090209: America's Deficit-Spending Spree Raises Alarms

The huge deterioration in the government's finances reflects the recession -- which has cut into tax revenues -- and the large amounts of money being spent from the $700 billion finance rescue plan that Congress passed in October.

By Jim Angle, FOX News

Not since World War II has America spent so much money so quickly.

In the last two years, the United States has run up deficits that amount to a combined $2.5 trillion dollars -- almost a fourth of all the debt the nation has taken on in its entire history.

"It's really staggering to think we're going to have trillion-dollar deficits for the next several years," Rep. Adam Schiff, D-Calif., told FOX News.

The deficit for January alone totaled $83.8 billion, worse than the $78 billion economists expected. The government had run a surplus of $17.8 billion in January 2008.

The huge deterioration in the government's finances reflects the recession, which has cut into tax revenues, and the large amounts of money being spent from the $700 billion finance rescue plan that Congress passed in October. About three-fourths of the deficit increase was related to spending on the bailout program.

With eight months left in the current budget year, the deficit already has surpassed the deficit for 2008, an imbalance of $454.8 billion that is the full-year record.

The Congressional Budget Office has forecast that the deficit for the current budget year will hit $1.2 trillion, but that estimate does not include the cost of President Obama's $787 billion economic stimulus plan, which he signed this week.

Many private economists are forecasting that the budget deficit for the current year will hit $1.6 trillion.

"These are the first trillion-dollar deficits the world has ever seen," Brian Reidl, a budget analyst at Heritage Foundation, told FOX News.

And at some point, someone has to pay it back, and some are concerned the cost will be passed on to future generations.

"It's easy to spend somebody else's money," said David Walker, CEO of the Peter G. Peterson Foundation and former comptroller general of the Government Accountability Office. "It's easier to spend someone else's money who's too young to vote and hasn't been born yet, and that's exactly what's going on."

"It's not only irresponsible," he added. "It's unethical."

America has borrowed so much that just the interest on its debt is now more than what the country spends on the war in Iraq. And the money the Obama administration is borrowing for the stimulus package adds another $350 billion in interest.

Most economists say deficit spending is necessary to tackle the economic crisis. But the debt is projected to soar now and continue to increase for decades to come.

That's partly because of all the promises made to 77 million baby boomers, who are just beginning to retire. Promised spending on Medicare, for instance, is slated to cost $36 trillion dollars.

"Thirty six trillion is how much money you would have had as of Sept. 30, 2008, invested at Treasury rates to deliver on the promises for the next 75 years," Walker said. "And how much did we have? Zip!"

There are other options for Medicare and other programs, but none very attractive.

"The cost of Medicare is going to grow so much that it's going to force lawmakers to either raise taxes by thousands and thousands per household or squeeze out other programs like education, antipoverty, roads and highways," Reidl said.

On Monday, the president will confront the gory details of the spending binge at a fiscal responsibility conference. Democrats who worry about deficits, so-called called blue dogs, told Obama last week that it's crucial to do something to curtail all the borrowing

He agreed, saying he'll start looking for ways to reduce spending..

"He made it clear to all of us that there was going to be pain we would feel. We were going to have to be willing to make the hard cuts," Schiff said, adding that Obama then made a rather bold statement. "He did not intend to kick this can down the road -- even if it meant that he'd be a one-term president," Schiff said.

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