The nation’s debt leapt $166 billion in a single day last week, the third-largest increase in U.S. history, and it comes at a time when Congress is balking over higher spending and debt has become a key policy battleground.
The one-day increase for June 30 totaled $165,931,038,264.30 - bigger than the entire annual deficit for fiscal year 2007 and larger than the $140 billion in savings the new health care bill will produce over its first 10 years. The figure works out to nearly $1,500 for every U.S. household, or more than 10 times the median daily household income.
Daily debt calculations jump and fall, and big shifts are common. But all three of the biggest one-day debt increases have occurred under the tenure of President Obama, and all of the top six have been in the past two years - an indication of just how quickly the pace of deficit spending has risen under Mr. Obama and President George W. Bush.
“What matters is the overall trend line, and the overall trend line is shooting up,” said Robert Bixby, executive director of the Concord Coalition, a bipartisan deficit watchdog group, who said it is one more reason for a fiscal wake-up call.
Fears over red ink have stalled key parts of Mr. Obama’s agenda in Congress in recent weeks, including his push for another round of stimulus spending. Just last week, House Democrats had to use a tricky parliamentary tactic to pass an emergency war-spending bill, aid for teachers and new spending caps.
On Wednesday, the Congressional Budget Office said the government has recorded a $1 trillion deficit for the first nine months of fiscal 2010, which began Oct. 1. That’s slightly down from 2009’s record $1.1 trillion deficit at this point.
CBO said revenues are doing slightly better this year than last year, while spending is down about $73 billion, mainly because the government made giant payments last year to bail out Wall Street, but did not have similar expenses this year. Other spending is higher, including unemployment benefits, which have jumped nearly 50 percent.
Deficits are the difference between what the government raises in revenue versus what it spends each year, while debt is the accumulation of those deficits over many years.
The Treasury Department calculates the country’s debt position each day, and big rises and falls are not unusual. In fact, since hitting $13.203 trillion on June 30, the figure has since slipped $25 billion to settle at $13.178 trillion as of Tuesday, the latest day for which figures are available.
June 30 is always a major day for new debt, since debt held by one part of the government to another - for example, IOUs to the Social Security trust fund - are rolled over, a spokeswoman for the Bureau of the Public Debt said.
All told, this June 30, the government reported issuing $760 billion in new debts and redeeming $594 billion, for a new net debt of $166 billion that day.
White House officials said that big a jump is not the norm and that Mr. Obama has worked with the hand he was dealt by Mr. Bush. He has had to push spending to try to jump-start the economy and create jobs, even as he has also pledged to work in the long term to reduce annual deficits and bring the debt under control.
The budget he submitted to Congress earlier this year calls for a mix of tax increases and spending reductions, including a freeze on non-security discretionary spending, that would reduce deficits by $1 trillion over the next decade.
Mr. Obama has also named a bipartisan commission to recommend major changes that could help reduce the deficit to about 3 percent of gross domestic product, and stabilize the debt held by the public - a somewhat different figure than total debt - at about 60 percent of GDP, which the administration argues are more sustainable levels.
Testifying to that commission last week, CBO Director Douglas W. Elmendorf said to reach the sustainable debt goal the government will have to raise taxes by 25 percent, cut spending by 20 percent or do some combination of the two.
“That would require, for example, roughly a one-half increase in personal income tax revenue. On the other hand, if the change came entirely from spending … that would represent, for example, the near elimination of all government programs except for Social Security, Medicare, Medicaid and national defense,” he said.
The White House said CBO’s scenario doesn’t take into account some of Mr. Obama’s proposals, such as long-term cuts in spending resulting from the new health care law.
Still, Mr. Bixby, the deficit watchdog, said the size of the numbers CBO laid out to the commission shows the tough choices that await Congress. He said the solution will have to be a combination of revenue increases and changes to major programs such as Social Security and Medicare, which are growing at a faster rate than the economy as a whole.
Total public debt includes two pots of money. One is normal government debt in the form of Treasury bills and bonds held by consumers, while the other is intragovernmental holdings, or money one part of the government borrows from another agency. That includes money borrowed from the Social Security trust funds.
Some analysts say the key measure is not the total public debt, but the debt in the hands of consumers. That figure stood at $8.628 trillion on Tuesday.