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CBO Projections Lulling Lawmakers


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.

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  • Jim Luebke

    The GOP should have held out for a sequester deal that cut our entitlement spending down to the level of the revenues that cover their expenditures.

    Let their inertia (not to mention cowardice) actually make some meaningful progress towards sustainable government.

  • Felipe Pait

    This post makes little sense. It is lamenting that the deficit is gone because the deficit put pressure on the politicians to do something….. which wasn’t really necessary.

    The deficit appears in the argument as an excuse to cut benefits instead of focussing on the immediate problem of high unemployment, when as we know very well the recession is why the deficit went up in 1st place.

    Really, it’s a non-sequitur. Devalues the important contributions you make elsewhere in the blog.

    • LivingRock

      Longer term structural deficits driven by defined gov’t benefits is one issue, today’s unemployment rate is another. But, where unemployment and deficits collide is when the deficits are driven by programs that do nothing to encourage economic growth and employment.

    • BrianFrankie

      “The deficit is gone…”

      Surely you are jesting? You do understand what gone means, correct? Let’s review: “gone” = $0. The CBO predicts the deficit will be “only” $642 billion in 2013. $642 billion!! Are you not absolutely staggered by that figure? Convert it to McDonald’s cheeeseburgers, and you would be able to build 30 parallel stacks to the Moon. It’s more than 4% of GDP. Or only adding about $2100 to the credit tab of every living American, man, woman, child. The largest deficit in real dollars *ever seen* in the US prior to the admins of Presidents Bush and Obama, except for WWII. Gone? I beg to differ.
      No one will dispute the deficit ballooned because of the recession.
      But there are serious structural issues underlying the deficit, which become more obvious every year. The US owes tens of trillions, perhaps more than a hundred trillion dollars, in promises which will not be able to be kept. We are the brokest nation the world has ever seen, and if politicians lose focus on long term structural solutions to the deficit, then hope for the nation is truly lost.

      VM – I take issue with your characterisation of an “automatically imposed sequester that everyone thinks leaves us worse off.” I don’t think it leaves us worse off. I think it is a tiny, promising start, but needs to be increased by a factor of ten and moved to address the non-discretionary budget in order to get us where we need to be.

      • Felipe Pait

        As a percentage of the national product, which is the only number that matters, the debt is no longer expected to grow.

        I suppose you can instead opt to measure in stacks of cheeseburgers but that is pretty irrelevant.

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