Meltdown 101: How did $1 trillion deficit happen?
By MARTIN CRUTSINGER – 2 days ago
WASHINGTON (AP) — In a year of eye-popping numbers, add one more: The government's annual budget deficit has topped $1 trillion.
And with three months left in the budget year, it will actually get even worse. The administration is projecting that the deficit will hit $1.84 trillion for the current budget year, four times the size of last year's deficit. Last year's number was the all-time leader at the time, at $454.8 billion — a figure that now seems rather puny in comparison.
Here are some questions and answers about what happened to the federal budget, which began the new century with the longest string of surpluses in seven decades.
Q: Just how did we go from a string of four consecutive surpluses from 1998 through 2001 to the fix we are in now?
A: The surpluses at the end of the last decade reflected a boom-time economy, which was enjoying the longest uninterrupted expansion in U.S. history.
When the last recession began in 2001, that cut into revenues. Then the government's budget picture darkened even further after the 2001 terrorist attacks as government spending was increased to pay for wars in Afghanistan and Iraq.
Q: But weren't things getting better at the end of the Bush administration?
A: Until President George W. Bush's last year in office, the deficit had been shrinking, hitting a five-year low of $161.5 billion in 2007. But that was followed by the record deficit of $454.8 billion in 2008, the budget year that ended on Sept. 30 of last year.
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