Graph Of The Year: Our Fast-Shrinking Deficit

Alan: Republicans are dumbfounded - all their thunder stolen.

Keynesianism works.
New Deal totally vindicated.
http://en.wikipedia.org/wiki/Keynesian_economics

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Congress has been fighting about deficits almost continuously since Republicans took the House in 2010. That’s how we got sequestration and the "fiscal cliff" and various debt-ceiling showdowns. But the dynamics behind this fight are shifting fast. The federal budget deficit fell 37 percent in 2013, thanks to faster growth, more tax revenue, the draw-down in Afghanistan, and recent spending cuts. As a result, the Congressional Budget Office expects U.S. debt to stay stable for the next decade as the economy improves (it will then start rising again as health-care costs grow).

Are those falling deficits good or bad? It depends who you ask. Many economists would argue that deficits are shrinking much too quickly given our still-hurting economy — Congress should either spend more or cut taxes further to get us back to full employment. On the other hand, the fact that deficits are shrinking helps reduce the number of ugly showdowns in Washington. Rep. Paul Ryan (R-Wis.) and Sen. Patty Murray (D-Wash.) recently reached an agreement on spending levels for the next two years with surprisingly little rancor. The chart above deserves some credit.