Will the United States Be Able to Post a Surplus Between Now and 2030?
Between 1970 and 1997, the United States managed to post 28 straight budget deficits.
The largest deficit (in inflation adjusted dollars) came in 1983 ($442.6 billion dollars), while the smallest deficit came in 1974 ($26.23 billion dollars).
If it weren't for a small surplus in 1969, the United States would have posted a string of deficits that lasted from 1961 until 1997.
From 1998 to 2001, the United States actually managed to post four straight surpluses. The country was enjoying an influx of personal tax revenues as the equity markets shot higher, and corporate tax revenues were doing exceedingly well also.
In 2002, the United States posted an inflation adjusted deficit of $186.2 billion dollars as the country battled through a recession.
With an estimated $1.8 trillion dollar deficit on the way in 2009, the United States will have posted eight straight deficits (2002-2009). They range from $165.2 billion dollars (2007) to an estimated $1.8 trillion in 2009.
Now, we are still 21 years away from breaking the all-time record for consecutive deficits, but here are a few things to consider:
1. The CBO (Congressional Budget Office) estimates that the United States will post a series of sizable deficits from 2010 through to 2019.
According to the CBO, in their estimation, the "smallest" deficit that the United States will post between now and 2019 will be $658 billion dollars (2012).
In 2019, they are estimating that the United States will post a deficit of nearly $1.2 trillion dollars.
2. Health care reform. Assuming that some sort of health care reform bill eventually gets passed, it will almost certainly be more costly than first anticipated (not a slam on any single political party - this is just how it usually works. Things often end up being more expensive than governments originally anticipate).
3. The economy. The CBO, for instance, estimates that the unemployment rate in the United States will fall below 6% in 2012 and remain there through the rest of the decade.
As a matter of fact, they predict that the unemployment rate in the United States will be under 5% from 2015 through to 2019.
What happens if this doesn't take place? What happens if there is another recession that causes unemployment rates to spike again?
You guessed it - less tax revenue and higher deficits.
There is practically no chance that we will magically post a surplus between now and 2019.
Assuming that we don't post a surplus between now and 2019, this would mean that the deficit streak would be up to 18 years by that point.
The question is - can we post a surplus between now and 2030, which is what we would need to do to avoid breaking our current 28 year-old record? Or will the old record be broken?
One more question: what's your best guess as to when the United States will be able to post another surplus?
Source: A History of Surpluses and Deficits in the United States
Filed under: The Economic Meltdown