Cato institute’s Michael Tanner tells Americans that the deficit is still bad news, regardless of media nonsense that the problem has been solved.
To listen to much of the mainstream media recently, one would assume that the battle against the national debt has been won.
First came a report from the Congressional Budget Office indicating that budget deficits over the next few years would be lower than previously predicted and that, therefore, the national debt would be growing more slowly. Next was the report from the trustees of Social Security and Medicaresuggesting that those programs were in slightly better shape — or at least no worse shape — than they were last year.
Happy days are here again. Let the good times — and the spending — roll.
But before we break out the champagne, we might want to look beyond the headlines.
Let’s start with that CBO report. It is true that the recovery (anemic as it is) has meant higher government revenues. In fact, federal tax collections are projected to reach 18.3 percent of GDP by 2014, back to the historical average. (So much for blaming the Bush tax cuts for ripping a hole in the federal balance sheet.)
“Liberals have rejoiced at recent budget reports, but our debt is still unsustainable.”
At the same time, the much-derided sequester, combined with the winding down of the 2008 stimulus bill and the wars in Iraq and Afghanistan, has slowed the growth in spending. As a result, projected budget deficits will shrink to as low as $378 billion in 2015, some $52 billion lower than previous estimates.
This reprieve is only temporary. After that nadir in 2015, deficits start growing again. By 2023, they will be on a steadily rising trajectory, approaching $900 billion a year.