Thursday, April 21, 2011

The U.S. Government Deficit On An Unsustainable Path

The issue of the U.S. federal government's deficit has been a front and center issue over the course of the last several months. Congress' and the Obama administration's effort to reach an agreement on the FY 2011 federal budget touted the $38 billion reduction in spending. As the below chart shows, the current deficit stands at $1.4 trillion. Cutting $38 billion will have little impact on what ultimately needs to be accomplished. Even if revenues returned to levels in early 2008 (black line in below chart), the deficit would still be equal to about $900 billion. The widening gap between spending and receipts is an unsustainable one. The second chart details the rapid increase in the governments overall debt which has ballooned along with this widening gap between receipts and outlays.

From The Blog of HORAN Capital Advisors

From The Blog of HORAN Capital Advisors

1 comment :

Blindfolded Monkey said...

You are right that the current deficits are not sustainable. On the bright side though it appears that both parties have also come that realization are are starting to take (baby)steps to address it. If the economy keeps improving and the US can start pulling out of Iraq and Afghanistan they may be able to put their fiscal house in order.