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.