The last year Democrats controlled both houses of Congress, 2010, the deficit was $1,293 billion. That November, Republicans took control of the lower house and much-maligned “disfunction” (i.e., liberals not getting everything they want) became the norm. The 2011 deficit was $1,300 billion.
In 2012, the first full budget year in which Republicans held the purse strings, the deficit fell to $1,089 billion. In 2013, it was $680 billion. In fiscal year 2014, which ended in September, the Congressional Budget Office estimates a $506 billion deficit.
Washington disfunction gets blamed for the immobility of government, but it has been effective in restraining spending. Plus, new problems aren’t being created. Disfunction is a concern insofar as the catastrophes created during the rose-colored days of “consensus” aren’t being addressed. Remember, though, the ability to fix problems is attached to the ability to create new ones. Given our leaders’ propensity for the latter, paralysis really is the best scenario.
At any rate, the civil society, such as it is, has shown remarkable adaptability the last few years, despite the example of the opposite being set in D.C. Americans are conserving their financial resources, as they did during World War II.
The deficit will drop to $469 billion in FY2015 before beginning to increase again due to rising mandatory spending and growing interest payments on the debt, according to the CBO report. By FY2022, CBO projects the deficit will exceed $900 billion, unless changes are made to current law.
Those changes would be making cuts to mandatory spending, especially Social Security and Medicare.
Soaring deficits will return sooner than 2022. The CBO projection leaves out the inflation and requisite rate hike that follows the liquidation of the Federal Reserve’s $4 trillion quantitative easing spree. Higher rates will boost interest payments on the $17 trillion debt to budget-busting levels. That will be a turning point for the republic. It will make the 2013 “fiscal cliff” look like a stepladder. Disfunction will not be good enough then.