More on Obama's Budget

http://www.futureofcapitalism.com/2010/02/more-on-obamas-budget

Just to amplify the earlier post on President Obama's budget, one of the historical tables worth focusing on is the one labeled 1.3 (Excel spreadsheet download). In 2000, federal outlays were $1.789 trillion, or 18.2% of GDP. In 2011, under Mr. Obama's budget, they will be $3.834 trillion, or 25.1% of GDP. This is a big increase. Using the Office of Management and Budget's 2005 constant dollars, 2000 spending was $2.041 trillion, while 2011 spending will be $3.369 trillion -- a big jump even if you adjust for inflation. Granted, as commenter Lyle points out, some of this is for wars and homeland security spending triggered by the attacks of September 11, 2001. And granted there are more American people now than there were back in 2000, so government has more people to serve and to deliver benefits to. Still, these are staggering numbers. If someone had told me back in 2000 that in ten years a president would be proposing a budget that spends $2.1 trillion more than President Clinton did in his last year in office -- in other words, that on a nominal basis, federal spending would more than double in the coming decade -- I'd have looked at them like they were nuts, totally nuts. Of course, using fiat currency like dollars as a basis of comparison over time is a little like using a yardstick made of elastic. Gold was trading at $300 an ounce back in 2000, while now it's above $1,000 an ounce. Yes, the size of government has increased over the past decade, but the value of the dollar has eroded, too. And if you find the above disheartening, remember that the real budget buster -- the retirement of the baby boom generation, with the associated impact on Social Security and Medicare spending -- has yet to hit.

by Editor  |  Feb 1, 2010 at 11:13 am Related Topics:  Federal Reserve, Health Care, President Obama receive the latest by email: subscribe to the free futureofcapitalism.com mailing list