9.8% in 2009. He maintains, specifically, that he has cut the deficit at a faster rate than anyone since World War 2. This is not even close to being true. We have had deficits followed by surpluses several times throughout history. In all of these situations the deficit would fallen by more than a 100%. I think what they mean is that the percentage of GDP has never fallen by a greater amount this quickly.
While this is true, this news is not as good as it looks. While it has fallen a great deal since 2009 you have to consider that historically speaking, it was extremely high in FY2009. From 1947 through 2008 the deficit only averaged about 2% of GDP. 9.8 percent was the highest deficit we had since 1945 when it was over 20% because of World War 2. In 1946 it was 7% and since then the highest deficit we ever had before 2009 was in fy1983, 5.9% of GDP. So while yes, it has gone down a lot, it is still quite high. Here are some calendar year deficit numbers.
Dec 31, 2013 -4.1%
Dec 31, 2012 -7.1%
Dec 31, 2011 -8.70%
Dec 31, 2010 -9.00%
Dec 31, 2009 -10.10%
Dec 31, 2008 -3.20%
Dec 31, 2007 -1.20%
Some of the huge spending increases in late 2008 and 2009 as well as low income credits and tax cuts intended to grow the economy were only temporary. The sequester, which Obama blamed on Republicans and was against, was actually responsible for over 1% of the decrease in the deficit.
The economy has not grown as much as the administration had hoped and that is another reason why it has been as high as it's been in recent years. So basically, its not that hard to bring down, when it's so extremely high.
Is this deficit sustainable?
Probably not over the long haul. We need to get some numbers under 2% of GDP within the next couple of years. And after that we need to start running a little bit of a surplus. Atleast for about 5 years. That is just to get things back in order. Otherwise we will be in big trouble.
Yes we had a high deficit during WW2 and we recovered from that but you have to look back at what happened after. Six out of the next 11 years we had a surplus. Out of the next 24 years we only had a deficit of more than 1% three times. Read More