly Budget Report for fiscal year 2009. Most of the news reports have focused on the deficit numbers, up to $1.4 trillion:
CBO estimates that the federal budget deficit was about $1.4 trillion in fiscal year 2009, $950 billion greater than the shortfall recorded in 2008. The 2009 deficit was equal to 9.9 percent of gross domestic product (GDP), up from 3.2 percent in 2008, and was the highest shortfall—relative to the size of the economy—since 1945. The substantial increase in the deficit resulted from both declining revenues and increased spending.
Yes, the deficit numbers are startling. But what is the greatest warning sign to me is the sharp decline in revenues, as illustrated by this CBO chart:
The drop in revenues will be hard to reverse given current Democratic policies which raise the costs and risks of expanding business and hiring employees. The CBO report notes that there was a drop in revenues from 2000-2003, but only by a total over the three years of 12%. Those three years came just after the burst of the Clinton high tech bubble starting in March 2000, and included the economic blow from 9/11.
By contrast, the drop in revenue from 2008-2009 alone fell 16.6%, per the CBO report.
In 2000-2003 we had a President fighting to lower taxes to free up private initiative and stimulate private growth. Now we have a President fighting to raise taxes and playing word games to call taxes “shared responsibility payments” and other nonsense.
With uncontrolled spending plans, and policies designed to stifle private economic growth in favor of government growth, we are in for a rough ride. But I’m telling you something you already knew, unless you only watch and read the mainstream media and left-wing blogs.
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