Exjackly

This is a post in the Federal Debt Discussion series.

Previously, we discussed The Scale of the Federal Debt. This debt did not magically appear. It has been built up over a number of years, and has gone up and down during that time period based on the annual deficits (and occasional surplus) in the federal budget.

There is a lot less information on the deficit than there is on the debt.  From my investigations, it appears that the best source online is the US Government’s Treasury Department and their Monthly Treasury Statement (MTS).

This site reports that for fiscal year 2007, our government ran a deficit of $163,681,000,000.

This is a significant decrease.  For comparison, here are the six previous years of data:

• FY 2001 was a surplus of $126,863,000,000 and ended just after the September 11 attacks.
• FY 2002 was $160,252,000,000 in deficit
• FY 2003 was $375,242,000,000 in deficit
• FY 2004 was $411,116,000,000 in deficit
• FY 2005 was $317,265,000,000 in deficit
• FY 2006 was $248,277,000,000 in deficit

As you can see, with the recent economic expansion, the deficit has shrunk significantly from four years ago.  This is to be expected.  The government’s collections are a lagging indicator of the economy.  Deficits increase during a recession and decrease during a boom.

It is not that simple however, since there are a lot of variables that impact the deficit beyond the economy.  Things like:

• Congressional approval of new spending
• Tax cuts (or increases)
• Disaster relief
• The available interest rates for issuing new government debt

There is more that impacts this figure than that.  In the end though, it is the annual deficits (and occasional surplus) which ultimately result in the total debt.  Paying attention to the fluctuating deficit will also ultimately be our national route to staying strong economically.

Oh, before I forget, how much of the budget deficit can be traced to interest payments on the national debt?  According to the government’s own figures from the Treasury, we spent $429,977,998,108.20 in interest last fiscal year.