Another trillion-dollar deficit?

— A second trillion-dollar deficit just finished; Washington is already spending toward a third.

Three years ago, Washington had never had a single trillion-dollar deficit and now it is about to have its third in a row. Sadly, what the federal government lacks in frugality, it is making up for with consistency.

The government’s 2010 fiscal year ended on October 1st. While the rest of the country has been economizing, the federal government has been supersizing.

Last year’s federal deficit amounted to $1.3 trillion. Amazingly, that is actually $100 billion less than 2009’s $1.4 trillion record deficit. This would seem to be good news, of a very limited sort, until the reason for the savings is revealed.

Last year’s deficit was less only because there were fewer bailouts. As the nonpartisan Congressional Budget Office stated in its fiscal year review: “Excluding those . . . spending rose by 9 percent in 2010, somewhat faster than recent years.”

Somewhat faster than recent years? That’s pretty hard to do, because Washington had been spending at a quick clip already.

Washington’s total spending last year was $3.5 trillion. For those keeping track, that’s almost $10 billion a day! It also amounts to about one-quarter of everything America made. Until 1995, the entire federal debt did not reach that level. Washington is now spending annually an amount equal to the debt it took over 200 years to accumulate.

No wonder that CBO projects, unless changes are made, that the federal government’s deficit next year will be over one trillion again-$1.1 trillion to be exact.

All together, these three years’ worth of trillion dollar-plus deficits will equal about $3.8 trillion. Before this string started, the federal debt held by the public amounted to $5.8 trillion. In three years’ worth of deficit spending, Washington will have increased the public debt by two-thirds.

To understand just how much spending has increased, look at spending in the last year before the government started racking up these deficits. In 2008, the first year of the recession-and therefore one that included spending for recession-related emergencies-the federal government spent $3 trillion. Next year, CBO estimates that it will spend $3.7 trillion.

That roughly $700-billion difference from 2008 to 2011 amounts to an almost 25 percent increase in just three years’ time! While the economy has emerged from the recession, the federal budget has not-it is still spending in emergency-mode.

Whereas the budget was initially seeking to offset the recession’s effects, it now looms as its own crisis. A government that habitually spends faster than the economy supporting it threatens that economy. And more importantly, the people it was meant to serve.

For liberals who argue that the solution is taxing more: No amount of tax increases can keep pace with such a spending machine. Nor should it be attempted. The answer to a runaway train is not to board the passengers faster, but to stop the train.

The simple, the obvious, and the only solution is to first cut federal spending back and then to hold its rate of growth below the economy’s. The economic downturn was serious, but was always just a temporary crisis. Washington’s spending is now a greater threat, because it threatens to become permanent. While economies, on their own, do not shrink forever, apparently government spending, if unchecked, can grow indefinitely.

J.T. Young served in the Department of Treasury and the Office of Management and Budget from 2001-2004.

Editorial, Pages 16 on 10/28/2010

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