The Congressional Budget Office (CBO) now estimates that the federal deficit for the recently completed fiscal year (2011) was $1.3 trillion, or 8.6 percent of the gross domestic product (GDP). This is historic stuff: Prior to the year that President Obama was inaugurated, the only deficits in American history that cleared even 6.0 percent of GDP all involved either the Civil War, World War I, or World War II. In inflation-adjusted dollars (as opposed to as a percentage of GDP), our deficit spending last year actually surpassed our deficit spending during any year of WWII (see table 1.3).
The CBO says that last year the federal government’s receipts were $2.3 trillion and its outlays were $3.6 trillion. So for every $2 that came in, a little over $3 went out.
Perhaps this new batch of sobering news will help motivate the Republican presidential candidates in tomorrow night’s debate to show more seriousness in dealing with our fiscal challenges, rather than simply saying they’re for a balanced budget amendment. (How, exactly, would they trim $1 of every $3 in federal spending to balance the budget? Or would their support for such an amendment merely invite a huge tax hike?) Fiscal seriousness on the part of the GOP field would provide a welcome contrast with the incumbent president and his record-setting profligacy.