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Deficit shrinks by $1 trillion in Obama era

http://www.msnbc.com/rachel-maddow-show/deficit-shrinks-1-trillion-obama-era?CID=sm_fb_maddow

In the not-too-distant past, talk in the political world of the U.S. budget deficit was all the rage. As the Tea Party “movement” took shape, conservatives quite literally took to the streets to express their fear that President Obama and Democrats were failing to address the “out of control” deficit.

Congressional Republicans agreed. As recently as 2013, Sen. Rand Paul (R-Ky.) was asked about the radicalism of his political agenda and he responded, “[W]hat I would say is extreme is a trillion-dollar deficit every year.” Around the same time, then-House Majority Leader Eric Cantor (R-Va.) argued that Congress should be “focused on trying to deal with the ultimate problem, which is this growing deficit.”

The Republican rhetoric was ridiculously wrong. We don’t have a trillion-dollar deficit; the deficit isn’t the ultimate problem; and it’s not growing.
Strong growth in individual tax collection drove the U.S. budget deficit to a fresh Obama-era low in fiscal 2015, the Treasury Department said Thursday.

For the fiscal year that ended Sept. 30 the shortfall was $439 billion, a decrease of 9%, or $44 billion, from last year. The deficit is the smallest of Barack Obama’s presidency and the lowest since 2007 in both dollar terms and as a percentage of gross domestic product.
Keep in mind, in the Obama era, the deficit has shrunk by $1 trillion. That’s “trillion,” with a “t.” As a percentage of the economy, the deficit is now down to just 2.5%, which is below the average of the past half-century, and down from 9.8% when the president took office.

Revisiting our coverage from several months ago, I looked for press releases from the “Obama is turning us into Greece!” crowd, eager to see them celebrate President Obama’s striking record on deficit reduction, but so far, nothing has turned up. Maybe they’re busy.

And in practical terms, that’s a shame. The vast majority of Americans are absolutely certain – thanks to deceptive Republican rhetoric and unfortunate news coverage – that the deficit has soared in the Obama era. Late last year, a Bloomberg Politics Poll found that 73% of the public believes the deficit has gotten bigger over the last six years.

The year before, the same pollster found that only 6% of Americans realized the deficit was shrinking. It helps explain why the president hasn’t gotten any credit for deficit reduction, which seems like the sort of development Tea Partiers and the Beltway’s Very Serious People should consider an extraordinary accomplishment.

As we talked about last year, it’s tempting to conclude that the public’s confusion doesn’t matter. In the Clinton era, the deficit disappeared entirely, and Americans had no idea.

But there’s another side to this. Whether or not Americans know and/or understand the basics of the fiscal argument may not have a practical impact on the debate itself, but the fact remains that voters are ultimately responsible for electing policymakers. If Americans believe, incorrectly, that the deficit is getting bigger, these same voters may be inclined to vote for candidates who’ll slash public investments and undermine social-insurance programs – which would have real-world consequences.

Postscript: To reiterate a point that bears repeating, I don’t necessarily consider this sharp reduction in the deficit to be good news. If it were up to me, federal officials would be borrowing more, not less, taking advantage of low interest rates, investing heavily in infrastructure and economic development, creating millions of jobs, and leaving deficit reduction for another day.

That said, if we’re going to have a fiscal debate, it should at least be rooted in reality, not silly misconceptions. And the reality is, we’re witnessing deficit reduction at a truly remarkable clip. Every conservative complaint about fiscal recklessness and irresponsibility in the Obama era is quantifiably ridiculous.

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So, I'm not an economist. I'll leave it up to you guys to determine if this is accurate or not.

Interesting.

Here is a counter arguement from CNBC, which basically says your article is true as to where we are.. but doesn't seem to mention where we are going..

Kiss that 'shrinking' budget deficit goodbye
Jeff Cox | @JeffCoxCNBCcom
Wednesday, 21 Jan 2015 | 12:07 PM ET


Among the laundry list of achievements President Barack Obama touted in his State of the Union speech Tuesday was a "shrinking" budget deficit.

While that's true on its face, there's more to the story, and it's likely to become a significant headache for his successor.

Obama and his supporters are correct in reporting that a budget gap when he took office of some $1.4 trillion has been trimmed significantly. The 2014 projection was for a $506 billion shortfall, while the 2015 number comes down to $469 billion, according to the Congressional Budget Office.

"At every step, we were told our goals were misguided or too ambitious; that we would crush jobs and explode deficits. Instead, we've seen the fastest economic growth in over a decade, our deficits cut by two-thirds, a stock market that has doubled and health care inflation at its lowest rate in 50 years," Obama said.

"At this moment — with a growing economy, shrinking deficits, bustling industry and booming energy production — we have risen from recession freer to write our own future than any other nation on Earth," he added later in the speech.

The good news, however, ends soon, at least for deficit hawks.

Absent substantial fiscal reform, obligations for retirement benefits, health care and other spending will be pushing that deficit higher and higher in the years to come, with the CBO projecting the number to approach $1 trillion again by 2024.

