The official verdict is in: Washington has never paid so much
for so little. Last week, the Congressional Budget Office released
its final tally on the federal government’s “fourth consecutive
year with a deficit above $1 trillion.” And in return, America
finished the fourth year of its worst peacetime economic recovery
since the Depression.
If government spending was supposed to equal prosperity, America
has not gotten what it’s paid for. Not that it hasn’t paid a
lot.
The federal government spent $3.5 trillion in fiscal year 2012.
As CBO observes: “Federal spending has totaled between $3.5
trillion and $3.6 trillion in each of the past four years…” Prior
to these four years, government spending had never broken $3
trillion.
Put into perspective, the entire federal debt held by the public
did not reach the last four years’ levels of annual spending until
1995.
Little surprise then that Washington racked up mind-boggling
deficits over these last four years. Before these last four years,
Washington’s annual deficit had peaked at $459 billion. Last year’s
deficit? $1.1 trillion — well more than twice the record high
before these last four years’ — and the lowest of the four.
Put into perspective, total federal spending did not equal last
year’s deficit spending until 1989.
Not surprising these spending-stoked deficits have resulted in
an enormous debt increase. Prior to these past four years, federal
debt held by the public equaled $5.8 trillion. CBO projected that
at the end of 2012, it would equal $11.3 trillion. In four years,
this debt has essentially doubled.
Put into perspective, the last four years of federal spending’s
deficits have accumulated federal debt equal to all that had been
accumulated previously.
For all this federal spending, deficits, and debt, what has
America gotten in return? The worst economic recovery of any
post-Depression period. In 2009, the economy shrank 3.1 percent. In
2010, it grew 2.4 percent; in 2011, 1.8 percent; and in 2012, it is
projected to rise 2.1 percent.
Average the real economic growth of these four years, and you
come up with less than 1 percent growth — just 0.8 percent! Even
dropping 2009’s negative growth and you get just over 2 percent —
a level that would equal weak growth if it were just one year’s,
let alone a 3-year average.
If anything could make this all seem worse, it is that
Washington is not done. CBO’s latest estimate for federal spending
is $3.6 trillion — slightly higher than 2012’s. If Washington
avoids the so-called “fiscal cliff,” whereby spending is
automatically cut and taxes raised at year’s end, then the deficit
will again exceed $1 trillion — for a fifth consecutive year.
And the American economy? Even avoiding the fiscal cliff’s
projected recessionary impact, CBO estimates the economy will only
grow 1.7 percent — less than in any of the three previous
years!
Economics is called the dismal science for a reason, but it has
nothing on recent federal budgeting when it comes to dismal.
Washington has just closed the books on the worst chapters in
its budget and economic peacetime history. Over the last four
years, it has spent like never before, rung up deficits like never
before, and accumulated debt equal to all it had run up before.
What has it gotten in return? The worst economic recovery in its
peacetime history.
And as though this was not more than enough, Washington is
already hard at work on the next installment in this sordid
story.
It is said America is afraid of uncertainty arising from the
fiscal cliff, wait until it gets a load of fiscal repetition.
America has not gotten what it paid for, but it is unquestionably
going to be paying for what little it gets. And paying, and paying,
and paying.
