America's Best Kept Secret: Deficit Falling At Fastest Rate Since WWII

The above cartoon is diametrically wrong. 
The deficit is coming down as steeply as it appears to be "rising."
(The original cartoon I pasted in this location does not appear on my post. The URL is http://www.outsidethebeltway.com/trillion_dollar_deficits_as_far_as_the_eye_can_see/)

The falling deficit has been a disaster for the GOP

By Ezra Klein, Published: September 26, 2013

There was a logic to Republicans' 2011 debt-ceiling demands. It was the logic underpinning the party's entire platform. It was the argument that had won them the 2010 election. And it was an argument that made sense as part of negotiations over the debt ceiling.

Alan: The Federal Deficit graph (to the right) speaks volumes. However, I am baffled by Klein's use of the two counter-intuitive graphs below. To understand them, you must remember that "the lower the line, the higher the deficit." 

(Cont.) Deficits exploded during the financial crisis. Really, exploded. Here's the graph:

Note: The lower the line, the larger the deficit. Data: U.S. Budget; Graph: made with Infogram.

In 2010, Republicans campaigned on a promise to bring debt and deficits down by cutting spending. When they won the election, they argued that it would be a betrayal of their mandate to permit the government to borrow more without first forcing the budget discipline they'd promised voters.

And so that's exactly what they did. They negotiated spending cuts before they would agree to a debt-ceiling increase. But then something terrible happened to the Republican Party: Success.

It wasn't all their success. Part of it is the economy improving. Part of it is new taxes passed into law by the Obama administration. Part of it is slower-than-expected health costs, and lower-than-expected interest rates. But the deficit has fallen dramatically. In fact, it's fallen at a faster rate than at any other time since World War II. And the Congressional Budget Office sees it stabilizing in the (totally manageable) two-to-three percent range through the next decade.

Note: The lower the line, the larger the deficit.  Data: U.S. Budget and CBO projections; Graph: made with Infogram

This is the context for the latest debt-ceiling fight: Republicans delivered on their 2010 promise to reduce the deficit, and now they're adrift. There's no single goal --save maybe the impossible dream of repealing Obamacare -- that really serves as the raison d'etre of this Republican Party. When's the last time you heard an elected Republican really try and sell the Ryan budget as the key answer to the nation's problems?

That's what you're seeing in the insane mash-up that is the House GOP's debt-ceiling bill. They needed to throw everything into it because there's no one overriding policy idea that holds today's Republican Party together. So Speaker Boehner is buying off some House Republicans with his Obamacare delay, and others with looser drilling regulations, and others with Paul Ryan's tax reform, and so on.

Unlike in 2011, the GOP can't point to a mandate for this agenda. In fact, they ran on it in 2012 and lost.

But more to the point, this agenda, unlike their 2011 agenda, has little to do with debt or deficits. There was a logic to the position that "we won't let the government borrow more to pay its bills unless it comes up with a plan to spend less in the future." There's no logic to the position "we won't let the government borrow more to pay its (more manageable) bills unless it blocks net neutrality and agrees to more offshore oil drilling and delays implementation of a debt-reducing health-care law we don't like."

There's been a lot of talk about how today's GOP seems even more fractious and uncertain than 2011's GOP. Part of that, of course, is losing the presidential election. Defeating Obama was part of what held the GOP together. But part of it is that they've largely achieved the policy goal most of them were sent to Washington to achieve. They carry all the anger and fear and commitment they had in 2011, but they don't really know what to do with it.

Ezra Klein is the editor of Wonkblog and a columnist at the Washington Post, as well as a contributor to MSNBC and Bloomberg. His work focuses on domestic and economic policymaking, as well as the political system that’s constantly screwing it up. He really likes graphs.

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Compare Obama's actual deficit with these trillion dollar a year estimates at the beginning of his presidency.
http://www.outsidethebeltway.com/trillion_dollar_deficits_as_far_as_the_eye_can_see/

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Currently, the deficit is about the same as Bush's. See Federal Deficit graph below.

Repeat After Me: 

The Deficit Is Falling. The Deficit is Falling.

by Kevin Drum

September 26, 2013

Dave Weigel notes a conundrum today: according to a new poll, 54 percent of the public disapproves of Barack Obama's handling of the deficit. And yet, as the chart on the right shows, the deficit is shrinking dramatically. Last

year it dropped by $200 billion, and this year, thanks to a recovering economy, lower spending from the sequester, and the increased taxes in the fiscal cliff deal, it's projected to fall another $450 billion.

