The United States Posts a $181 Billion Dollar Budget Deficit in July
In case you didn't hear, the US government announced earlier today that they had posted a budget deficit of $180.6 billion dollars for the month of July.
Receipts were down sharply (mainly due to a dramatic drop in corporate and personal tax revenues), and outlays were way up ($332 billion, up 26% from a year ago).
Now, the government takes in more money some months compared to others (depending on when people pay income taxes, etc.) - however, the sheer enormity of the deficit number in July just can't be ignored.
In order to illustrate just how big this ONE MONTH deficit was, I thought that I would point out some of the larger deficits that the United States has posted in the past.
I'm talking deficits over the course of an entire year - not just a single month.
For instance - the United States posted an inflation adjusted deficit of approximately $420 billion dollars in 1991. At the time, the United States was struggling through a recession (July 1990 to March 1991), and paying new costs to fight the "Persian Gulf" war.
Now, I know that the United States is currently fighting two wars and going through a recession - however, July's deficit figure was 43% of the entire 1991 deficit.
How about 1983? The United States was going through an incredibly rough period this year, as a two-headed monster of high inflation and high unemployment numbers were doing a number on the economy.
The unemployment rate actually topped 10% for a few months, and inflation was running rampant.
Ronald Reagan, who would ultimately go on to become one of the most popular presidents in history, was on the ropes politically.
The government racked up a $442 billion dollar deficit in 1983 (inflation adjusted), and many people were absolutely astonished by the sheer size of the deficit.
An impressive figure to be sure, but consider that the July 2009 deficit was approximately 41% of this figure (for all of 1983).
Or how about the WWII years?
In 1943, the United States posted a total deficit (inflation adjusted) of $670 billion dollars.
An eye-popping figure to be sure - however, consider the sacrifices that the country was making at the time.
What's even more astonishing (to me anyways) is the fact that the United States posted a deficit in July that was nearly 27% of this number.
Two other notable deficits for you:
1934 - The US government posted an inflation adjusted deficit of $57.69 billion dollars as the country struggled to cope with the devastating effects of the Great Depression. This is not even a third of the July 2009 deficit.
1919 - The US government posted an inflation adjusted deficit of $166.32 billion dollars as a result of WWI. The US entered the war in 1917, and spent heavily, quickly moving from a surplus to a deficit.
4.35 million US troops were mobilized in WWI, and the country sacrificed dearly to pay for the war.
However, the deficit posted in 1919 was still less than July of 2009.
Is it unfair to compare our current deficit to others in the past? In my opinion, not at all.
Money is money, and we are spending unbelievable sums of money that we don't have right now.
Sure, we are dealing with a number of tough issues right now, but we have also dealt with tough issues (war, recessions, depressions) in the past.
Sources: History of Deficits and Surpluses in the United States
Historical Unemployment Rates in the US
Marketwatch.com - U.S. Posts $181 Billion Budget Deficit in July
Filed under: The Economic Meltdown