Budget gap huge but has been worse

WASHINGTON (AP) — The federal government’s budget gap is huge — but by some measures, it’s been bigger in the past.

The annual budget deficit reached $1.4 trillion in fiscal year 2009, the Obama administration said Friday, a record sum by far in dollar terms. It’s the result of both a huge jump in spending and a sharp drop in tax revenue.

In effect, the federal government went on a spending binge at the same time it received a sharp pay cut.

And if, like an overextended consumer, Washington doesn’t mend its ways, it will pay more and more in interest. Interest payments could balloon to $799 billion in 2019 from $191 billion in 2009, according to an estimate by the nonpartisan Congressional Budget Office.

The budget gap reached 10 percent of gross domestic product in fiscal 2009, which ended Sept. 30. GDP is the broadest measure of the economy’s output.

That’s the largest proportion since World War II, when it was much higher. The 1943 deficit, for example, equaled 30.3 percent of the economy.

The total national debt is projected to worsen over the next decade unless major changes are made to tax and budget policies. According to the CBO, publicly held national debt — which represents the accumulation of annual deficits — would reach 81.7 percent of the economy by 2019, from about 51 percent in fiscal 2009. Still, that’s below the record of 113 percent in 1945.

That level of debt could drive interest rates higher as Uncle Sam struggles to finance the flood of red ink.

Friday’s announcement raises other questions. Here are some answers.

DEFICITS, DEFICITS

$459 billion: 2008 deficit

$1.4 trillion: 2009 deficit, highest on record

$1.4 trillion: 2010 deficit (Projection by Congressional Budget Office)

$974 billion: 2011 deficit (projected)

$633 billion: 2012 deficit (projected)

$1.2 trillion: 2019 deficit (projected)

BIGGEST DEFICITS AS PERCENTAGE OF GDP, SINCE 1940

10 percent: 2009 deficit

3.2 percent: 2008 deficit

6 percent: 1983 deficit

21.5 percent: 1945 deficit

30.3 percent: 1943 deficit

WHEN HAS THE NATION RUN A SURPLUS?

12: Number of years since 1940 the United States has run a budget surplus

28: Number of years the budget was in deficit, 1970-1997

4: Number of years the budget was in surplus, 1998-2001

$70 million: Cumulative U.S. surplus from 1789-1849

$1 billion: Cumulative U.S. debt from 1850-1900

NATIONAL DEBT, HIGHS AND LOWS

29.6 percent: National debt — the total of annual deficits — as a percentage of GDP in 1790

2.7 percent: Debt as percentage of GDP in 1916, lowest since 1900

33.4 percent: Debt as percentage of GDP in 1919, after World War I

112.7 percent: Debt in 1945

24.6 percent: Debt in 1974, a postwar low

51 percent: National debt as percentage of GDP, 2009

81.7 percent: National debt by 2019 (CBO estimate)

NATIONAL DEBT TO GDP (All figures for 2008)

40.8 percent: United States

90.2 percent: Belgium

107.9 percent: Greece

60.6 percent: UK

54.2 percent: France

38.9 percent: Germany

MAKE LESS, SPEND MORE

$419 billion: Drop in federal taxes and other revenue from 2008 to 2009

$543 billion: Increase in spending from 2008 to 2009

$2.1 trillion: Federal revenue in 2009

$3.5 trillion: Federal spending in 2009

PAYING THE PIPER

$253 billion: Interest paid by government, 2008

$191 billion: Interest in 2009

$799 billion: Projected interest, 2019