The 2016 number is expected to grow 18.6 percent to $556 billion, before a one-time drop to $530 billion the following year. From there, the deficit goes on a glide path higher to the point where it more than doubles the 2015 figure by 2022, the CBO estimates.

The trend will pose a policy headache for future members of Congress as well as the person who takes over the Oval Office from Obama when he exits in early 2017.

"Monthly budget updates suggest that the burgeoning U.S. expansion continues to improve the near-term fiscal outlook. Federal government revenues are outpacing last year's gait and federal discretionary spending continues to decline," economist Dana M. Peterson at Citigroup said in a report for clients.

"However, mandatory federal spending, especially for public retirement and health-care benefits, continued to expand unabated in the first three months of the fiscal year. Such rising mandatory expenditures foreshadow spiraling federal deficits and debt ahead."

Peterson said the late-year tax and spending agreement between Obama and Congress solved nothing, adding that "media coverage of the nation's incipient fiscal challenges has been muted and measures of policy uncertainty are improving."

What lies ahead is a "fiscal firestorm" fueled by "unchecked" growth in retirement and health-care spending, Peterson said. Medicare and Medicaid spending will surge from $68 billion in the first quarter of the fiscal year to $84 billion in 2015; Social Security outlays will rise from $171 billion to $180 billion, and disability from $35.3 billion to $35.9 billion—in total, 9 percent higher.

In addition, the Affordable Care Act—Obamacare—subsidies are pegged at $5.4 billion, or more than half the total IRS spending of $9.3 billion.

"Worsening trends in mandatory expenditures on public health care and retirement entitlements point to deficit enlargement ahead. Insipient expansion of mandatory outlays continues to threaten to reverse the progress to date in narrowing the federal budget deficit and slowing the rise in public debt," Peterson said.

"Policymakers continue to focus on low-hanging fruit to reduce federal government debt and deficits, while avoiding necessary cuts to mandatory expenditures and tax reform," she added.

Peterson concluded that a "trifecta" of concerns—rising structural deficits, a growing share of debt to gross domestic product and "a dysfunctional political process"—have been "largely unaddressed" in Washington.

Indeed, the debt remains and in fact is growing.

The federal government has a $16.6 trillion marker held by its various creditors around the world—about $2.5 trillion combined to China and Japan alone—and Obama can make no similar claim about that number "shrinking."

In fact, according to the Federal Reserve, the government ended 2008, just before Obama took office, with a total debt of $7.9 trillion—less than half its current level.

And there was no sign of debt growth slowing, as the total grew 7.2 percent in the third quarter of 2014.

CNBC

so it appears that it is very possible that the administration and congress (who I'm sure will both try to take credit for deficit reduction) have achieved some level of short term success while passing the bigger problem onto the next group to deal with... at least if this article is correct, that is what is happening.

US Debt clock

Looks like that debt number is still rising rather quickly to me.

In further news, Ireland just dropped corporate taxes to 6%.

Wow. Nice link. Well, not nice in a good way.

Certainly nice in a bad way though.

your article was written in january.

this one is this month.

please learn the difference between deficit and debt.

the country has always been in debt, since the early days of the nation, as a matter of fact.

interesting enough, the only time the debt hasn't risen was during the Carter and Clinton years.

I know the difference between debt and deficit. Just like everything else everyone on here argues about, you can get a completely different opinion on how much the deficit is depending on who you ask. My point is, even with that deficit reduction, if it's not fuzzy math, it's still not enough.

You can thank the republican house during the Clinton admin for lowering the deficit. As you are so keen on government shutdowns, the repubs had to send the budget to Clinton 3 times before he signed it, as he wanted more spending. But please, continue giving Clinton credit for that. Libs are good at taking credit for things they didn't do.

the classic "the president gets all the blame, congress gets credit" line.

Did you even listen to the Lib candidates in the debate? All they want to do is spend, spend, and spend some more.

once again, nobody here has a problem with spending in the middle east for some odd reason.

why are you so against investing in your own country?

one years worth of funding the iraq war would've covered millions of americans through college.

so you're saying your cool with taking care of people who hate us, but not cool with taking care of people who ARE us?

i watched the entire debate. did you?

i watched a bunch of candidates who want to take care of americans.

you know what i saw from the GOP debates? a bunch of people who wanna take care of israeli's and other middle easterns.

our country has always been strongest when we spend on ourselves. period.

Regardless, this is a thread you created to make it seem like the democrats suddenly care about the defecit. News flash, they don't. They would run this country into the ground if given the chance. It's always the repub congress that has to reel them back in and say nope to their spending.

And I did watch the debate, and I don't recall any of them saying they would cut military spending or any spending in the middle east.

...I wish I could spend $439,000,000,000.00 that I didn't have with no personal repercussions. Our economic and political systems are so broken. They sound great in theory, but both are far from their ideals. The two intertwine entirely too much and both are rife with corruption.

