All posts by Nick Alter

Budget Myth No. 1

Federal Budget Myth No. 1

Few people actually read and remember federal budgets, which makes it tempting to rely on partisan explanations of why the federal government has not balanced its budget. Since 2001, however, the US has borrowed to pay for routine operating expenses, regardless of shifts in partisan control of the White House and Congress.

While everyone is entitled to their own opinion,  not everyone is entitled to his or her own math or historical facts.  A number of common  myths impede practical budget solutions,  since poorly defined problems are difficult to solve.  In the next two weeks I will identify a few common myths about federal debt and budgets.  Lets begin with the first.

Myth: “The federal government has rarely  balanced its budget.” In fact, the federal government borrowed for only four extraordinary purposes during the nation’s first 180 or so years.  Federal leaders borrowed  to wage wars, plug budget holes during downturns, acquire and link new territory, and prevent states from leaving the Union.  Congress typically paid down debt after each well-understood,  emergency use of debt.   So, for example, Congress retired debt with surpluses after the 4 or the 5 previous spikes in debt, after the the Revolution, War of 1812, Civil War, and World War II.

Appendix A – US Treasury Debt, 1790-2012