Happy Debt Day: Government to 'Run Out' of Cash Sunday, Earliest Ever

[Renegade]

Debt Day comes early this year. Unfortunately, it's nothing to celebrate.

The symbolic "holiday," which falls on Sunday, marks the point in the fiscal year when government spending exceeds revenue.

In other words, the government will stop making money and start borrowing on Sunday.

And it's coming earlier than ever, according to House Minority Leader John Boehner, who's pointing to Debt Day as yet another symptom of a government he says is spending too much, borrowing too much and taxing too much. Last year's Debt Day fell more than three months later, on Aug. 5.

"All the revenue for this fiscal year will be spent as of Sunday," Boehner, R-Ohio, said. With the fiscal year ending Sept. 30, he said, "everything that happens after Sunday through ... the balance of this fiscal year is going to have to be borrowed from our kids and grandkids."

Boehner penned a column, posted on his Web site, blaming the early Debt Day on an "arrogant culture of spending" and the Obama administration's "borrowing binge."

"In short, about halfway through Fiscal Year 2009, Washington has run out of money," he wrote.

The staggering budget deficit, projected to hit as high as $1.8 trillion by the end of the year, is due to a combination of symptoms.

The Congressional Budget Office's monthly budget report for March, released early this month, showed the federal government has seen both a loss in revenue and a spike in spending. The report showed revenue fell by about $160 billion, or 14 percent, below its 2008 level for the first half of the fiscal year -- and spending rose to $1.9 trillion, about one-third over the 2008 level at that halfway point.

Boehner's office estimated the government will have spent about $2.2 trillion as of Sunday, blaming in large part the $787 billion stimulus package (part of which is being spent this year) and the earmark-laden omnibus bill that funds the government through the end of the year.

But economist Josh Bivens, with the Economic Policy Institute, said Debt Day is more a "symptom of how bad the economy is."

He said tax revenue has plummeted as a result of lost jobs, falling wages and an unstable stock market, leading to an early Debt Day. "To me, it's just a symbol that it's in a real bad recession," he said.

President Obama's term hardly marks the start of the deficit trend -- the government went from running surpluses to deficits toward the beginning of the Bush administration.

But the deficit-driven Debt Day has fallen between July and September every year since 2002, so April 26 is strikingly early. Boehner's office predicts early Debt Days for years to come, since Obama's budgets for his first term continue to predict deficits, though they would fall below this year's high-water mark.

The Congressional Budget Office, though, notes that Debt Day is merely symbolic, since the federal government collects tax revenue throughout the year -- the government doesn't technically run out of money on Sunday. Rather, it marks the day the government, on an annual basis, spends its projected amount of revenue for the year.

"That's a figurative thing, not a reality," CBO spokeswoman Melissa Merson said.

http://www.foxnews.com/politics/firs...nday-earliest/

[Lars]

WHAT, ME WORRY?

[Brihard]

I wonder how much of that spending is cash *actually spent* this year, and how much of it is commitment to fund future initiatives, averaged out over the year? How much of the cash spent was funding authorized under previous budgets and administrations?

From what I've seen in the past year or two, most of these sorts of pronouncements are cheap political gimmicks - sound bytes, essentially - that distort or manipulate statistics and budgetary figures to make a point that is politically convenient to the person pointing them out.

I have read estimates (I believe in The Economist) that the stimulus bill and TARP will ultimately be a net gain to the American taxpayers, as the increased economic activity will eventually result in increased tax revenue over and above the spending. Conversely, allowing the economy to continue on its present course may have a greater ultimate cost than not doing anything about it now.

This kind of outlay of government cash all at once is ugly, no doubt, but it's only happening once. Nearly this amount is spent each year on defense alone.


Simply put, issues as complex as the current American economy are above most of our abilities to understand unless we have a solid background in economics. I include myself in that. Any political punditry that would seek to reduce the issues into something as silly as a single graphic, poster, or protest sign or bumper sticker is inherently dishonest.