Graphs of US federal revenue and spending

July 11, 2006 12:58 PM

Mark Wieczorek has put together some graphs of US federal revenue and spending and the US trade deficit, with a minimum of editorializing. They're shown using nominal dollars, real (inflation-adjusted) dollars, and as a percentage of GDP.
posted by russilwvong (33 comments total)

Wow, lots of numbers to digest. The first graph on the first page seems odd to me.

I know our expenditures will keep going up, but will reciepts keep up? I keep hearing about tax cuts, yet that number continues to grow, and adjusted for inflation still grows slightly (two graphs down).
posted by SirOmega at 1:15 PM on July 11, 2006

Scroll down to the GDP graph...that gives some clarity to the receipts graphs. I am actually kind of amazed at the relative stability of surplus/deficit as a percentage of GDP since WWII...especially given all the noise about record deficits. Taking the WWII years out of that graph and collapsing the scale would provide better context for the last few years versus the more normalized post war period.
posted by cyclopz at 1:32 PM on July 11, 2006

Great post... and very interesting (although nothing really new here)...
posted by AspectRatio at 1:33 PM on July 11, 2006

The deficit page seems to be a bit out of date; it says that all numbers beyond 2003 are government projections. It also appears to be measuring the unified budget deficit (although it doesn't say), i.e. it treats the social security surplus as net income. That makes the situation look significantly rosier than it is. If you measure the change in the national debt since Bush took office, we're averaging just about $500 billion a year.
posted by gsteff at 1:34 PM on July 11, 2006

I am actually kind of amazed at the relative stability of surplus/deficit as a percentage of GDP since WWII

Me too. Actually, after looking at these graphs I feel much better about the economy. I had worried, for instance, that our trade imbalance with China could destroy the economy. But it appears that they account for less than 10% of our trade.
posted by Crotalus at 1:34 PM on July 11, 2006

The one that gets me is the cost of living graph. So, I need to make 5.5 times more than my dad just to stay in the same spot? No wonder I feel like such a failure...
posted by ubi at 1:45 PM on July 11, 2006

I hate math.
posted by craven_morhead at 1:57 PM on July 11, 2006

Failure is inevitable - we cannot "grow" our way out of this.
posted by rzklkng at 2:01 PM on July 11, 2006

Also, can anyone clear up for me the problem with trade deficits? I know the basic argument that it represents a net transfer of wealth outside the country, but it seems that in exchange for that wealth, we get stuff. We give them dollars, they give us refrigerators. If you expect the value of the dollar to decline soon, as almost everyone does, it seems possible that we're getting the better end of the deal.
posted by gsteff at 2:15 PM on July 11, 2006

The problem, gsteff, would seem to be that we are left holding plastic crap from WalMart and they are holding greenbacks and Treasury bills. Remember when the Japanese bought Rockefeller Center?
posted by ahimsakid at 2:22 PM on July 11, 2006

These are excellent, thank you.

As a slight threadjack, does anyone know of a source of easily-parseable (macro) economic data? I know you can get things like CSVs of governmental budgets and things like that but is there a good/easy way of getting recently updated statistics in an automatic way?

I'm thinking about things like the CPI and PPI, but also GDP growth, GDP Deflator, exchange rates/PPP corrected etc. It would be kind of nifty to have a way of getting these numbers with some metadata about when they were generated/collected and ideally in some easily machine-readable format, though that could be mashed up relatively easily.
posted by Skorgu at 2:29 PM on July 11, 2006

Remember when the Japanese bought Rockefeller Center?

Heh. Probably not the best example you could have used.
posted by Kwantsar at 2:39 PM on July 11, 2006

The one that gets me is the cost of living graph. So, I need to make 5.5 times more than my dad just to stay in the same spot? No wonder I feel like such a failure...

That makes no sense to me. Isn't that the what 'adjusting for inflation means'? If inflation were properly accounted for, that should be a straight line.
posted by empath at 3:25 PM on July 11, 2006

As a slight threadjack, does anyone know of a source of easily-parseable (macro) economic data?

Bureau of Labor and Statistics

You can pick a dataset to view, then cick on the "more formatting options" in the upper right. The problem is its form-based so you cant do a simple GET with URL parameters. Though they do have a suggestion box on their website.
posted by SirOmega at 3:46 PM on July 11, 2006

bah, scratch that AND in the link.
posted by SirOmega at 3:47 PM on July 11, 2006

President Bush delivered some good news today. The deficit's only $296 billion, the fourth-largest deficit in US history.

1. 2004 (George W. Bush) $413 billion
2. 2003 (George W. Bush) $378 billion
3. 2005 (George W. Bush) $318 billion
4. 2006 (George W. Bush) $296 billion (projected)
5. 1992 (George H. W. Bush) $290 billion

posted by kirkaracha at 4:04 PM on July 11, 2006 [2 favorites]

Ugh, trade imbalances do not cause problems at all.
posted by delmoi at 4:11 PM on July 11, 2006

Remember when the Japanese bought Rockefeller Center?

