The details of the 2010 budget have been handed over to Congress, and they are indeed mindboggling. Over ten years, the federal government will spend $42 trillion dollars. It will take in $35 trillion in taxes, leaving a $7 trillion deficit. Individual income tax receipts will nearly double, as will corporate tax receits and social security outlays.Medicare and Medicaid will more than double, as will net interest payments on the national debt.
This is...a forecast, of course. If our last presidency was any guide, forecasts aren't exactly FASB compliant.
A look at forecasted outlays vs. actual:
Forecasted receits vs. actual:
A combined picture:
And the resulting deficit:
With these table stakes, let's just hope that past events aren't indicative of future performance, otherwise our credit rating will be on the fast-track to subprime.
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You know that the US has a budget every year and that we pay for that budget by levying taxes and tariffs. When the US government spends more money than it takes in, there's a deficit; a shortfall. Now, to cover that shortfall, the US government sells bonds. We cover the shortfall from the money taken in from sale of those bonds. Once the government sells a bond it then creates ten times the amount of that bond as money available to spend. That's what they do, illogical as it sounds. We sell, on average, about 380 million dollars of these bonds every week. The primary buyers of these bonds are Japan and China but every country in the world does because those bonds represent an IOU from the US government and, in this world, an IOU from the US government is seen as money in the bank. These countries then use those IOUs to back their own currency or buy oil. You can only buy oil in US dollars. There are only two oil exchanges in the world, in London and New York. Both only take US dollars. So if you're from any other country in the world, you need dollars to buy your oil. Because of this, there is always a market for US dollars or, in this case, the next best thing: the IOUs.
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Debt management plan
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