Washington’s Record Deficit

The Bush administration has admitted that the national budget deficit is edging towards $490 billion. The current record is only $413 billion, from 2004.

Of course, that $490 billion isn’t precisely accurate. There are about $80 billion in the U.S.’s military spending that didn’t make it into that estimate, due to the way the budget deficit is calculated.

The estimate hasn’t been officially released yet… an anonymous official slipped a few news agencies a head’s up before a press conference later today. White House press secretary Dana Perino is refusing to comment, although she did point reporters towards the fact that lawmakers agreed to increase the deficit several months ago in order to provide a short-term boost for the economy.

The numbers involved — $490 billion!?! — are getting me all worked into a tizzy. There is, however, another number that should be brought to the party. $490 billion is about 3 percent of the U.S. economy. During the 1980s and early 1990s, the deficit was a much more significant portion of the economy. I’m not saying that we shouldn’t be concerned, but the deficit has been relatively higher in the past.

What we really ought to be thinking about, though, is what happens to this deficit. Whoever is actually elected president next November will immediately become responsible for a record deficit. Both major candidates have made some pretty expensive campaign promises — will the government be able to pay for those initiatives with this big burden?