Wednesday, October 15, 2008
The United States 2008 federal deficit has reached a record high, US$454.8 billion—more than double last year’s deficit. Financial experts believe that next year, the deficit will reach over $700 billion, while the National Debt Clock has recently run out of digits to record over $10 trillion in national debt.
The deficit is now equivalent to 3.2% of the Gross Domestic Product (GDP) of the United States, with the government’s total income being 17.8% of GDP, and total outlays being equivalent to 21% of GDP.
Treasury Secretary Henry Paulson blamed the deficit on the housing market, related markets, and slow growth. He said the news would “reinforce the need to not only address short-term challenges, but pursue policies that promote economic growth and fiscal responsibility, and address entitlement reform”.
Democrats like Senator Kent Conrad, however, placed the blame on “President Bush’s failed policies“. “The reality is that the next president will be inheriting a fiscal and economic mess of historic proportions,” said Conrad, adding that “it will take years to dig our way out”.
Another Democrat, House Budget Committee Chairman John Spratt, also blamed the Bush administration. “The eight years of this administration will include the five biggest budget deficits in history,” he said. “The resulting debt will be passed to our children and grandchildren.”
Jim Nussle, director of the Office of Management and Budget said that he believes that the deficit will start to decline. “The bipartisan stimulus bill and the slow economy are the primary reasons for the increase in deficit as reflected in this year’s budget results. This increase reinforces the need to adopt and maintain policies that promote economic growth and fiscal responsibility, including entitlement reform and pro-growth tax policies. I am confident the economy can return to stronger growth with a declining deficit—after working through current challenges if Congress limits wasteful and excessive spending.”