Accelerating Towards the Abyss: The Real Story of Fiscal Year 2010
After cutting through the “clever” misdirections contained in the final Monthly Treasury Statement of the federal government’s fiscal year just ended on September 30, it’s clear that that Uncle Sam’s true financial situation deteriorated at an even faster rate in fiscal 2010 than it did during fiscal 2009. What I choose to describe as Uncle Sam’s operating deficit was 19% higher. You read that right.
Let’s start with receipts.
In fiscal 2008, before deducting IRS-generated stimulus payments that were substantively disbursements, the government took in over $2.6 trillion. In recession-dominated fiscal 2009, collections dropped about 20% to $2.104 trillion. In fiscal 2010, the supposed year of economic recovery, receipts were $2.162 trillion, a less than 3% increase that was over $100 billion short of the $2.264 trillion the Congressional Budget Office (CBO) projected in August 2009.
When you look at why any increase in receipts occurred at all, you realize how weak and two-tiered the economy really is. Only two major areas showed an increase: income taxes paid directly by corporations (up by 38% to $191 billion) and collections from the Federal Reserve (up by over 120%, from $34 billion to $76 billion, per the CBO). Large, established firms pay the vast majority of corporate income taxes; the increase in these collections demonstrates that, relatively speaking, their situation has improved. Collections from the Fed have spiked because its “money from nothing” quantitative easing (QE) portfolio has ballooned; interested and dividends earned on QE investments are handed over to the Treasury. After excluding QE earnings, the government’s operational receipts in fiscal 2010 amounted to $2.086 trillion, barely higher than fiscal 2009′s comparable $2.070 trillion.
Fiscal 2010 receipts trailed fiscal 2009 in the two other major categories. Collections of individual income taxes (down 2% to $898 billion) and for Social Security and Medicare (down almost 4% to $815 billion) were very disappointing. The Social Security system is running monthly cash deficits — right now, not 30 years from now.
The real receipts downer is buried within the individual income tax category. Look at what has happened during the past four years with gross non-withheld income tax receipts, which are predominantly paid by entrepreneurs, business owners, and investors (in billions):
- Fiscal 2007 — $437.6
- Fiscal 2008 — $455.3
- Fiscal 2009 — $312.4
- Fiscal 2010 — $278.2
From their peak in 2008, gross non-withheld receipts have dived by almost 39%. During fiscal 2010, the year of supposed economic recovery, they dropped 11%.
“As the following graphic shows, taking away lower payouts to wards of the state Fannie Mae and Freddie Mac and the effects of the Troubled Asset Relief Program (TARP), out-of-pocket federal spending in fiscal 2010 shot upward. Spending on the regular operations of the government in fiscal 2010 was 7.5% higher than the previous year.”
For this alone, somebody should go to jail. We are in dire financial straits and these bums are spending OUR money like it’s going out of style! I can’t think of any responsible corporation that would INCREASE spending by 7.5% when facing a huge amount of debt (unless, of course, you’re General Motors and the Federal Government will always bail you out). This is insane and people wonder why so many individuals are running towards the Tea Party movement. To spend this much money, place even more debt on this nation, and then get nothing for all of that spending, is simply criminal. Every single individual in Congress that voted for this increased spending needs to be thrown out immediately. Shame on them for doing this to us and our kids.
If you are going to assert “…virtually unprecedented in human history,” how about giving us some context? Otherwise, it sounds like a throwaway line.
Also, maybe someone can clarify about all the stimulus money that has not been spent yet, because things were not shovel-ready, blah, blah. Is that still counted as part of the deficit, even though it has not yet been spent?
Well Dwight, I tried to find a precedent, and couldn’t — at least not for raising spending from about 2.7 trillion to $3.5 trillion in just three years at the same time as tax revenues have gone down about 20%.
The World War II ramp-up in the U.S. was sharper in terms of percentage increases. But almost all of the increase from $13 billion in spending in 1941 to $72 billion in 1945 went to defense, which is obviously not what is happening now. Otherwise, you would have to dig hard into the finances of ancient times and consult with guys like Victor Davis Hanson to try to find ancient civilizations which were as willfully reckless or moreso with non-defense spending. I’m not at all sure that you can.
“Virtually” wasn’t a “throwaway” adjective. It was a hedge in case somebody finds something I couldn’t. What we’re doing to ourselves now may be totally unprecedented.
Yes, Dwight. The unspent stimulus money counts as debt. Try to follow this. I’ll type slowly.
It counts as debt because it is BORROWED. We pay interest on that money.
For a citation in support of this, I recommend a DICTIONARY. Look up the meaning of the word debt.
Dumbass.
Thank you Mr. Blumer. Your analysis is absolutely devastating/terrifying – although I think it is likewise absolutely accurate.
And I’ve got further bad news.
The republicans aren’t going to stop it either. They’ve already ‘pledged’ to not look at any spending cuts outside of 17% of the federal budget. Which means, nothing. And if the economy slows during their congressional watch, they will INCREASE spending, and that is a prediction that cannot be disputed by any rational human being.
