The U.S. deficit will shrink… and then explode
By Erica Alini - Tuesday, February 5, 2013 - 0 Comments
There are two simple facts about the U.S. deficit that Congress and the media — for all the brouhaha about government debt these days — tend to ignore. The Congressional Budget Office highlighted those two things once again today in its annual forecast on the budget and the economy:
1. The U.S. deficit has been shrinking since 2009.
According to the CBO’s analysis, the deficit in 2013 will be $845 billion, or 5.3 per cent of GDP, which is roughly half the share of GDP it accounted for in 2009.
Now, the actual deficit in 2013 is likely to be larger than that, since CBO projections assume that the enormous spending cuts of the fiscal cliff will actually kick in, whereas it’s likely Congress will choose to cut less. (The cuts are currently set to take effect on March 1 and the CBO always makes its baseline forecasts based on what current law says, not what lawmakers are likely to do.)
That said, the deficit has been declining for the past three years, both in dollar terms and relative to the size of the economy. In 2009, the U.S. deficit was $1.4 trillion. In 2012 it was $1 trillion — still a mind-boggling figure but almost 30 per cent smaller than what it was three years earlier. As a percentage of GDP, last year’s deficit was seven per cent — again very high, but already three percentage points lower than in 2009.
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The U.S. deficit debate: lopsided stories make balanced reporting tricky
By John Geddes - Saturday, July 23, 2011 at 12:05 PM - 44 Comments
The ideal of balanced reporting, which in its classic formulation goes back to Walter Lippmann, serves us well in most cases. The general notion is to seek to report from neutral ground. That doesn’t mean, of course, that journalists should suppress their own sense of judgment. But in conventional reporting of clashes between legitimate actors, the journalist tends to toward giving roughly equal weight to the opposing camps.
That usually works fine. Let’s say you’re covering a labour dispute. Rarely is either the employer or the union so clearly in the right that it seems fair for the reporter to emphasize the merits of one side’s bargaining stance over the other’s. In an election campaign featuring competitive parties with proper platforms, reporting generally should give the rivals’ policy positions similar emphasis. (Of course, columnists and editorial writers and partisan pundits needn’t feel any such constraint.)
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The battle between Obama and Ryan
By John Parisella - Monday, April 18, 2011 at 4:18 PM - 28 Comments
Outside of the rhetoric and the partisanship, it is fair to say that the…
Outside of the rhetoric and the partisanship, it is fair to say that the debate about the deficit and the debt is shaping up as a classic one over the role of government and the kind of country Americans want to build for their children. On the one side, Republican House Budget Committee Chairman Paul Ryan has been rightly commended for his audacity and courage to put his proposals forward at great risk. And, on the other, President Obama has finally made it clear where he stands and where he wants to take the country.
Both men acknowledge the need for important and drastic cuts in spending. They both recognize that the current path is unsustainable. The deficit is right now hovering at about 10 per cent of GDP and the debt is over 90% of GDP. Where Ryan and Obama differ is on the solutions. Ryan wants an overhaul of major entitlement programs such as Medicare and Medicaid, and wants to repeal Obama’s healthcare reform. The Bush tax cuts would become permanent under Ryan’s plan, which also calls for a reform of the tax code.
Obama’s approach keeps the major entitlement programs intact, but puts in place mechanisms to produce operational cuts. Elsewhere, Obama is promising to eliminate the Bush tax cuts on those earning over $250,000, calls for important cuts to defense spending, and also proposes to reform the tax code. Obama has made a compelling case for the kind of country he believes Americans want—compassionate and fair. In so doing, he may have re-energized his supporters who have found him far too compromising of late.
Meanwhile, a bipartisan group of six senators is working on a compromise solution. Its work will be inspired by the compromise spirit that prevented last week’s government shutdown, the contrasting Obama/Ryan visions, and the conclusions of the president’s debt and deficit commission led by former chief of staff Erskine Bowles and former senator Alan Simpson. This will all be added to the mix just as the Republican presidential nomination process kicks in.
The initial reactions seem to pit right against left, red against blue, small against big, and rich against less rich (i.e.the middle class). Media pundits reflect these assessments. It is highly likely that the battle lines are now drawn for the debt ceiling debate in the coming weeks, the 2011-2012 budget negotiations between the White House and the Republican-controlled House, and the 2012 presidential election.
As matters stand, Obama’s approach seems to have more potential with the electorate, which generally favours the longstanding entitlement programs. Ryan’s desire to make the Bush tax cuts on the rich permanent and to turn Medicare into a voucher program, opening the way for private insurers, makes it more daring but far more controversial and less voter-friendly.
The Republicans in the House have endorsed Ryan’s approach, which will place an obligation on the GOP presidential challenger in 2012 ( not easy if your name is Mitt Romney and you passed a health care reform bill similar to Obama’s as Governor), Obama has succeeded in remotivating his base by what they have seen in last week’s speech as the line in the sand.The face of America is in for an historic confrontation. Let the battle begin.
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Obama proposes to cut deficit by $4 trillion over 12 years
By macleans.ca - Wednesday, April 13, 2011 at 4:08 PM - 4 Comments
Goal falls short of targets set by his deficit commission
In a speech today, Obama proposed a “more balanced approach” to achieve $4 trillion in deficit reduction over 12 years. He’s also called for the creation of a new congressional commission that will be charged with developing the plan to achieve that goal. The goal falls short of targets set by his deficit commission and House Republicans, reports the Washington Post. “We don’t have to choose between a future of spiraling debt and one where we forfeit investments in our people and our country. To meet our fiscal challenge, we will need to make reforms,” Obama said. “We will all need to make sacrifices. But we do not have to sacrifice the America we believe in. And as long as I’m president, we won’t.”
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Raise taxes now, cut them later
By Andrew Coyne - Monday, December 20, 2010 at 6:00 AM - 24 Comments
Everyone agrees that the deficit has to be cut sometime
Carolyn Kaster/AP
Announcing he had reached a deal with the Republicans to extend the tax cuts enacted under his predecessor, President Barack Obama extolled the virtues of compromise.
Yes, he had agreed to hold taxes at current levels, not only for those earning less than $200,000 ($250,000 for couples), as he had previously vowed, but for everyone, as the Republicans had insisted. But in return, he had obtained GOP agreement to extend eligibility for unemployment insurance for another 13 months to those whose benefits would otherwise have run out.
Or in other words, the two sides agreed that, in exchange for taking in less revenue, they would spend more of it. The cost of the agreement: an estimated $900 billion over two years, “to be financed,” as the New York Times reported, “entirely by adding to the national debt.” Amazing what can be done by people of goodwill, provided you leave the people who will actually pay for it all out of the negotiations.
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The Curious Case of Barack Obama
By John Parisella - Friday, February 27, 2009 at 6:53 PM - 29 Comments
What is it with this guy? Barack Obama’s first 100 days have to rank…
What is it with this guy? Barack Obama’s first 100 days have to rank among the most active in over 70 years.
He promised a stimulus package and signed one two weeks ago; he promised mortgage relief and delivered; and while Secretary Geithner may have been short on details as far as relief for the financial sector is concerned, he still delivered the beginnings of a more comprehensive package. In the meantime, Obama announced the closing of Gitmo and, just today, he elaborated on his Iraq strategy. Obama’s visit to Canada clearly illustrated a new era in American diplomacy and his address to Congress this Tuesday further outlined his commitment to four major policy areas—energy, health care, climate change, and education. And he’s got a plan for all of it to boot. Still, the fight over the budget remains.
