Monday, March 2, 2009

How Big is the Budget: Part I

There is no question that the new budget and deficit is BIG. Felix at his Market Movers blog tries to put the current budget in perspective:

It's pretty much impossible to get one's head around the sheer enormity of the numbers in Barack Obama's first budget. But it's important to try, and one anonymous commenter has a very good point: the entire federal budget, as submitted by President Clinton in 1996 through 1999, was smaller than the budget deficit that Obama is proposing for next year.

While this obviously ignores inflation, it does put the vastness of the budget in perspective. His next comparison brought out a lot of criticism from readers, but I think they miss the point (remember, this is just about putting it all in perspective):
Obama's total budget is $3.6 trillion, which works out at $34,000 per household; median household income is about $50,000. Which basically means that for every dollar that a US household earns, the US government plans to spend 68 cents next year. And the ten-year T-bond still yields less than 3%. Extraordinary.

Criticism was raised that he was comparing a per family average (the budget portion) with a median (rather than average) household income. His point (I believe) is that for the median family out there earning ~$50,000 this year, the government is chipping in an additional $34,000. That my friends, is some government spending!