The Budget of the U.S. Government for the 2015 fiscal year was presented at the White House today and unlike Canada, we are not looking at a balanced budget by 2015. Indeed, the forecast is for a small decline in the deficit but the rest of the decade looks like deficits all the way down. The expenditure to GDP ratio for the U.S. federal government will be at 21.4% in 2015 and is projected to stay at about that level until 2024. Contrast that with the Canadian federal government’s expenditure to GDP ratio of 15.1 percent for 2012-13. The last time the Canadian federal government’s expenditure to GDP ratio was over 21 percent was in 1994-95. It has gone steadily downward since.
The US federal fiscal position is not really expected to worsen but neither will it improve greatly – in Figure 1, revenues and expenditures look like proverbial ships travelling parallel in the night. Figure 2 shows the expenditure to GDP ratio staying flat and the revenue to GDP ratio straining upwards over time but never quite meeting its expenditure counterpart. Figure 3 shows the net debt rising steadily but the net debt to GDP ratio coming down from about 66 percent to reach 60 percent by 2024. Still, I suppose its not the kind of budget Jim Flaherty would want to bring home to Steve.