I remember seeing various reports in the last few months — both before the midterm elections, and then again when Congress got cranked up a few weeks ago — about how “deficits don’t matter” anymore, or something like that. And the President certainly has been singing that same tune, as he trots out even more and larger spending programs. Yes, the deficit this year will be around half of what it was in, say, 2010. That is certainly one way to look at it (and the way folks who want to spend a lot of your money — and your kids’ money — want you to look at it.) But the real story is that the deficit this year will still be the 6th largest in history…exceeded ONLY by the previous five years under this President. So, yes, while the deficit is down in percentage terms over the last few years, it is still several times larger than it was during the mid-2000s. Anyway, anyone who looked at the reports by the Congressional Budget Office (CBO) knew that this “dip” in the deficit was to be expected. It is more a result of demographics and a rebounding from economic recession than the success of any government tightening. But those same reports have some dire warnings about what is coming down the pike: more crushing deficits. The CBO just published an updated report, and it’s opening line should grab everyone’s attention: The federal budget deficit, which has fallen sharply during the past few years, is projected to hold steady relative to the size of the economy through 2018. Beyond that point, however, the gap between spending and revenues is projected to grow, further increasing federal debt relative to the size of the economy—which is already historically high. The deficit does matter. And we ignore it at our peril — which is exactly what too many people of both parties are doing. You can see the whole report here: cbo.gov/publication/49892 PS: Here is another zinger: Beyond 2017, CBO projects, real (inflation-adjusted) gross domestic product (GDP) will grow at a rate that is notably less than the average growth during the 1980s and 1990s. Translation? The anemic growth we have seen under this President is the “new normal.” Debt and a sick economy. Nice things to leave our kids, huh?
Posted on: Tue, 27 Jan 2015 13:53:19 +0000
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