The good news is that the Congressional Budget Office is forecasting that deficits will shrink drastically next year and continue to do so for the two years following. The government will add $642 billion to the debt in 2013, $560 billion in 2014, and $378 in 2015. The bad news is that they also see the trend promptly reversing in 2016, with entitlement spending starting to ramp up aggressively.But the real news seems to be that the short-term projections have largely depressurized the atmosphere in Washington. Both the FT and the Wall Street Journal have stories today detailing how both Democrats and Republicans feel like they’ve earned some breathing room on dealing with the long-term debt problem. A telling quote from the Journal:
“You can hear the air fizzing out now,” said Steve Bell, a Republican and senior director at the Bipartisan Policy Center who has called for Congress to reach a budget deal. “They are just overly tired of the same fight, tearing the same scab off the same wound.”
And a similar one from the FT:
“A lot of the energy and appetite for a substantial [deficit] fix is gone,” said Doug Holtz-Eakin, the former Congressional Budget Office director and head of the American Action Forum, a moderate Republican think-tank in Washington.
As the data vividly shows, the long term entitlement crunch is just around the corner, and both articles dutifully cite lawmakers from both parties denying that they are in denial about these realities and that they will buckle down and come up with meaningful reforms. But with the only budgetary breakthrough of the past two years having been an automatically imposed sequester that everyone thinks leaves us worse off, it’s hard not to be at least a little skeptical of their claims.