Yeah, isn't that why Osama flew those airplanes into the WTC?
posted by b1tr0t at 4:22 PM on July 11, 2006

The graphs do not seem (to the layman) assert the notion that the country is in dire financial straights. I'd love to read a post or two from someone who can give some perspecitve on this.
posted by batou_ at 4:25 PM on July 11, 2006

This is the big question.

Will the dual deficits of the US eventually cause a recession and if so how serious will it be.

The Economist magazine seems to think that eventually it will cause a recession but haven't said much about how bad it would be.

Current Account Deficits may not be a problem. If you are taking in money from outside and using it to create more value than the money than the money that is coming in then it is not a problem. I.e. if you borrow $1M but invest it and create an asset worth $2M then you have no problem.

It should be noted that the US probably ran a current account deficit until WWI when it became a net lendor instead of a net debtor.

However, if you use that money that is coming in to buy things that depreciate - i.e. PS2s and SUVs then you may be in trouble.

The other thing that affects all of this is that people's houses have appreciated rapidly. There is a possibility that there the value that has appeared in peoples houses is real and will stay, at least in the US. On the other hand, inflation due to the increase in oil prices could cause a rapid reduction in the value of housing.

With the US government deficit it is serious, however, the US government could be massively reduced or even eliminated by withdrawal from Iraq and the removal of the Bush II tax cuts. However, the US position will become worse when the baby boomers retire. How much worse is a matter of speculation.

Here a comparison should be made to the positions of most European governments, many of which are worse. They cannot do something like withdraw from Iraq and remove tax cuts as their deficits are due to pensions and other social welfare schemes that cannot be easily eliminated and they already have highish taxation.

The long and the short of it is that we don't really know what is going to happen, but the US's dual deficits look somewhat worrying as does the increase in housing. There is an ominous similiarity to the Japanese booms of the 1980s and early 1990s where first the stockmarket boomed and then tanked and then the real estate market did the same leading to a slowdown that lasted for a long time. And the other thing that the Japanese had is the most rapidly aging population of any developed country. Baby boomers anyone?
posted by sien at 4:49 PM on July 11, 2006

cyclopz: Taking the WWII years out of that graph and collapsing the scale would provide better context for the last few years versus the more normalized post war period.

Here's one such graph (via a related Google Answers thread).

batou_: The graphs do not seem (to the layman) assert the notion that the country is in dire financial straits. I'd love to read a post or two from someone who can give some perspective on this.

Sure, that wasn't the point of the post. It shows historical data: just the facts, ma'am.

That said, economists like to say that "things which can't go on indefinitely, don't." It's not possible for the US to borrow money indefinitely. (*) Nor is it possible for the US to run a trade deficit indefinitely. Right now the markets--meaning foreign and domestic investors--appear to be assuming that eventually the US will get its budget deficit and trade deficit back under control (the "soft landing" scenario). If they change their minds and stampede for the exits, the US dollar would drop, interest rates would go way up, and the economy would go into the tank. There were quite a few confidence crises like this in the 1990s.

Brad DeLong has been thinking about this issue for a while. He still thinks the soft landing scenario is the most likely.

(*) Actually this isn't quite true: it's possible to maintain a stable debt-to-GDP ratio. But the US has a rising debt-to-GDP ratio.
posted by russilwvong at 4:57 PM on July 11, 2006

President Bush delivered some good news today. The deficit's only $296 billion

Kenny Boy Lay must be helping the President from the beyond with his "deficit reduction":

The truth is, the real size of the deficit is masked by the fact that the Administration and Congressional Republicans are spending every single penny of the Social Security surplus, an estimated $180 billion this year. Thus, even if OMB’s estimate today is correct, the real budget deficit is $180 billion higher – or some $476 billion.

posted by Sirius at 5:18 PM on July 11, 2006

The other thing that affects all of this is that people's houses have appreciated rapidly.

By "all of this" you mean the economy in general I presume? For everyone who makes a pile of money selling their house, someone else went exactly that much further into debt to buy it. No wealth is created that way. There are effects on the economy, such as construction employment as the high prices encourage new building, but for the most part it's just a way to put more people into debt and otherwise shift money around. Certainly it makes a contribution to the other major economic oddity of the US economy which perhaps deserves mention here, the negative household savings rate.
posted by sfenders at 5:22 PM on July 11, 2006

In general I distrust the GDP-% figures since GDP is a highly fungible number, given how we massage it with "hedonics" (the Feds think that $500 Dell you bought is really worth $2000) and "owner-equivalent rent" (yes, your mortgage payment is part of our GDP).