Weigel notes that this has deprived conservative yakkers of one of their favorite applause lines: "You don't hear Republicans lulz-ing at Obama for failing to 'cut the deficit in half in my first four years,' because he basically did this, albeit in four and a half." That's true. It's also true that contrary to Republican orthodoxy, it turns out that raising taxes on the rich does bring in higher revenues and therefore reduces the deficit.

Bottom line: It's unfortunate that the deficit is falling so fast. It's a headwind against the recovery that we don't need. Nonetheless, the deficit is falling fast, and no one seems to know it yet. The chart above is one that deserves much wider distribution. Be sure to show it to your conservative friends at every opportunity.

Political Blogger

Kevin Drum is a political blogger for Mother Jones. For more of his stories, click here.

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Alan: The above cartoon tells the truth: the national debt is much larger than the annual national deficit. However, it is not necessarily true that the "U.S. Economy" will strike an iceberg. For example... Japan has one of the strongest currencies in the world -- and no one is speculating economic calamity in that country -- yet Japan's national debt is 213% of GDP. In the United States, debt as a percentage of GDP is about one third Japan's at a "mere"74%.  http://en.wikipedia.org/wiki/List_of_countries_by_public_debt  If House Republicans do not explode the economy, a pent-up boom -- coupled with a return to Clinton-era tax rates -- could easily generate enough tax revenue to start making a significant dent in the National Debt. Once the debt starts heading south, markets will not only be tolerant of remaining debt, they will also be euphoric that the tide has turned. The Republican personality just doesn't "feel right" unless puritanical austerity is being imposed. Generally speaking, austerity -- which is quite distinct from financial responsibility -- is toxic to capitalist expansion. 

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Republican presidential candidate, Pat Buchanan, the living American who has served longest as a White House senior staff adviser, observed: “The Republican philosophy might be summarized thus: To hell with principle; what matters is power, and that we have it, and that they do not.” 
“Where the Right Went Wrong" 

http://www.amazon.com/Where-Right-Went-Wrong-Neoconservatives/dp/0312341156/ref=sr_1_1?ie=UTF8&qid=1381295072&sr=8-1&keywords=where+the+right+went+wrong 

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The Daily Show Asks A Real Hostage Negotiator How To Handle The GOP. (Video)  http://paxonbothhouses.blogspot.com/2013/10/watch-daily-show-ask-real-hostage.html

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"The Reign of Morons Is Here," Charles P. Pierce, The Atlantic

http://paxonbothhouses.blogspot.com/2013/10/the-reign-of-morons-is-here-atlantic.html

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"A Southerner Explains Tea Party Radicalism: The Civil War Is Not Over"  http://paxonbothhouses.blogspot.com/2013/10/a-southerner-explains-tea-party.html

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Diane Rehm's Brilliant Panel Discussion: "Possible Repercussions Of A U.S. Debt Default At Home And Abroad"

http://paxonbothhouses.blogspot.com/2013/10/diane-rehm-show-possible-repercussions.html

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"The Great Recession Vaporized 40% Of Americas's Net Worth. The Tea Party Intends Worse."

http://paxonbothhouses.blogspot.com/2013/10/the-great-recession-ate-40-of-americans.html

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"The Shutdown Is A Republican Civil War" by Ezra Klein

http://paxonbothhouses.blogspot.com/2013/10/the-shutdown-is-republican-civil-war-by.html

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Republican Rule And Economic Catastrophe: A Lockstep Relationship"

http://paxonbothhouses.blogspot.com/2012/05/republican-rule-and-economic.html 

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"Politics and Economics: The 101 Courses You Wish You Had"

http://paxonbothhouses.blogspot.com/2012/01/politics-and-economics-101-curricula.html 

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"Republicans for Revolution," A Study In Anarchic Apocalypticism

http://paxonbothhouses.blogspot.com/2013/10/republicans-for-revolution-study-in.html

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"Sarah Palin As The Mad Hatter" (Image)

http://www.myconfinedspace.com/2010/09/16/sarah-pallin-straight-jacket/sarah-pallin-straight-jacket-2/

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"Shocking Development: Republicans Shut Down Prefrontal Cortex"

http://paxonbothhouses.blogspot.com/2013/10/shocking-development-republicans-shut.html

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"Jon Stewart Nails GOP Demands For Re-Opening Government"

http://paxonbothhouses.blogspot.com/2013/10/jon-stewart-nails-gops-crazed-demands.html

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