Obama and his supporters are fond of blaming George Bush and the deficit spending of 2002-2008 on our government’s various fiscal problems. As Obama put it, “”Number one, we inherited a $1.3 trillion deficit. … That wasn’t me.” This is that trademark Obama straight-talk we’ve come to expect. It’s a false alibi that has the additional demerit of making the President appear remarkably weak and incapable of leadership.
Bush truly did a lot of deficit spending, as much as four hundred billion per year in 2008. But notice the chart above. This spending was dwarfed by the total scale of government spending in any given year and the high receipts (i.e., taxes) raised compared to deficit spending. Now look at 2009, year of Obama and the major stimulus coupled with the continuation of Bush’s half-spent TARP funds. The budget appears to be half deficit spending. And the deficit is an order of magnitude larger than it has been in previous years, nearly $2,000,000,000,000. The government is not taking money in and spending like it always did, but instead is borrowing on a heroic scale to maintain an unrealistic scale of legacy spending and unworthy causes like propping up GM and financing broke state and municipal governments.
This level of spending is dangerous and unsustainable. Judging by Gold’s recent spike to $1,190/ounce, it appears people interested in maintaining their wealth are starting to realize what’s going on with out devalued currency.