The ‘lesser of two evils’ thing just won’t cut it if we want to save the country. Do people still believe that if obama doesn’t set the spending agenda that the country is not going over a financial cliff. PLEASE!
And the ‘change from within’ thing is also just too ridiculous to even have to respond to. Who’s going to set the agenda—– a few freshman tea partiers or a bunch of rinos that make up the leadership. Use your heads.
Saying that your going to change the rino nature of the republican party and the way your going to do it is elect them to office is so stupid that i can’t believe people actually fall for it.
We need someone else. Maybe constitutional party—just someone else.
Isn’t that obvious?
To all the people that are snickering right about now and saying that i’m just “wasting my vote”, I say that if you vote for this crew of republicans, you are virtually guaranteeing that you are ‘wasting any chance’ to ever save the country from out of control spending. And, guess what? Out of control spending is not just a phrase. It means we will soon be up the creek financially and people are just too oblivious to really think about what that means.
Has everyone forgotten that john mccain proposed that the federal gov’t take over ALL MORTGAGE DEBT in this country? Have you forgotten that?
I guess i’ve made enough enemies for now. Not that I wanted to, but how else are we going to get spending under control? Not with this group of republicans.
Commentations,
None of us are saying that the GOP are perfect. Far from it!
What we ARE saying is that they are better than the Democrats by a mile!
A vote for any 3rd party at this time serves as a vote FOR a Democrat, because the 3rd party candidate has zero chance of election. Splitting the opposition vote to the Democrats serves them, and no one else. Most i9mportantly doing that is a disservice to the country as the last 18 months has clearly shown!
Once given some power again, the GOP must be held accountable. If they fail to heed the call for common sense, limited government, a new Party to replace one or both of the current parties will need to be formed.
“The Obama administration and the Pelosi-Reid Congress have spent wildly and run up deficits recklessly on a scale virtually unprecedented in human history.”
So did Bush. What’s your point?
The point is the gas pedal is arguably being pressed harder to the floor now then before and we are that much closer to a real abyss!!
Right, it’s different now than when you had the opportunity to do it. Do’t worry, you’ll do it again soon enough, then what will you say? “It’s all Obama”s fault!”
Welcome to the machine.
This is not true. There have been many other periods when spending exceeded the Bush years as a percentage of GDP. Always during wartime. Mostly for war expenses. Just like Bush.
The worst of the Bush spending happened after the Democrats took control of Congress in ’07. For the civics illiterates, CONGRESS, more specifically, the HOUSE, controls the purse strings. All spending bills must originate in the House. (As an aside, all spending portions of ObamaCare are unconstitutional, because that bill originated in the Senate.)
So, it is not about who is President, although he plays a role. “Bush did it too!”, is not a valid justification. Bush, by the way, was a SoCon, but not a FisCon. Tax cuts? Yes. Spending cuts? Not so much.
The gross National debt has increased more in the last 3 years of Democratic majority Congress, than the 12 years of Republican majorities before.
$4,553,969,658,629.31
EOFY2007-EOFY2010 (D)
$4,033,670,471,553.09
EOFY1995-EOFY2007 (R)
http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo5.htm
Congress controls spending. The President does not sign and cannot veto the Congressional Budget Resolution.
http://www.cbpp.org/cms/?fa=view&id=155
For 2009 though, Nancy Pelosi and Harry Reid bypassed George Bush entirely, passing resolutions to keep government running until Barack Obama could take office. At that time, they passed a massive spending bill to complete the 2009 budgets..
And where was Barack Obama all this time? He was a member of that very Congress that passed these massive spending bills, and he signed the omnibus bill as President
to for 2009.
If the Democrats inherited any deficit, it was the 2007 deficit, the last Republican budget. That deficit was the lowest in five years, and the fourth straight decline in deficit spending.
After that, Democrats took control of spending, including Barack Obama, who voted for the budgets.
If Obama inherited anything, he inherited it from himself.
In a nutshell, what Obama is saying is I inherited a deficit that I voted for and then I voted to expand that deficit four-fold since January 20th, 2009.
Cost of Bush’s 2008 bank bailout = $700 billion.
Cost of Iraq and Afghanistan wars since 2001 = Approx. $1 trillion
Cost of Bush tax cuts over past 10 years = Approx. $1 trillion
Any discussion of the national debt which omits these facts is not serious.
- Estimated net cost of TARP so far, per the Obama administration as of Oct. 5 — $50 billion (I think it will come in somewhat higher)
- Cost of bailing out Democrat-created debacles Fannie Mae and Freddie Mac so far — $148 billion (projected cost could be as high as $363 billion; if the econ doesn’t legitimately recover, I think it could be more)
- Cost of Iraq and Afghanistan Wars, both authorized by Congress but which have both been lengthened at a probable cost of hundreds of billions by clowns like Harry “the war is lost” Reid, Nancy Pelosi, et al continually motivating the enemy — $1.121 trillion.
- Increase in federal receipts from 2002 to 2008 during the six effective years of the Bush tax cuts, before Pelosi, Obama, and Reid hijacked the economy — + $763 billion, from $1.853 trillion to $2.617 trillion after adding back 2008′s IRS stimulus payments.
