Thursday, June 01, 2006

May: Record YTD Increase in National Debt

by Bill McBride on 6/01/2006 02:09:00 PM

For the first eight months of the 2006 fiscal year (starts Oct 1st), the National Debt has increased $424.1 Billion. The previous record was $413.2 Billion for the first eight months of fiscal 2004.

Click on graph for larger image.

As a percent of GDP, the deficit has improved slightly over the last few years.

The annual increase in the debt is running around 4.5% to 5.0% of GDP. This is a classic "structural budget deficit" or "high employment deficit" - something most economists believe should be avoided.

If someone says the deficit is falling - laugh (or cry). Its not true. Here are some recent delusional comments:

"[Hank Paulson] will work closely with Congress to help restrain the spending appetite of the federal government and keep us on track to meet our goal of cutting the deficit in half by 2009."
George W. Bush, May 30, 2006
"That surge in government receipts, along with the strict control on spending that you've advocated, are putting us on a path to not only meet your deficit-reduction target but to do so ahead of schedule."
Treasury Secretary John Snow, May 30, 2006