About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

276 IRET Congressional Advisory 1 (2011)

handle is hein.taxfoundation/iretcgadv0273 and id is 1 raw text is: INSTITUTE FOR RESEARCH ON THE ECONOMICS OF TAXATION IRET is a non-profit 501 (c)(3) economic policy research and educational organization devoted to informing the public about policies thait will promote growth and efficient operation of the market economy. July 6, 2011 Advisory No. 276 PAST RECESSIONS OFFER PERSPECTIVE ON THE FEDERAL GOVERNMENT'S DEFICIT AND DEBT PROBLEMS The federal government's deficit usually rises during recessions, and the depth of the last recession contributed to the red ink. However, the rise in the deficit this time was extraordinary. Why did the federal deficit increase so much more during and after this recession than during and after previous Table 1 Federal Goverr recessions? And Debt Held By The F Fiscal Y This paper examines the 10 U.S. recessions since 1950. It concludes that an upsurge in federal spending is the primary reason for federal deficits of a magnitude not seen since World War II. Since then, the federal government deficit has exploded. Measured as a share of GDP, the deficit was 10.0% in fiscal year 2009, 8.9% in 2010, and an estimated 10.9% in 2011. federal government debt held iment Receipts, Outlays, Deficits, 3ublic As Percentages Of GDP, ears 2005-2011 Fiscal Year Receipts Outlays Surplus or Federal Debt Deficit (-) Held By The Public 2005 17.3 19.9 -2.6 36.9 2006 18.2 20.1 -1.9 36.5 2007 18.5 19.6 -1.2 36.2 2008 17.5 20.7 -3.2 40.3 2009 14.9 25.0 -10.0 53.5 2010 14.9 23.8 -8.9 62.2 2011 estimate 14.4 25.3 -10.9 72.0 Data Source: U.S. Office of Management and Budget The federal government was running a budget deficit prior to the recession that officially began in December 2007, but the red ink appeared tolerable relative to the size of the economy. The Office of Management and Budget reports that, as a share of gross domestic product (GDP), the deficit was 1.9% in fiscal year 2006 and 1.2% in fiscal year 2007.1 (See Table 1.) Because real output was growing faster than the debt, federal debt held by the public was actually declining slightly compared to GDP, from 39.6% in 2005 to 36.5% in 2006 and 36.2% in 2007. credible plan for reducing them. Federal government finances post-1950 recessions From 2007 to 2011, by the public will have doubled, from 36.2% of GDP to an estimated 72.0%. The huge deficits of recent years, and the consequent mushrooming of debt, are not long sustainable. The debt crisis that has engulfed Greece illustrates the danger when a government incurs outsized deficits and debt without a during and after The National Bureau of Economic Research (NBER), a non-partisan, non-governmental economic research organization, is the traditional arbiter of when recessions begin and end.2 It has recorded 10 recessions since 1950. The most recent began in December 2007 and officially ended in June 2009. S I gg~ g ~gg

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most