Feb. 1, 2010— -- President Obama announced a $3.83 trilion budget today that he hopes will fight unemployment while freezing spending on some government programs. It's a huge price tag, and it's worsening an enormous, record-setting budget deficit -- $1.6 trillion.
Many people are now asking how we got here. Especially when it was not long ago that we had a surplus. Here's a breakdown of the recent history:
In 2000, when President Clinton left office, the U.S. was in the black by $236 billion. At the time, number crunchers projected a surplus for at least 10 years.
But just two years later, we were in the red by $158 billion. The aftermath of 9/11 effectively froze the nation's economy. And President Bush enacted his first round of tax cuts.
By 2004, the deficit had more than doubled, to nearly $413 billion. The U.S. had invaded Iraq, and, economists point out, there was another round of tax cuts.
By the end of 2008, the banking system was near collapse. Bush signed a $700 billion bank bailout package, and the deficit grew to $438 billion.
Then Obama took office and soon enacted the $787 billion economic recovery plan. That brings us to $1.4 trillion in debt...and still counting.
"What started out as a trickle in 2008 turned into a flood in 2009," said Robert Bixby, the executive director of the Concord Coalition, a nonpartisan organization that seeks to end federal budget deficits. "Neither party can wash their hands of responsibility. The current administration has adopted a lot of those same policies, so frankly, I don't think you can point partisan fingers."
In fact, to put it in perspective, the U.S. currently has the largest deficit since World War II, and as economists point out, we're not in world war now.
You've certainly heard the warnings about future generations paying the price. Bixby says it's not just rhetoric.
Budget Deficit: How Did We Get Here?
"Future generations are in a world of hurt because we're running up this debt," Bixby said, "and they're going to have to pay interest."
They'll have to pay just as their parents and grandparents start relying on social security.
So is there a solution?
Jobs, everyone agrees, would help by providing more tax revenue and more consumer spending. But those jobs aren't here yet.
"The consensus is we're going to have to make some pretty hard choices," Bixby said, "and there's also consensus that nobody wants to make them right now."