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Is the US Deficit Shrinking in 2005?
In  July of '04 and January of '05 ("Psst, the deficit's shrinking"), Wall Street cheerleader Larry Kudlow  suggested that our deficit was shrinking.  I guess it depends on how you figure it.  The amount of annual INCREASE in our national DEBT (debt chart), or shortage of money with which to pay our government bills, is what the GAO refers to as the "on-budget deficit".   Webster:  Deficit - A shortage in amount, esp. of money.  
If the increase in debt of 42 BILLION, for the FIRST DAY of the new 2007 fiscal year (Oct. 2, '06), had been posted on the last day of fiscal 2006 (Sept. 29, '06), the deficit for 2006 would have swelled to 616 billion, making it the largest on-budget deficit in the history of the Republic.  Is this a sign of a shrinking deficit?
Webster:  Deficit - A shortage in amount, esp. of money. (anchor)
Microsoft Excel Worksheet
The chart above (anchor) of monthly debt is generated from numbers provided by the United States Treasury  http://www.publicdebt.treas.gov/opd/opdpdodt.htm and the Federal Reserve. http://www.federalreserve.gov/releases/h6/hist/h6hist10.txt Kudlow made his pronouncements in '04 and 3 months into fiscal '05 (Jan).  The first 6 months of debt increase in 05 put us on track for a linear annual projection of an 800 billion dollar increase in our debt, or an 800 billion dollar "on-budget deficit".  But who would have imagined that the M3 money stock would then be pounded into the economy at rates as stunning as the 182 billion dollar increase in M3, over just the 8 weeks ending September 30th?  This single 8 week period increased the entire money stock created since 1913 by over 1.8%.  Might this chart of debt to M3 indicate that this was an effort to monetize the debt?  
Interest paid on our debt for fiscal 2006 was $405 billion.  This was the interest expense in spite of some of the lowest interest rates in the last 40 years.  http://www.publicdebt.treas.gov/opd/opdint.htm What will happen to just this interest expense portion of our increasing debt now that the Fed has been raising rates in earnest bearing in mind that the interest expense on our national debt amounted to a whopping 70% of our total 2006 on-budget deficit?  How rapid will the impact of the increase in interest expense be now that average issued debt maturity is just 55 months with 51% being held by foreigners?  
During the week ending November 19, 2005 with a 4-1/4% 5-year and a 4-1/2% 10-year note Kudlow and guest indicated that they didn't think there would be too much of a problem with a 6% 10-year note.  Based on the chart of debt interest what do you think?

The following is unnecessary reading unless you want to judge the accuracy of my prior figures and presumptions.
(Numbers for March 2005) - In  July of '04 and January of '05 ("Psst, the deficit's shrinking"), Wall Street cheerleader Larry Kudlow  suggested that our deficit was shrinking.  I guess it depends on how you figure it.  The amount of annual INCREASE in our national DEBT, or shortage of money with which to pay our government bills, is what the GAO calls the "on-budget deficit".  Webster:  Deficit - A shortage in amount, esp. of money.  According to the numbers from the Treasury link here   http://www.publicdebt.treas.gov/opd/opdpdodt.htm as of 3-31-05 (end of first half of fiscal 2005):
7,776,939,047,670      is the amount of our debt as of 3-31-05(first half fiscal year '05)
7,379,052,696,330     subtracting the debt on fiscal year close of 9-30-04
=397,886,351,340      increase in debt over first half fiscal 2005 x 2
=795,772,702,680      is the projected increase in debt, or shortage of money with which to finance our government, or "on-budget deficit", for fiscal '05 with a linear rate of increase.  
CHART
This is a bit worse than the 761,556,989,796 increase in debt for '05 that I figured in January when I got curious and checked Kudlow's premise.  Please check my figures, I would be very happy to correct them.  Projected total U.S. National Debt by Sept 30 2005 fiscal year close = 8,174,825,399,010.  This would constitute a 10% increase in our total national debt in a single year.  Does this spell the incredible shrinking deficit?  Incredible.....definitely, shrinking.....you decide.  As of the end of July it looks like we may fall a little short of that but I wouldn't count on it, and if housing simply levels out, our debt will skyrocket.
Further, our increasing deficit does not even take into account the ridiculous socialist/Marxist spending increases, such as that detailed in the '04 GAO U.S. Financial Statement involving the medicare prescription drug "benefit" that piled on a 43% increase to the total, of all of our previously accumulated future financial obligations from before Roosvelt, in a single year.  Click here for a Microsoft Excel projection of drug spending out 75 years based on the OMB projections and adjusted for M3 to maintain 2004 dollars.  How will these charts look if we have an economic slowdown?  Are we exempt from further terrorist attacks?  Is the government monetizing the debt through an unprecedented blizzard of phony money flooding the system in terms of M3?  You be the judge.
