America Will Be Bankrupt On Sunday
Apr 24, 2009 8 Comments ›› Pat Dollard
Earliest In History
Debt Day comes early this year. Unfortunately, it’s nothing to celebrate.
The symbolic “holiday,” which falls on Sunday, marks the point in the fiscal year when government spending exceeds revenue.
In other words, the government will stop making money and start borrowing on Sunday.
And it’s coming earlier than ever, according to House Minority Leader John Boehner, who’s pointing to Debt Day as yet another symptom of a government he says is spending too much, borrowing too much and taxing too much. Last year’s Debt Day fell more than three months later, on Aug. 5.
“All the revenue for this fiscal year will be spent as of Sunday,” Boehner, R-Ohio, said. With the fiscal year ending Sept. 30, he said, “everything that happens after Sunday through … the balance of this fiscal year is going to have to be borrowed from our kids and grandkids.”
Boehner penned a column, posted on his Web site, blaming the early Debt Day on an “arrogant culture of spending” and the Obama administration’s “borrowing binge.”
“In short, about halfway through Fiscal Year 2009, Washington has run out of money,” he wrote.
The staggering budget deficit, projected to hit as high as $1.8 trillion by the end of the year, is due to a combination of symptoms.
The Congressional Budget Office’s monthly budget report for March, released early this month, showed the federal government has seen both a loss in revenue and a spike in spending. The report showed revenue fell by about $160 billion, or 14 percent, below its 2008 level for the first half of the fiscal year — and spending rose to $1.9 trillion, about one-third over the 2008 level at that halfway point.
Boehner’s office estimated the government will have spent about $2.2 trillion as of Sunday, blaming in large part the $787 billion stimulus package (part of which is being spent this year) and the earmark-laden omnibus bill that funds the government through the end of the year.
But economist Josh Bivens, with the Economic Policy Institute, said Debt Day is more a “symptom of how bad the economy is.”
He said tax revenue has plummeted as a result of lost jobs, falling wages and an unstable stock market, leading to an early Debt Day. “To me, it’s just a symbol that it’s in a real bad recession,” he said.
President Obama’s term hardly marks the start of the deficit trend — the government went from running surpluses to deficits toward the beginning of the Bush administration.
But the deficit-driven Debt Day has fallen between July and September every year since 2002, so April 26 is strikingly early. Boehner’s office predicts early Debt Days for years to come, since Obama’s budgets for his first term continue to predict deficits, though they would fall below this year’s high-water mark.
The Congressional Budget Office, though, notes that Debt Day is merely symbolic, since the federal government collects tax revenue throughout the year — the government doesn’t technically run out of money on Sunday. Rather, it marks the day the government, on an annual basis, spends its projected amount of revenue for the year.
