A government budget is a financial statement presenting the government’s proposed revenues and spending for a financial year. The government budget balance, also alternatively referred to as general government balance, public budget balance, or public fiscal balance, is the overall difference between government revenues and spending. A positive balance is called a government budget surplus, and a negative balance is a government budget deficit. A budget is prepared for each level of government (from national to local) and takes into account public social security obligations. (Wikipedia)
Americas economy today, different than just 50 years ago, is almost totally affected or controlled by politics. Perhaps it always was and it was not as obvious. Overall though that means that YOU, the voter, is deciding on how Americas economy will excel or decline every voting period. Yes YOU! The political leaders that YOU select will decide if America’s economy will work for YOU or go against YOU.
When I was in college in the late sixties and early seventies the economy was directly affected by the automobile industry. If GM was laying off the economy went down and if they were hiring and selling cars it boomed! Totally ridiculous but true. Today our economy is much more diverse and stronger for that to continue. But again it is directly affected by one major controlling factor and that is POLITICS! The stock market goes up and down based on what Congress is doing or saying.
I studied and greatly enjoyed Economics in college while earning my Degree in Business. I have owned 9 small businesses that lived off its revenue/sales each day as most small business owner do. I have managed millions of dollars in large operations and held accountable for every single dollar! I have written, submitted, and then managed huge budgets. I study and understand the American and world economy on a regular basis. I enjoy it.
All of us are concerned about the federal debt. Everyone knows why we have such a huge debt too. Obama helped the most to put America in this huge debt situation. Under President Obama, the national debt grew the most dollar-wise. Obama added $8.588 trillion. This 74 percent increase was the fifth-largest contributed by any president. Obama’s budgets included the costly economic stimulus package that may have actually contributed to the economic come back we are now enjoying. It is very hard to prove though. But his spending added $831 billion by cutting taxes, extending unemployment benefits, and funding public works projects. (source- Kimberly Amadeo- Updated March 14, 2019)
The Obama tax cuts added $858 billion to the debt in two years. Obama’s budget increased defense spending to between $700 billion and $800 billion a year. Federal income was down, thanks to lower tax receipts from the 2008 financial crisis. He also sponsored the Patient Protection and Affordable Care Act. It was designed to reduce the debt by $143 billion over 10 years but these savings didn’t show up until the later years.
See the following articles to better understand just what Obama did. It will be in ALL the history books in the classroom in the future I hope.
- National Debt Under Obama
- US Debt by President by Dollar and Percentage
- Obama’s Real Debt and Deficit Legacy
As one that fully understands budgets and economics it is a fact that the economy was improving when President Trump took office. BUT what would the economy look like had Hillary Clinton would have won? It is very fair to conclude that she would have wasted trillions on give-a-way programs popular with the Democratic Party while pocketing millions for herself.
It is very clear to everyone that Obama was a poor manager of money and the economy proven by his huge deficit spending. It is MY opinion that he was attempting to bring the country out of its slump but he did a poor job in selecting places and projects to spend money on. He clearly was not looking for impact on past his tenure in the Presidency. He was and remains a politician and NOT a businessman and it shows in his actions and decisions.
Look at this revealing graph below. The Obama years are 2009 to 2017 and the graph clearly shows the GDP has the largest deficits in the past 50 years by huge numbers. President Trump took office as the GDP was recovering in 2016 and the recovery accelerated with President Trumps support.
The Congressional Budget Office reports;
“Federal budget deficits are set to increase rapidly this year (2018) and over the next four years, CBO projects, and then to remain largely stable relative to the size of the economy—but at a very high level by historical standards—over the rest of the projection period. Those deficits would result in rising federal debt. Moreover, CBO’s baseline projections reflect a number of significant changes to tax and spending policies that are scheduled to take effect under current law. If those changes did not occur, deficits and debt would be substantially larger.”
