"Deficit Hawks, Rejoice! We’re in a Golden Age of Deficit Reduction"

[applegrove]

Deficit Hawks, Rejoice! We’re in a Golden Age of Deficit Reduction

by Daniel Gross at the Daily Beast

http://www.thedailybeast.com/articles/2013/04/10/deficit-hawks-rejoice-we-re-in-a-golden-age-of-deficit-reduction.html

"SNIP.............................................

And in theory, there’s more to come. The budget Obama presented, which is naturally dead on arrival, continues the spending restraint. Next year it projects spending will rise 2.5 percent. It aims to increase revenues by doing things like getting rid of the absurd carried-interest tax break for private equity and hedge-fund managers. Should all the proposals become law, the administration projects revenues will rise nearly 12 percent in fiscal 2014, leaving a deficit of $744 billion.

That’s still big. But it would represent as a decline of 47 percent in four years. And what ultimately matters isn’t the sheer size of the annual deficit but its size in relation to the economy. That’s shrinking too. The ratio of the primary deficit to GDP has been falling rapidly, from 10.1 percent of GDP in 2009 to a projected 6 percent in fiscal 2013 (it’ll probably be less), and 4.4 percent of GDP in fiscal 2014.

We may be no closer to a grand bargain than we were last year. Congressional Democrats are angry at Obama’s willingness to propose a reduction in the growth rate of Social Security, while Republicans can’t countenance any increase in revenues. And yet the deficit continues to decline.

As I said, we’re living in a Golden Age of Deficit Reduction.

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