Credit: money.cnn.com
It’s an indisputable fact: The budget deficit is getting smaller.
In fiscal year 2010, which was President Obama’s first full fiscal year in office, the budget deficit was $1.3 trillion. In fiscal year 2013, the Congressional Budget Office projects it will be $845 billion. That’s a 35 percent decrease in terms of dollars, and it’s even bigger—41 percent—if you’re tracking the deficit as a share of the GDP. The percentage drop is even bigger—roughly 50 percent—if you start from fiscal year 2009, which overlapped the final year of the Bush presidency and the first year of Obama’s.
But when Bloomberg News commissioned a survey asking Americans whether they believed the budget deficit was growing or shrinking, just six percent answered the question correctly. Ninety-four percent had no clue. And 62 percent actually thought it was getting bigger.
So the next time you hear a poll about how Americans think it’s important to shrink the budget deficit, keep in mind that 94 percent of us don’t even know that it’s getting smaller.
The deficit is misleading because of what it includes and what it omits. When you consider that the deficit is just the increase in the national debt, not the total, and that we do not have enough tax revenue to pay the interest on the national debt, much less retire any of it, one will find that the country is actually insolvent. To pay the interest and principle on our bonds, we just issue bonds that fewer and fewer in the world want, so the Federal Reserve just buys them. Economically, this is the same as counterfeiting money, in the trillions of dollars. But it gives the illusion of lower deficits even as our insolvency increases. Russia and China are selling treasuries, as fast as they can without collapsing the world economic system, in order to escape the inevitable inflation of dollars and get their reserves in safer places. They are making huge purchases in gold and silver, for example, that they perceive to be a better store of value than the US dollar. Even India is doing this.