The significant expansion in the deficit is the result of a
substantial increase in spending and a halt in revenue
growth. In 2008, CBO estimates, federal spending will be
8.3 percent higher than it was in 2007; at the same time,
total revenues will be less than they were in 2007.
Total Federal Budget Deficit (Surplus) 1967 - 2008 (actual) - 2018 (projected)
Source: CBOThe only time in recent history the Federal budget has run a surplus was for four years (1996 - 2001) of the Clinton administration. Although the economy has soured due to stagnating wages, layoffs, the credit crunch, and the housing debacle, the Federal deficit is in no where near as bad shape as it was during the stagflation era of the '70s and early '80s.
We will have to wait and see about the CBO's prognostications. As Yogi Berra said, "Prediction is very hard, especially about the future."
Defense outlays comprise nearly 66 percent of Federal discretionary outlays. It costs alot to be the policeman of the world:
Federal Discretionary Budget Authority: 2002 - 2008
Source: CBOContributing to the run-up in the record price of oil, the CBO report shows that demand for oil has far outpaced the supply since 2005, and year-over year demand growth has also outstripped supply growth since 2005.
World Oil Supply and Demand: 2002 - 2008
Data shows that the great oil price run-up of the '00s, not seen since the early 1980s, dates from the beginning of this mismatch in oil supplies and oil demand. Tell me again why Congress needed to hold hearings on this issue? Couldn't they just have read their own report?
Oil Price Trend: 1976 - 2008