It's time for a pop quiz. What is bigger than the combined economies of India, Russia, Brazil, Spain, and Canada? Answer: the U.S. budget deficit over the next ten years, if the Obama budget plan becomes law.
President Obama plans to borrow about $7 trillion over the next ten years to finance all of his spending plans. That is a big number, and a tough thing to put in perspective. To present an idea of the scale of the deficits, the attached chart compares Obama's projected deficit with the 2007 GDPs of the eleven largest economies on earth other than that of the U.S.
The projected ten-year deficit is larger than the Japanese economy. It's larger than the German economy. It's larger than the bottom five economies on the list combined.
Obama accomplishes these enormous deficits by spending a lot early, and spending a lot late. The deficit this year in his budget is projected to be about $1.7 trillion, a bit larger than the entire Canadian economy and a bit smaller than the Italian one. But it's not just near-term countercyclical Keynesian foolishness fueling the outlook. The deficit in 2019, the tenth year of his projected budget, is $712 billion, about two-thirds the size of the Indian economy.
It's worth mentioning that these deficit numbers are likely much lower than what would occur if many of President Obama's policies were adopted. The Obama budget has an astonishingly rosy outlook for the economy, especially if one considers the likely impact of all of this spending.While the president likes to blame the Bush administration for all of his troubles, the fact is that the CBO ten-year budget forecast published in January 2008 called for a ten-year surplus of a few hundred billion dollars. The economy has taken some of the steam out of revenues in the first few years, but the mind-numbing spending increases do the majority of the work. The long-term economic outlook has not changed much since last January. Yet the Obama budget calls for a deficit that is roughly double the size of the one forecast by the CBO just over one month ago.
There was a time when the horrible Bush deficits were the center of Democratic rhetoric. But back when the first round of Bush tax cuts were passed, the CBO estimated that their ten-year cost would be $1.35 trillion. Bush gave us Spain. Obama is shooting for the world.
Kevin A. Hassett is a senior fellow and the director of economic policy studies at AEI.