Any discussion of the national debt which fails to acknowledge these facts is not serious.
Muppets
Largest annual deficit under Bush – approximately 400 billion. Too big to be sure
Largert annual deficit under Obama – 1.85 TRILLION. FOUR AND A HALF TIMES AS BIG
Read this then talk your absolutely brain dead trash: http://blog.heritage.org/2009/03/24/bush-deficit-vs-obama-deficit-in-pictures/
Piffle. Tax cuts don’t COST the government anything. If the Bush tax cuts reduced potential government revenue by one trillion dollars (argueable), that money was merely left in the hands of it’s rightful owners – the ones who earned it by the application of their labor and intellect – and put to the best uses they could imagine. That doesn’t represent a cost, it represents simple economic justice.
THANK YOU!
Agreed. Calling tax cuts a static net loss shows mathematical and economic retardation.
But if yu cut taxes, it would work better if you also cut spending.
“Cost of Bush Tax Cuts”
This is an argument that all money rightfully belongs to the Government and that all tax cuts must be “paid for”. It is a completely ignorant statement, and is akin to asking a slave to pay for his freedom. I reject it and you as parasitical tyrants. For example, tax cuts might mean stop paying fat asses in swivel chairs 6 figures to cut checks to Medicare fraudsters. That is just one example, I could give you some more, but why waste my breath.
http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo5.htm
Annual increase to gross National debt:
eofy2001-eofy2002
$421 (R)
eofy2002-eofy2003
$555 (R)
eofy2003-eofy2004
$596 (R)
eofy2004-eofy2005
$554 (R)
eofy2005-eofy2006
$574 (R)
eofy2006-eofy2007
$501 (R)
eofy2007-eofy2008
$1,017 (D)
eofy2008-eofy2009
$1,885 (D)
eofy2009-eofy2010
$1,652 (D)
(in billions)
Republicans have been far from perfect in holding back government spending, but they pale compared to the Democrats controlling both houses of Congress and the Presidency. This graph shows it: http://gatewaypundit.firstthings.com/2010/09/unreal-obama-says-gop-pledge-to-cut-spending-is-irresponsible/
So instead of running off the cliff in high gear (gets you there faster) in democrat fashion – the republicans drive us over the cliff in second gear.
Whats the difference? Its like death from a thousand paper cuts or a hundred thousand. One’s faster than the other but the end result is the same.
Its time to seriously consider third party solutions. If a third party candidate can corral 20-30% or more of the votes it will certainly get attention. Not ‘independent’ like Lieberman who is democrat through and through or the Marxist Sanders in Vermont but independent as in a real conservative.
Like Tea Party maybe? Gives the libs some entertainment too. Seems they like the pejorative ‘tea baggers’. That word wasn’t in my lexicon 2 years ago!
The economic system is broken, it was democrats and republicans that corrupted it
it makes sense to leave both parties behind, since they are the equally responsible for the current crisis. They play the blame game while driving ever closer to the edge of the cliff.
We deserve the government we have, watching the cliff come ever closer and keep electing the same people responsible for the damage.
The debt is what it is! The underlying causes are what they are! It is a total waste of time to be debating who spent more beans and who hid more beans of spending and debt. The real issue to confront, combat and reverse is the decades of socialist-progressive creep in our government from the early 20th century to the present.
The Democrat Party has become the overt surrogate mother to the communist, socialist-progressive parties and movements. The GOP has, since the 60′s, become a party of enablers and compromisers to the socialist movement. Now more recently, the GOP is becoming the surrogate mother for the anarchist parties and movements, known currently, as Libertarians. Add to the GOP a third element of division known as the “Conservatives” who purport themselves to be of a fiscal and constitutional “Christian” political ideology.
The GOP has become a splintered rag-tag party incapable of mounting a war front against the socialists taking over the country and the government. Likewise, the new Tea party is a rag-tag accumulation of incompetents who’s only platform is to complain while assigning their loyality as yet another splinter faction of the failed GOP. They had a wonderful opportunity to be a movement accross all party lines representing the Traditional America and all the values that made us once such a mighty and successful nation.
In the meantime while, all the factions of the GOP are busy trying to replace the moderate centrists of the GOP, the radical socialists of the Democrat Party are busy trying to oust their moderate centrists.
Results? A hundred year old (+) precisely organized and centric socialist party being in a slight minority position against a splintered rag-tag multi-faceted GOP with a slight majority position, having NO will or even a clue of how to address the real underlying problems of government and the nation. Their only rhetoric is stop the spending, reduce the debt and reduce the size and restore a constitutional government. Has anybody read their strategic plan to accomplish those things? I mean a “real” comprehensive viable plan! Of course not! They don’t have one! So, continues GOVERNMENT GRIDLOCK, CONGRESSIONAL DIVISION AND A CONTINUED MEAN SPIRITED DIVISION OF THE PEOPLE without any common grounds of unity to heal the nation of it’s illnesses.