6 scary facts about the US budget deficit

CBS/AP

(MoneyWatch) COMMENTARY Gridlock in Washington, record public debt and the uncertainty of November's presidential election don't bode well for the federal government getting its fiscal house in order. The constitutional system of checks and balances was supposed to guard against fiscal recklessness, says economist Ed Yardeni, but the founders forgot to include a balanced budget requirement in their founding document.

"Without it, there was nothing to check and balance the spending excesses of our politicians once they realized that they could finance the resulting deficits in the credit markets," writes Yardeni, president of Yardeni Research, in a new note to clients.

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The odds of Washington passing a balanced budget amendment are less than zero given that Congress can't agree on any of the many deficit reduction plans that have been proposed recently, Yardeni says. It's an unsettling, situation, he notes, pointing to six scary effects on the nation's financial situation so far:

1. The federal deficit over the past three fiscal years through September 2011 totaled $4 trillion, averaging $1.3 trillion per year. This fiscal year, which is the third full year of the economic recovery, the deficit is likely to be around $1 trillion again.

2. Total public debt outstanding, including nonmarketable securities held by federal trust funds, rose to a record $15.6 trillion during March. It's up $1.3 trillion over the past 12 months and $6.1 trillion over the past four years.

3. Dividing all this debt by the labor force in the U.S. shows that American workers each owe a record $100,720. That's double what they owed during 2004.

4. The Federal Reserve has enabled this fiscal recklessness by pegging the federal funds rate near zero and buying lots of U.S. Treasuries. The Fed's holdings of U.S. Treasuries rose $1.1 trillion over the past four years through the week of April 4.

5. The social welfare state in America is set to grow faster than the economy as the Baby Boomers retire. From 1993 through 2010, outlays per beneficiary for Social Security and Medicare more than doubled from $10,459 to $22,319. Over this same period, total wages and salaries in compensation and nominal GDP did about the same. Because Americans are living longer, the number of Social Security beneficiaries rose 88 percent over this period, and will increase at a faster rate as the Baby Boomers now start to retire.

6. The number of people claiming disability has soared. It rose to a record 8.7 million during March, doubling since February 1997. Over this period, their numbers have increased by 4.3 million. This helps to explain some of the drop in the labor force participation rate, which fell from 66.9 percent to 63.8 percent over this period.

[Moravecglobal]

Affluent out of state and foreign students selected over qualified instate students at public UC Berkeley. In spite of eligibility University of California Berkeley Chancellor Birgeneau, Provost Breslauer shed thousands of instate applicants. Qualified instate applicants to public Cal. are replaced by a $50,600 payment from born abroad affluent foreign and affluent out of state students. And, Birgeneau subsidizes affluent foreign and affluent out of state tuition in the guise of diversity while he doubles instate tuition/fees.

Cal. is not increasing enrollment. Birgeneau/Breslauer accept $50,600 foreign students and displaces qualified instate Californians (When depreciation of tax funded assets are included (as they should be), out of state and foreign tuition is more than $100,000 and does NOT subsidize instate tuition). Going to Cal. is now more expensive than Harvard, Yale.

A shocking picture of inept UC Berkeley senior management. With the recommendations of Cal. Chancellor Birgeneau, Provost George Breslauer allowed campus police to use excessive force - rammed baton jabs - on students protesting Birgeneau's doubling of instate tuition. Resignation of Birgeneau is necessary, but not sufficient, fire Breslauer. Email your opinion; UC Board of Regents [e-mail]

[jeannutson]

These facts explain why much efforts need to be employed to implement the proposed deficit reduction plans.

[Squezzbox]

So the problem is struggling people and not the fact that I paid 28% taxes this year vs someone making half a million paid about 14% because of all the legal deductibles. Lets put it this way, go fight the next war yourself because I know that I and all the people I know will not be joining in any effort to do anything for anyone to live better lives off our hard work.

Get facts right, having a part of the population paying so little to no tax does not bring jobs or create anything but disparity. But do keep twisting the facts its always an amusing thing to read.