The Congressional Budget Office released Wednesday the figures for spending, revenues and the deficit in 2014. At $486 billion, the 2014 deficit is the smallest since the pre-stimulus and pre-bailout level of $498 billion (adjusted for inflation to 2013) in 2008.
This means the household national debt burden rises by about $4,000. The total household debt burden exceeds $150,000.
While some, like President Obama and Treasury Secretary Jack Lew, see today’s announcement as cause for celebration, others are looking with great concern at the tidal wave of trillion dollar deficits clearly visible on the horizon.
The average annual deficit over the next decade is projected at $950 billion, just shy of a trillion. This is because after 2014, the deficit–absent further policy changes–is only heading in one direction: UP.
The deficit fell as spending increased because tax receipts increased faster than spending. This is in no small part due to a range of tax hikes, increasing the tax burden on American families, enacted during Obama’s term in office. Tax revenue grew by 9 percent, or $239 billion compared to last year, according to the CBO.
Entitlement spending, the biggest driver of growing deficits and debt, continued its unchecked growth. The implementation of Obamacare drove health spending on Medicaid and exchange subsidies up by $49 billion or 19 percent. Social Security and Medicare spending rose by $37 billion (5 percent) and $14 billion (3 percent) respectively.
Improper accounting for the budgetary effect of the Treasury’s conservatorship over Fannie Mae and Freddie Mac reduced the total spending figure by $74 billion in 2014. Fannie’s and Freddie’s current profits are used to offset actual federal spending in the current fiscal year, without accounting for the downside risks of a federal guarantee of mortgage-backed securities.
These are the very same instruments that were key contributors to the 2008 financial crisis. For fiscal year 2014, it means that spending was $70 billion higher than the government reported to the public.
Rather than try to reduce the deficit with tax increases that impede growth and improper accounting that exposes taxpayers to undue risks Congress should control spending by:
1. Moving towards patient-centered, market-based health care.
2. Reforming Social Security’s disability and retirement programs.
3. Controlling the welfare state.
4. Rooting out waste, duplication and inappropriate spending.
5. Capping the growth in spending.
The tidal wave of deficits and debt is rolling in.
This article has been modified.