Many Americans know the deficit has exploded this year. What may be less well-known is that the problem is not confined to this year or next, but stretches out at least a decade and represents a historic, multi-trillion-dollar change in the country's fiscal fortunes.
CNBC, working with the Congressional Budget Office, found that the 10-year outlook for the nation's deficit has deteriorated by almost $8 trillion. In effect, every man, woman and child in the United States has taken on an extra $25,000 in debt, CNBC has learned.
Comparing the CBO's outlook in 2008 to the current forecast, CNBC found that what was once a projected $247 billion surplus for the years 2009 through 2018, is now an estimated $7.4 trillion deficit.
What caused it? According to the CBO, 57 percent of the increase was caused by the decline in revenues, of which a vast majority resulted from the agency’s outlook for the economy.
Specifically, Social Security accounts for a huge part of the revenue change. According to the network's analysis, Social Security was expected to show a $2.3 trillion surplus over the 10-year period from 2009-2018. However, new figures show that if a surplus for the agency will exist at all, it is projected to be just over $1 trillion.
Adding to the deterioration is a range of expenses and methodology, including the stimulus bill, a change in accounting for the war, extended unemployment benefits and additional interest on debt.
Federal Reserve Chairman Ben Bernanke highlighted deficit concerns in his Congressional testimony on Thursday, saying that Americans are in for tough, unpopular changes, such as tax increases, to close the deficit gap.
On the upside, though, the deficit crisis underlines the budget’s sensitivity to the economy and that may help address part of the nation’s fiscal problems. But it won't address all of it. Not by a trillion-dollar long shot.
Reported by Steve Liesman, written by Michelle Lodge