The Congressional Budget Office projected today that the federal budget deficit for FY 2009 will be $1.2 trillion, over 8 percent of anticipated GDP. And this is before Congress enacts Barack Obama’s “stimulus” package, which would add hundreds of billions of dollars more to the deficit.
The best way to look at budget deficits is as a percentage of Gross Domestic Product. So, using data from the Brookings Institution and other sources, and adding on this year’s deficit and the one now projected for FY 2009, I created this chart, which shows the federal budget deficit (or surplus) as a percentage of GDP from 1962 through 2009; click to enlarge:
As you can see, we are headed for uncharted waters–uncharted, anyway, since World War II. If they pursue their current course, the Democrats are going to own a budget deficit that in both absolute and relative terms dwarfs anything in our modern history. I have no idea what the consequences of that may be, and, after the events of the last six months, I have no confidence that anyone else does, either.
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