The federal deficit this fiscal year will be $1.6 trillion, or about 10.6% of gross domestic product. That is the largest deficit since World War II, and even Obama's optimistic estimates show our deficits will not return to sustainable levels for at least the next decade.
The administration's projection of total federal spending over those 10 years (2011-20) is $45.8 trillion, while expected taxes and other receipts will be $37.3 trillion. The $8.5 trillion deficit is about 20% of spending. And all of these numbers are based on a full and lasting economic recovery, which, based on current experience, is a pretty optimistic projection.
When the Democrats took control of Congress in 2007, the debt held by the public was 36.2% of GDP. It rose to 40.2% the next year. This year it will be about 63.6%, next year 68.6%, then 77% of GDP in 2020.
One can't help but ask: how will Americans pay for all this? One also can't help but be reminded of the line from Atlas Shrugged: "You'll do something, Mr. Rearden!"
And so, on a wish and a Keynesian prayer, we're hurtling down the abyss with nary a flashlight in sight.
Most revolting of all, of course, is the fact that this is hardly the first time the experiment has been run and the results have long been in. The manner in which that approach fails has been exposed repeatedly over a period of decades. Writers from John T. Flynn (The Roosevelt Myth, 1948) to Burton Folsom Jr. (New Deal or Raw Deal?, 2009) have demonstrated again and again in layman's terms what actually happened when the Keynesian experiment was tried here on this scale before. (Other countries show similar results, not surprisingly.)
You have to wonder when the general public will finally get educated enough to get the message, and muster up enough outrage to put an end to it once and for all. With the burgeoning of the Tea Party movement, that may finally be happening.
Update: More horrifying data... Jeffrey Anderson of the generally outstanding Pacific Research Institute, writing at IBD, says:
[W]hether measured in constant dollars, real dollars or even as a percentage of the gross domestic product, Obama's average deficit in his first two years will more than triple the average deficit during the Great Depression.Wow. Just wow.
Update II (2/21/2010): Alan Reynolds writing at IBD lends more evidence to support the view that Keynesianism never works, and that the Administration must know this.
A famous 1999 study by Christina Romer, who now heads the Council of Economic Advisers, found the average length of recessions from 1887 to 1929 was only 10.3 months, with the longest lasting 16 months.
Recessions lasted longer during the supposedly enlightened postwar era, with three of them lasting 16 to 21 months.
Keynesian countercyclical schemes have never worked in this country, just as they never worked in Japan.