Update on the Impending Budgepocalypse: U.S. to Run Second Largest Deficit in 65 Years
Yesterday, the Congressional Budget Office released its Monthly Budget Review, complete with updated deficit figures. The short version? The budget's in some serious fiscal pain; it's just not quite as bad as last year's. With just one month to go in the 2010 fiscal year, the U.S. has already rung up a $1.3 trillion deficit. If there's good news, it's that that figure is down slightly (about $70 billion) from the same month last year. But, as the CBO points out, it's only good news when compared to last year's record-setting deficit: "Relative to the size of the economy, this year's deficit is expected to be the second-largest shortfall in the past 65 years: At 9.1 percent of gross domestic product (GDP), that deficit will be exceeded only by last year's deficit of 9.9 percent of GDP." Overall, near-term deficit estimates have grown in recent months. In July, the administration revised its projections for this year and next upwards by a total of $150 billion. Whether or not the budget's current trajectory will eventually trigger a fiscal crisis isn't entirely clear. But the more the debt grows, the more likely a crisis becomes.