I think politicians should have to take a vow of poverty and donate their money to charity. Too many politicians seem to be in it for the money rather than the greater good. It'll never happen, but I'm not sure how else we fix things. I wish there was a candidate that actually seemed to care about the issues and the American people more than just doing what they have to do to win an election and get the power and prestige that goes with the office.

You mean it's just like your claim that Clinton had a balanced budget?

Yours is a history of what has happened the last few years and where we are today. Mine acknowledges that yours is right and then extrapolates out several years to tell you what is coming. It's very possible that both articles are right.

meh, I dont know about the federal deficit...but my expenses for home have gone up, my health insurance has gone way up and I'm getting less and less for my money.

Which means even more companies like GE and Eaton will be moving their HQ's to Ireland. Yes, GE has a US HQ and so does Eaton, but for purposes of tax, they are in Ireland.

Aren't loopholes grand!

Nobody?... I actually take offense with that extremely broad generalization.

I don't like spending money anywhere outside our borders, other than emergency relief aid (IE: tsunamis, hurricanes, earthquakes, etc)

It's not our job to support the world, especially when we have so many financial issues right here in our own backyard.

Wonder why everyone is moving out? Why is America not the best place to do business?

The last I heard from some on this board is that our corporate taxes are high, but every one has loopholes, so they don't pay that much. Everyone if they have resources like GE.

So they are moving out of America just for a change of scenery?

Of course not, 40'. It is cyclical - first was move to Tennessee, then Mexico, followed by China, next will be India. It is simply corporate greed, the bottom line, pressure from stockholders, call it what you will. Eventually the cycle will come back to North America, of course only after we have had the Third World experience...

We all know it is the job of business to make money and maximize profits. Call it greed if you want but if I am working for you or investing my money in you, you better come through. We need the jobs and we need the job security that comes with a profitable business. Investors want your stocks value to rise, not fall.

The Governments job is to keep business from going too far in their search for profits. Coal companies leaving toxic holes in the ground, water pollution by battery manufacturers, etc are some of the things the government does.

It is also the responsibility of our government to make sure those businesses find a profitable place to do their business and it benefits all of us if that business is done in America.

People talk greed and loopholes as our Businesses move overseas. If it was better for a business to stay here, it would stay, but apparently it ain't.

Sounds like maybe we should close some loopholes

A flat tax system will do that.

We could also wake up and realize it's 2015 and not 1954 any more... America has it's benefits but there are a lot of nice places to live and work around the world these days and it's a very competitive market. These corporations that deal with numbers far bigger than most of us can even comprehend are going to do what is in their best interest. We can close all kinds of loopholes but if the result is that their taxes creep up and up.... they will go somewhere else. Most of them are already doing business all over the world anyway.

Whatever we do with corporate taxes has to be about a lot more than seeing how much money we can milk out of these corporations just because they make a lot of it and we feel entitled to it, it has to be a comprehensive plan that makes America a favorable place to start, grow, and keep a business.

you complain the most about the government being involved in business. so your statement is odd to me.

you constantly post that government needs to stay out of business.

well they have. and now corporations for the longest are chasing the bottom line to the point that they ship tons of jobs overseas.

you can't have your cake and eat it, too.

i have to do this project about Walmart and the damage they've done to American suppliers for Purchasing class. The research is making me cry. Walmart pretty much forced suppliers to move to china in order to sell their products in Walmart. since the majority of suppliers are now based in China, they get low cost products and mark the products to consumers sometimes 87%.

then combined with the corporate welfare america gives companies. it's a train wreck on our economy. they call it a monopsony.

We spend 439 BILLION more than we make and some people are happy about that Wake me up when we have zero debt, and 900 Billion saved for a rainy day. Until then both parties suck.

we'll never have zero debt.

but we've had a surplus in the budget before, and it's getting better and better toward that goal.

That post is so void of facts and so twisted that there is no way to answer it.

Never say never. If your average Joe can do it then so can our government

it's full of facts. the charts and stats are right there in the initial link.

saying its wrong but not supporting your statement is whats twisted.

are you talking about Walmart? because it's a fairly common fact that they are shady as hell.

Stand down dude. I was talking about your last post to me.
Read and Comprehend son.

Americans paid HOW MUCH in taxes last year?

Americans paid a grand total of $3.25 trillion in taxes for fiscal year 2015.

This was $228 billion higher than the total receipts in fiscal year 2014, marking an increase of 8 percent.

According to the Monthly Treasury Statement released Thursday, more than one-third of fiscal 2015's taxes came from individuals, at $1.54 trillion, while corporations paid little more than one-ninth at $347.80 billion. The rest comes from social insurance and retirement taxes, excise taxes, estate and gift taxes, customs duties, and other miscellaneous receipts.

Despite the record intake, the U.S. government ran a deficit of $438.90 billion for the fiscal year.

http://www.cnbc.com/2015/10/16/americans-paid-how-much-in-taxes-last-year.html

Money loses value over time. It makes no sense to have a rainy day fund and harms the tax payer more than it helps them in the long term. Either spend the extra money or refund it back to the citizens. Governments should always run in the red, just not to this extent.

When was that?

under clinton.