Advancing a Free Society

The President’s proposed deficits and “primary balance”

Thursday, February 17, 2011

Today we’ll look at President Obama’s proposed deficit path, as yesterday we looked at his spending and revenue paths.

deficits projected 2012 v4

This graph compares the last 50 years of deficits with the next 50 years under President Obama’s proposed policies.

The vertical white line at 2011 separates the past from the projected future.

This graph is busy because we have four different bases for comparison.  The first three are standard metrics.

  • The white x-axis would be a balanced budget.
  • The dotted yellow line shows the 2.1 percent of GDP average deficit over the past 50 years.
  • The dotted green line is at 3 percent.  Above the dotted green line, debt will grow faster than our ability to pay it.
  • The dotted blue line is the President’s proposed new test for himself and the country.  He now defines success as getting red below dotted blue.

The President proposes a 7 percent budget deficit for 2012 (the red dot).  His deficits would bottom out at 2.9% seven years from now, in 2018, and then rise steadily forever.

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