The United states is "borrowing more than 40 cents of every dollar we spend."
Scott Rigell on Monday, February 14th, 2011 in a press release.
Rep. Scott Rigell says the United States borrows more than 40 cents of every dollar it spends
Federal budget season officially opened on Feb. 14 with the release of President Obama’s spending proposal for the coming fiscal year.
Some of the first shots were fired by Virginia Republicans in the House of Representatives, charging Obama is not doing enough to cut spending and sink budget deficits.
"We are a nation $14 trillion in debt and are borrowing more than 40 cents of every dollar we spend," said Scott Rigell, who represents Virginia’s Second District, in a press release.
Rigell is not the only Republican using that line. We wanted to see if it is true.
Crystal Cameron, Rigell’s director of communications, told us the congressman based his statement on the Treasury Department’s monthly report on the government’s income and expenditures.
We turned to those summaries and did some math.
In fiscal 2010, which ended Sept. 30, 2010, the federal government had revenues of $2.16 trillion. It spent $3.46 trillion. That means the deficit was 37.5 percent of total spending.
The Treasury also has information through January of this fiscal year. The U.S. has spent $1.18 trillion while receiving $758.35 billion. That gives us a deficit worth 35.6 percent of spending. Uncle Sam projects the deficit will be of 36.9 percent spending for the entire 2011 fiscal year.
So the true figures are a bit below Rigell’s claim that we are covering 40 cents of every dollar spent with debt. But he’s pretty close to the right number.
There is, however, a catch. The Treasury Department divides its revenue and spending into two categories: on-budget and off-budget.
Matt Anderson, a Treasury spokesman, said off-budget contains Social Security and the Postal Service. The services are not included in budget bills approved because they are expected to be self-supporting, although in recent years Congress has spent money to cover losses at the Postal Service. All other revenues and spending are considered on-budget.
A chunk of our payroll taxes go directly into Social Security funds, which are then disbursed to recipients. The money never goes into the larger pool of U.S. revenue, nor do receipts from income taxes, corporate taxes or other forms of federal revenue go towards Social Security payments.
The off-budget programs run a surplus. During the 2010 fiscal year they had revenue of $631.69 billion against spending of $554.69 billion. That means the deficit for on-budget programs was 47.3 percent. The full-year estimate for the 2011 fiscal year would put the deficit in on-budget programs at 45.9 percent.
We asked Isabel Sawhill, a senior fellow and budget expert at the center-to-left Brookings Institution, to check our figures. She and her research assistant, Alex Gold, confirmed our math. They said "the exact numbers depend on the time period examined, but 40 percent seems to be a reasonable ballpark figure."
To get historic perspective, we looked at U.S. budgets from 1930 until 2010. The highest deficits, as a percentage of spending, came in 1943 during World War II, when 69.5 percent of spending was debt financed.
In 1985, during when Ronald Reagan was president, the gap was 22.4 percent, and the deficit gap never fell below 11 percent under his watch. In 1995, during the Clinton Administration, the gap was 10.8 percent. The budget would actually enjoy four years of surplus at the end of his tenure, reaching a high point with revenues exceeding spending by 13.2 percent in 2000.
In 2005 under George W. Bush, deficit spending accounted for 12.9 percent of outlays. The 2009 budget, passed during Bush’s final months in office and altered when Obama took over, saw spending exceed revenues by 40.2 percent.
To review, Rigell said the United States is "borrowing more than 40 cents of every dollar we spend." Under the total budget figures the deficit is actually a bit smaller than that mark, coming in at 37.5 percent in the last fiscal year and a slightly lower number so far this year.
But when Social Security and Postal Service funds are excluded, as they are from the annual federal budget, the size of the deficit climbs above 40 percent.
By one measure, Rigell slightly over-estimates the percentage of our annual spending that is deficit-based. By another, he slightly under-estimates it. Overall, he’s made an accurate claim. We rate his statement True.