Americans can only hope that Europe’s financial community does not implode before the November 2012 elections, dragging the U.S. and the rest of the world into another Great Depression
Ask any financial advisor what to do when you are drowning in debt and they will tell you to spend less and pay down your debt. This is just common sense. However, if you ask politicians what to do, they will advise that the nation spend more and borrow more.
Despite a huge national debt and deficit, the federal government just concluded its biggest spending year with its second biggest annual budget deficit. For fiscal 2011 which ended September 30, the government spent $3.6 trillion, an increase over the $3.52 trillion posted in 2009.
The budget “deficit” is the difference between the revenues that government took in and what it spent. The “debt” is the accumulation of yearly deficits. The U.S. has a debt of $15 trillion and this grows by billions daily due to the interest that must be paid on the amount of borrowing required to sustain its operations. Fully 40 cents of every dollar the government spends is now borrowed.
The Congressional Budget Office noted that the deficit is “greater than in any year since 1945” as World War Two wound down. As a Wall Street Journal editorial expressed it, “The Obama years have racked up the three largest deficits, both in absolute amounts and as a share of GDP, since Hitler still terrorized Europe.”