America’s increasing deficit is a trend that cannot be denied. In 2011, the credit rating in the United States was downgraded, something that happened for the first time in history. However, even with the cutbacks on spending, the country’s debt continued to increase.
By 2012, the United State’s national debt sat at 14,271,000,000,000. Then, in 2013, this number increased to an unbelievable $17,156,117,102,204, which doesn’t seem to add up when considering that it should have decreased as a result of more budget cuts toward spending. To gain better understanding, this must be looked at in another manner.
If you were to view the 2011 government budget scaled down like an $annual family’s household budget, you would arrive at an income of $21,700. However, expenses would be at $38,200. New credit card debt would be around $16,500, outstanding credit card debt would be around $142,710 and budget cuts would amount to around $385. Meanwhile, the 2013 budget would include an income of $28,000, expenses of $38,030, new credit card debt of $10,030, outstanding credit card debt of $171,561 and budget cuts of $4,680.
The moral of the story is that the 2013 family would make 92 percent of larger budget cuts, put 39 percent less charges on their credit card and yet somehow owe 20 percent more on their outstanding credit card bill. This would equal six years and one month of the total family income to pay it off.
What exactly caused this crisis? Under President Clinton, there was a surplus and a much stronger foundation. If the Clinton era’s method of spending would have continued, the surplus would have sat at $2.3 trillion. When he left office, however, it sat at around $86 billion. George W. Bush contributed hugely to the deficit with all of his spending on the wars in Iraq and Afghanistan plus domestic spending in addition. A total of more than $8 trillion in spending between Bush and President Obama contributed to the continuing deficit.
Unfortunately for Obama, he still has his work greatly cut out for him to clean up after Bush’s spending. Projected costs for the president include minus $250 billion for the middle class tax cut, plus $126 billion in defense spending savings, minus $800 billion for the Recovery Act and minus $400 billion for one time emergency investments.
Additional losses from the Clinton surplus to where the country is today includes $3.6 trillion as a result of lower tax revenue and $7 billion in debt for government finances, such as student loans. What this means is that there are greater taxes or lower expenditures or even both to compensate, and it is needed quickly.