Budget Deficit Goes Into Overdrive

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There's something terribly ironic about a group of Congressmen and -women chastising General Motors (NYSE: GM), Ford (NYSE: F), and Chrysler executives for driving their companies into the ground, when the state of Uncle Sam's balance sheet looks like it does today.

Yesterday, the Treasury Department announced that the federal budget deficit for just the first two months of fiscal year 2009 (which started on Oct. 1) will come in at more than $400 billion. Sure, the deficit is abnormally high thanks to the raising of funds for the TARP program, which propped up banks like Goldman Sachs (NYSE: GS), Bank of America (NYSE: BAC), and Wells Fargo (NYSE: WFC), but even without the bailout programs, the budget deficit would have still been close to $200 billion. Sheesh!

Going back to 2000 (when we had substantial budget surpluses), here's what a basic income statement of the U.S. government looks like:

Year	Government Receipts	Government Outlays	Budget Surplus (Deficit)
2000	$2,025 billion	$1,789 billion	$236.2 billion
2001	$1,991 billion	$1,863 billion	$128.2 billion
2002	$1,853 billion	$2,011 billion	($157.8) billion
2003	$1,782 billion	$2,160 billion	($377.6) billion
2004	$1,880 billion	$2,293 billion	($412.7) billion
2005	$2,153 billion	$2,472 billion	($318.3) billion
2006	$2,407 billion	$2,655 billion	($248.2) billion
2007	$2,568 billion	$2,728 billion	($160.7) billion
2008	$2,524 billion	$2,979 billion	($455) billion
First 2 Months of Fiscal Year 2009	N/A	N/A	($401.6) billion

Sources: Congressional Budget Office, U.S. Treasury .

Some of the more daunting budget-deficit estimates for all of 2009 estimate a $1 trillion shortfall. At the rate we're going, we'll be there by Valentine's Day.

It's quite a quagmire: Letting sections of the economy fail causes tax receipts to plunge, but propping up those sectors requires unsustainable spending. Either way, a government that couldn't balance its books when the economy was booming is bound to drown in red ink when it heads into a recession ... not to mention the worst recession in decades.

I'm still confident that a significant portion of the funds injected by the Treasury will eventually be recouped, but seeing numbers like these reminds me why, one year ago today, I wrote an article called "The Impending Destruction of the U.S. Economy."

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