BIRNBAUM: A ray of hope in a gloomy economy
The deficit is falling, the deficit is falling! Chicken Little isn’t the one saying so. The claim is actually true.
The U.S. budget deficit is dropping sharply. Hundreds of billions of dollars that analysts once thought the Treasury would be forced to borrow this year are rolling in steadily, thanks to tax-rate increases, spending cuts and economic growth.
The government’s total deficit so far for the fiscal year that started in October is $600 billion, down 23 percent from the same period the year before. Put another way, the deficit averaged 4.5 percent of gross domestic product in the first three months of 2013, which is less than half the peak annual deficit of 10.1 percent of GDP four years ago. The money keeps flowing in.
Remarkably, some Washington insiders are complaining. Too much austerity, they say, will hurt the economy because it will slow production and job creation. To which the rest of us should respond, “Are you kidding?”
Lawmakers have struggled for years to stanch the tide of red ink. Now, at last, there is some progress in that direction. We should all be grateful.
At the same time, the deficit has not gone away — not even close. The annual shortfall will still be huge. Clearly, it’s good news that what policy analysts have been seeking for years is finally happening. The $1 trillion-a-year deficits that we feared would lead to a steep downgrade of the U.S. credit rating — or worse — are dipping at least a little.
Instead, even a consensus item like bringing our fiscal house into some semblance of order has turned into a partisan melee. Republicans are relieved and hoping for even more fiscal restraint. Democrats, on the other hand, are shouting as loudly as they can about cutbacks in social safety-net programs, such as Head Start, as a way to coax a reversal in the austerity trend.
The public has noticed the difference. The latest Quinnipiac University poll shows that voters believe Republicans in Congress are doing a better job of handling the federal budget deficit than Democrats by 43 percent to 36 percent. In a similar vein, President Obama gets low marks on the economic front. His handling of the economy is viewed favorably by 41 percent of voters and is disapproved by 53 percent.
A logical conclusion: A plurality of citizens doesn’t buy the notion that getting the deficit under control is a bad thing.
Economists (at least some of them) disagree. Of course, putting the brakes on government, they say, will put more people out of work — not only here, but in Europe as well. There’s all-out war between the spenders and the savers worldwide.
The resolution of the dispute, as with all things, comes down to balance. In the United States, $1 trillion of deficit spending a year is too much and half that amount is probably too little, at least for now. What’s just right is anyone’s guess.
It makes no sense to abandon deficit reduction in favor of either spending more or taxing more. Sure, deficits can be shrunk by raising additional revenue through rifle-shot tax changes, but that’s even more of a growth and jobs killer than spending restraint.
Tax reform of the traditional kind that lowers rates and eliminates loopholes is a different story altogether. Extra revenue coming from a streamlined system like that wouldn’t hurt and, in fact, would help our economy.
Backtracking on deficit reduction in general, at the very moment that we finally are making real progress, is as foolish a policy choice as anyone can imagine. Decision-makers in Washington need to resist the temptation and to accept the good news about deficits and continue down that path.
A fight over cutting more — or less — will come to a head in mere months as Congress debates how to raise the federal borrowing limit. Compromise will be needed, but deficit reduction should remain a cherished goal.
Jeffrey Birnbaum is a Washington Times columnist, a Fox News contributor and president of BGR Public Relations.
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