George Bush - Budget Surplus to Budget Doom

President Bush and his administration inherited a budget surplus from the Clinton administration in 2001. The economy looked to be in relatively good shape based on mid-term economic update.

Budget surplus info from 2001

Washington, DC, August 22, 2001 – The FY 2001 budget surplus is $158 billion, the second largest in U.S. history, according to the Mid-Session Budget Review released today by the Office of Management and Budget

Debt Repayment: From 2002 – 2011 surpluses will allow a total of $2.0 to $2.2 trillion in debt repayment. At the end of 2011, the public debt will total around $1.1 trillion. At 6.1 percent of GDP, this will represent the lowest debt burden since 1917. Public debt will fall to $3.3 trillion at the end of the current year, from a high of $3.8 trillion in 1997.

Document Online: Mid-Session Review, Budget of the United States Government, Fiscal Year 2002 (August 2001) is available online at www.omb.gov.

Almost 8 years later. Let's look at the economic situation based on July 2008 info.

Current budget deficit 2008-2009

July 28 (Bloomberg) -- The U.S. budget deficit will widen to a record of about $490 billion next year, an administration official said, leaving a deep budget hole that will constrain the next president's tax and spending plans.

more info from the government.

Let's look at the current economic situation as of October 2008.

Cost of the economic crisis

Oct. 10 (Bloomberg) -- The global financial crisis is turning into a bigger drain on the U.S. federal budget than experts estimated two weeks ago, ballooning the deficit toward $2 trillion.

Bailouts of American International Group, Fannie Mae and Freddie Mac likely will be more expensive than expected. States are turning to Washington for fiscal help. The Federal Reserve said this week it will begin buying commercial paper, the short- term loans companies used to conduct day-to-day business, further increasing costs. And analysts now say the $700 billion bank- rescue plan passed by Congress last week may have to be significantly larger.

``I always assumed they would be asking for more money along the way if it was necessary, and it looks like it's going to be necessary,'' said Stan Collender, a former analyst for the House and Senate budget committees, now at Qorvis Communications in Washington. ``At the moment, there's nothing happening here that's positive for the budget. Nothing.''

The 2009 budget deficit could be close to $2 trillion, or 12.5 percent of gross domestic product, more than twice the record of 6 percent set in 1983, according to David Greenlaw, Morgan Stanley's chief economist. Two weeks ago, budget analysts said the measures might push deficit to as much as $1.5 trillion.

How in the heck did the Republicans create this economic mess? Fiscal stupidity of the Bush administration is a great answer. John McCain will not make it better; he will stay the course.

Why is the rest of the world falling down with the USA. This chart will show why.

U.S. Debt Held in Foreign Countries

On July 31, 2008, the total federal debt stood at $9.586 trillion. Of that amount, $4.182 trillion was owed to the various “trust funds” (e.g., Social Security, Medicare, federal employees retirement funds, etc.) because the government “borrowed” that money from them. That leaves $5.404 trillion of debt “held by the public.” Of that amount, $2.728 trillion is held domestically by banks, mutual funds, and other U.S. investors. This leaves $2.676 held by foreign countries, institutions and individuals.