Economics correspondent Paul Solman looks at rates of annual deficit spending in real and nominal dollars and projects a response to reader Jack Doyle’s question.
Paul Solman frequently answers questions from the NewsHour audience on business and economic news here on his Making Sen$e page. Here is Thursday’s query:
Name: Jack Doyle
Question: How long will it take America to approach a $10 trillion deficit?
Paul Solman: Annual deficit? Well let’s see. Starting in 1940, the first year for which I can easily find both nominal and inflation-adjusted numbers, the federal budget deficit was about $3 billion nominal, close to $50 billion in 2012 dollars. This year, the deficit is expected to be $1.3 trillion, nominal and real. That’s about 433 times as much nominally over 72 years; 26 times as much in “real” or inflation-adjusted dollars.
You’re asking the question in nominal, face-value dollars, Jack. So one way to answer is to calculate the rate of growth over the past 72 years and project it ahead. The nominal rate of growth? Something like 8.7 percent a year. So if today’s deficit grows at that rate, it should hit $10 trillion about the time I reach 92 years of age: 2036.