What interests, or should I say, worries me, is *my* share of the interest payments on the accumulated debt, given that I am going to be a taxpayer near the top of Uncle Sam's list for the next 30-odd years. I assume we will never pay the debt back itself.

Including FICA, I am paying about 30% of my income in federal taxes.

Currently we are paying 5%/yr on debt issues, but I believe the mean interest rate is closer to 4%. 4% x our national debt of $8.4T means my annual interest payment to our creditors is roughly $5000, based on my proportion of tax payments vs Uncle Sam's total rake ($~$2.3T this year).

In short, the only debt number that really matters is how much interest we're paying to our creditors, and how affordable this is to us.
posted by Heywood Mogroot at 5:32 PM on July 11, 2006

Thus, even if OMB’s estimate today is correct, the real budget deficit is $180 billion higher – or some $476 billion.

Senator Kent Conrad is on c-span talking about the President's press release, and is saying the real budget deficit is $593 billion dollars (subtracting last years national debt amount from OMB's new projection for this years national debt).
posted by Sirius at 5:45 PM on July 11, 2006

Those charts don't show anything relating to consumer debt, so here's some more fuel for the fire:

1. Outstanding Consumer Credit and Personal Savings
2. Mortgage Debt Outstanding
posted by Civil_Disobedient at 6:33 PM on July 11, 2006

I'd like to point out the oft-overlooked fact of the US' #1 trading partner: no, not China, and not even your low-wage labour friends to the south. That's right. It's us - Canada. And, amazingly, it's not even all oil. Or wood. It's actually a ton of stuff, from auto parts to software.

The issue with China isn't that they sell so much, it's that they buy so little... the China-US trade deficit is over twice the Canada-US trade deficit with less trade overall. But that's another story altogether.
posted by GuyZero at 6:35 PM on July 11, 2006

For some perspective on consumer credit it may be worth checking out The Affluent Society where the great GK Galbraith ruminates on how US consumer debt may cause a collapse in the near future. It was written in the late 1950s or early 1960s.
posted by sien at 6:57 PM on July 11, 2006

For at least a little perspective, here's a piece from today's LA Times: Deficit's Good News Less Than Meets the Eye. Summary: the administration plays a game of overestimating the deficit so that when the real numbers come in the situation looks better than it really is.
posted by scalefree at 8:10 PM on July 11, 2006

In general I distrust the GDP-% figures since GDP is a highly fungible number, given how we massage it with "hedonics" (the Feds think that $500 Dell you bought is really worth $2000) and "owner-equivalent rent" (yes, your mortgage payment is part of our GDP).

Erm. No. You're right about quality hedonics, but you are wrong about mortgage payments, which do not find their way into the GDP or its deflator. You've confused the GDP deflator and the CPI.
posted by Kwantsar at 9:19 PM on July 11, 2006

One more issue that hasn't been raised yet: the upcoming health-care costs of the aging baby-boom generation. Savings will be required to pay for these costs, regardless of whether they're public or private.

Gareth Morley, writing on INROADS-L (a Canadian list):

I can't take much comfort in the fact that the predicted demographic crisis has not yet happened. The Baby Boom (defined as people born between 1945 and 1960) is current between 43 and 59 years old. In other words, at the highest earning point of their life cycle, and still too young to put big demands on the medical system. The first post-war baby turns 65 in 2010. By 2020, most of the Baby Boomers will be out of the active workforce and will be heavy users of medicare and other defined benefits of the welfare state.

The point is not to panic and make changes to our system that make it less cost effective. The point is that we have fixated on the fiscal surplus/deficit when we should be focusing on the actuarial deficit implicit in our current system of benefits and taxes. As Paul Krugman put it, we (in all the Western countries) are like a professional couple in their fifties: we are not planning adequately if our incomes barely exceed our expenditures, let alone if we are actually borrowing money.

posted by russilwvong at 9:47 PM on July 11, 2006

kwantsar: This table shows the smoke & mirrors of the GDP -- imputed rents are (AFAICT) $1T this year. I'm no economist, I'm just going by what I read here.
posted by Heywood Mogroot at 11:26 PM on July 11, 2006

Here's another take on the situation, from the Federal Reserve Bank of St. Louis Review: Is the United States Bankrupt?

Abstract: Is the United States bankrupt? Many would scoff at this notion. Others would argue that financial implosion is just around the corner. This paper explores these views from both partial and general equilibrium perspectives. It concludes that countries can go broke, that the United States is going broke, that remaining open to foreign investment can help stave off bankruptcy, but that radical reform of U.S. fiscal institutions is essential to secure the nation’s economic future. The paper offers three policies to eliminate the nation’s enormous fiscal gap and avert bankruptcy: a retail sales tax, personalized Social Security, and a globally budgeted universal healthcare system.

posted by scalefree at 1:06 PM on July 12, 2006