I am very much into "supply side economics", or free market capitalism, since anything else is a version of Socialism/Marxism/Facism to one extent or another, but if government cannot exercise any spending restraint whatsoever, demonstrated at least by Bush's running veto tally, which remains at ZERO, it doesn't matter how much growth we have if we continue to outspend it.  Historically it has been our government's tendency to spend more anytime revenues go up, as also demonstrated under Reagan.  I don't want to be a doomsayer but from the performance I have witnessed in my 54 years, only a radical change in government, away from a 2 party (one actually) system will fix it (a near success of which we witnessed in Ross Perot's bid (not that I am a Perot fan)).  The entrenched establishment and old guard consistently fail to manage.
Is the US Deficit Shrinking in 2005?
In  July of '04 and January of '05 ("Psst, the deficit's shrinking"), Wall Street cheerleader Larry Kudlow  suggested that our deficit was shrinking.  I guess it depends on how you figure it.  Somebody help me with my math here.  The amount of annual INCREASE in our national DEBT, or shortage of money with which to pay our government bills, is what the GAO calls the "on-budget deficit".  Webster:  Deficit - A shortage in amount, esp. of money.  According to the numbers from the Treasury link here:
Update 3-31-05
7,776,939,047,670      is the amount of our debt as of 3-31-05 (first half fiscal year '05)
7,379,052,696,330     subtracting the debt on fiscal year close of 9-30-04
=397,886,351,340      increase in debt over first half fiscal 2005 x 2
=795,772,702,680      is projected increase in debt for fiscal '05 with linear rate of increase
This is a bit worse than the 761,556,989,796 increase in debt for '05 that I figured in January when I got curious and checked Kudlow's premise.  Please check my figures, I would be very happy to correct them.  Projected total U.S. National Debt by Sept 30 2005 fiscal year close = 8,174,825,399,010.  This would constitute a 10% increase in our total national debt in a single year.  Does this spell the incredible shrinking deficit?  Incredible.....definitely, shrinking.....you decide.  
I am very much into "supply side economics", or free market capitalism, since anything else tends toward Socialism/Marxism to one extent or another, but if government cannot exercise any spending restraint whatsoever, demonstrated at least by Bush's running veto tally, which remains at ZERO, it doesn't matter how much growth we have if we continue to outspend it.  Historically it has been our government's tendency to spend more anytime revenues go up, as also demonstrated under Reagan.  I don't want to be a doomsayer but from the performance I have witnessed in my 54 years, only a radical change in government, away from a 2 party (1 actually), system will fix it.  The entrenched establishment and old guard have got to go.
This deficit does not even take into account the ridiculous socialist/Marxist spending increases, such as that detailed in the '04 GAO U.S. Financial Statement, that piled on a 43% increase to the total, of all of our previously accumulated future financial obligations from before Roosvelt, in a single year.  How will these charts look if we have an economic slowdown?  Are we exempt from further terrorist attacks?
This is what I wrote on January 13 2005 when I was suspicious of Kudlow's premise:
Is Our Deficit Shrinking in 2005?
According to Larry Kudlow in July '04 (fiscal 4th month), our deficit was shrinking.  I guess it depends on how you figure it.  Somebody help me with my math here.  The amount of annual INCREASE in our national DEBT, or shortage of operating money, is what the GAO calls the "on-budget deficit".  Webster:  Deficit - A shortage in amount, esp. of money.  According to the numbers from the Treasury:
7,601,173,485,023   is the amount of our debt as of 1-13-04
7,379,052,696,330   subtracting the debt on fiscal year close of 9-30-04
=222,120,788,693    increase in debt over 3-1/2 months, divided by 3-1/2
=  63,463,082,483    the debt per month, multiplied by 12 months for year total
=761,556,989,796   linear projection for funding shortfall in fiscal '05.  This would appear to be roughly consistent with acceleration of the already near vertical line on the chart that I developed from the same Treasury site and scanned to my home page. (edit - earlier versions of this chart were hand drawn with a pencil on graph paper before I knew that Excel was a program that came with my computer).  
Now...
7,379,052,696,330    Was the debt for end fiscal 9-30-04
- 6,783,231,062,743    now subtract the debt for fiscal end 03
= 595,821,633,587  increase in our debt for 2003-2004 which I am calling the overall deficit
It would seem to appear as though the fiscal 05 ON-BUDGET DEFICIT COULD BE PROJECTED TO BE OVER 25% HIGHER than the deficit of fiscal year ended 9-30-04.  Is it likely that the deficit will decelerate the rest of the year?  We are already down 221 billion in 2005 and the whole 2003-2004 deficit was 595 billion.  I am completely open to correction, but it seems typical cheerleader Kudlow/Wall Street/CBO.  
Check daily debt here (link removed)
From Sept 30, 2003 to Jan 13, 2004 there was a  
208,612,275,865  deficit  
Compared to 221 billion dollar deficit from Sept 30, 2004 to Jan 13, 2005
Figure it out for yourself.  Maybe I made a mistake.