NEW YORK (MainStreet) — President Obama released his much anticipated budget proposal Monday, calling for sizeable cuts in government spending that are expected to shave $1.1 trillion from the national deficit over the next decade.
It’s certainly an admirable proposal – and a much needed one in the long run – but it may obscure the truly startling statistic in the report: As part of the budget proposal, the Obama administration also predicted that the government’s budget deficit for this year will skyrocket to an all-time high of $1.65 trillion, up from $1.29 trillion for the 2010 fiscal year.
While Congress and the administration will certainly go back and forth this week debating the president’s plans to improve the budget in the future, nothing that ends up in the final plan will impact the deficit figure for this year. So even as legislators work to gradually balance our nation’s checkbook for the years to come, this figure should serve as a wake-up call for Washington and the country as a whole to figure out how we got to this point, and what we need to do to fix it.
For starters, given the depth of our budget deficit this year, it may be difficult to remember that the country was actually debt free throughout most of the 1990s.
“We obviously have a very deep problem facing us with our deficit, but we didn’t always,” said Jack Lew, director of the Office of Management and Budget, in a recent video posted by the White House offering a brief history of our nation’s deficit. “As a government, we were running a surplus not too many years ago.”
In fact, as of 2001, the country operated with a budget surplus of $5.6 trillion. So what happened? The short answer, as any shopaholic surely knows, is that we simply lived beyond our means as a country and refused to pay for the purchases we made during the past decade.