Home > Personal Finance > A Revealing Pre-Election Look at the Budget Deficit

Comments 0 Comments

I’m a visual learner—I don’t get it unless I can see it or read it. Perhaps this is why I find politics and punditry so frustrating. Facts and figures in sound bite format without the benefit of context or analysis are more confusing for someone like me than they are enlightening. Show me the data, let me read the narrative and I’ll formulate my own opinion, thank you very much.

I was thinking about this after the last presidential debate. Once again, I heard how under the current administration the deficit has doubled and spending is out of control. So I decided to take a look at the numbers for myself.

Tax and Fee Revenues — a Closer Look

My first click was to the Office of Management and Budget’s website, where I was able to compare federal receipts (tax and fee revenues) and outlays (spending) for the fiscal years 2008 through 2011. Afterward, I went to the Congressional Budget Office’s site to download its August 2012 projection for the current year ended September 30. Here’s what I learned — when compared to the September 30, 2008 tax receipts:

  • 2009 revenues were 17% less than 2008
  • 2010’s were 13% less than 2008
  • 2011’s were 9% less than 2008
  • and 2012 receipts are expected to be 4% less than 2008

Obviously, the recession took a toll on the government’s checkbook as revenues were $1.1 trillion lower for the four-year period of 2009 through 2012.

There is, however, another way to view this data. After that 17% drop in receipts for 2009 versus 2008, revenues actually increased:

  • by 3% in 2010 versus 2009
  • by 7% in 2011 versus 2010
  • and are expected to increase by 6% in 2012 versus 2011

This is a positive trend worth taking into account.

Out-of-Control Spending?

As for the expenditure side of the ledger, when compared to September 30, 2008 outlays, spending increased:

  • by 18% in 2009
  • by 16% in 2010
  • by 21% in 2011
  • and are expected to increase by 19% in 2012

Which brings a total of $2.2 trillion in increased spending during the same four years.

Once again, these same numbers tell a different story too.

After that 18% increase in 2009 versus 2008, expenditures actually:

  • declined by 2% in 2010
  • increased by 4% in 2011
  • and are expected to decline by 1% in 2012

This is hardly indicative of an out-of-control situation.

Putting the two sets of numbers together—$1.1 trillion in lower income versus $2.2 trillion in higher spending—it’s easy to see how $3.3 trillion of the aggregate federal deficit could be directly attributed to this administration’s actions.

Could Things Have Been Different?

The obvious question is, could the government have immediately reduced its expenditures when revenues took a nose-dive? Frankly, I don’t see how that would have been possible, for a few reasons.

First, according to the Heritage Foundation, which also draws its numbers from the Office of Management and Budget, entitlement spending (Social Security, Medicare, etc.) made up just under 60% of total outlays for the past four years. So ratcheting down that end of the equation would have been difficult. Moreover, after the initial $500 billion increase in entitlement spending that occurred in 2009 versus 2008, which can be attributed to the onset of the financial crisis, the level of this spending actually declined by 7% from point to point (projected 2012 versus 2009).

Also according to the Heritage Foundation’s table, discretionary spending, which makes up the balance of the government’s outlays increased:

  • by 8% in 2009 versus 2008
  • by 16% in 2010
  • by 14% in 2011
  • and is expected to increase by 7% in 2012

However, after that initial 8% increase in 2009 versus 2008, discretionary spending:

  • increased by another 8% in 2010
  • declined by 2% in 2011
  • and is expected to decline by another 6% in 2012

This suggests that the government is actually reducing expenses as the economy slowly improves.

Here’s my point: it’s hard to make a decision on a course of action with selectively presented data. I know this from my experience as a business owner and I’ve come to realize this as a voter during these past several election cycles.

So, to paraphrase the late Timothy Leary, turn down the volume, turn on the laptop, tune in to the details and make up your own mind instead of letting someone else make it up for you.

Image: Jeff Sandquist, via Flickr

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other sponsored content on Credit.com are Partners with Credit.com. Credit.com receives compensation if our users apply for and ultimately sign up for any financial products or cards offered.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team