They further report;
“As required by statute, when constructing its baseline projections, CBO incorporates the assumption that current laws governing taxes and spending will generally remain unchanged in future years. Under that assumption, in CBO’s baseline, federal deficits average $1.2 trillion per year and total $12.4 trillion over the 2019–2028 period. As a percentage of gross domestic product (GDP), the deficit increases from 3.5 percent in 2017 to 5.4 percent in 2022. Thereafter, the deficit fluctuates between 4.6 percent and 5.2 percent of GDP from 2023 through 2028. Over the past 50 years, the annual deficit has averaged 2.9 percent of GDP.”
“That pattern of deficits is expected to occur mainly because, under current law, revenues and outlays would grow at different rates. Revenues would be roughly flat as a percentage of GDP over the next several years before rising steadily in the second half of the period. In contrast, outlays would increase in most years through 2028.” Says the Congressional Budget Office.
Trump’s deficits could be double Obama’s
“When Obama took office the deficit increased due to the Great Recession causing tax revenue to fall and an increase in spending on items such as unemployment. After peaking at $1.4 trillion in fiscal 2009 (September 2009 or eight months after taking office) it fell to a low of $438 billion in fiscal 2015 and rose to $585 billion in fiscal 2016.
Multiple organizations ranging from the Congressional Budget Office, or CBO, to the Committee for a Responsible Federal Budget are projecting that the Federal deficit will increase even as the economy grows. After increasing to $779 billion in fiscal 2018 it appears that it could cross $900 billion this year and over $1 trillion in fiscal 2022 and beyond. The scary thing is if the economy stumbles and growth slows more than expected or enters a recession, the deficit will increase even more than what this chart shows.” Reports the Congressional Budget Office.
S&P 500 doubled under Obama
From the day after Obama’s election in November 2008 until Trump’s election eight years later the S&P 500 rose 113%. So far since Trump’s election, the Index has increased 28%. From the graph below it appears that the stock market has essentially carried on the momentum from Obama’s tenure.
S&P 500 chart – StockCharts.com
Anyone that understand budgets and economic charts must be fair in their analysis. So to be fair the trade deficit shows the economy improved under Obama near the end of his second term. There is no doubt about that and then President Trump grabbed it and made it even better because as a businessman he knows to do that. It remains very likely that under President Trump the economy will continue to grow in a way a businessman know how to grow any good company…America.
Careful analysis and some common experienced based speculations presume that under President Trump the United States economy will continue to improve and will bring in more tax revenues to help reduce the national debt. The very old and many times proved saying that “one must spend money to make money” applies here. Of course that does include “over spending” that occurred in the Obama years.
The large deficits over the next 10 years would cause debt held by the public to rise steadily. Relative to the nation’s output, debt held by the public is projected to increase from 76.5 percent of GDP in 2017 to 96.2 percent at the end of 2028. At that point, federal debt would be higher as a percentage of GDP than at any point since just after World War II—and heading still higher. This understanding must be considered by each President and its various decision makes like the 2nd Districts Congressmen. Your Congressman MUST totally understand the financial aspects of the District and America at ALL times. They cannot guess!
Outcomes if Certain Changes Scheduled in the Law Did Not Occur
In CBO’s baseline projections, deficits in the latter half of the decade, though quite large, are not trending upward relative to the size of the economy. That pattern occurs in large part because CBO’s projections reflect the assumption that substantial tax increases and spending cuts will take place as scheduled under current law.
“If those changes did not occur and current policies were continued instead, much larger deficits and much greater debt would result: The deficit would grow to 7.1 percent of GDP by 2028 and would average 6.3 percent of GDP from 2023 to 2028, CBO estimates, compared with 4.9 percent in the baseline. With cumulative deficits of $15.0 trillion over the projection period, debt held by the public under that alternative fiscal scenario would reach 105 percent of GDP by the end of 2028, an amount that has been exceeded only one time in the nation’s history. Moreover, the pressures that are projected to contribute to that rise would accelerate and drive up debt even more in subsequent decades.” Says Barry Blom.
(Barry Blom is an analyst in CBO’s Budget Analysis Division. The budget projections were the work of about 100 people at CBO.)