This is the only graph you need on Washington’s budget debate
May 17, 2013 at 3:43 pm By Ezra Klein – washingtonpost
The Congressional Budget Office released their analysis of President Obama’s 2014 budget proposal today. The bottom line? It more than solves our deficit problem for the next decade, and for some time beyond that. And unlike the status quo — which also reduces the deficit, though not by as much — it brings the deficit down gradually over 10 years, rather than reducing it sharply over the next two years and then watching it rise slowly over the next decade.
The Senate Democrats’ budget and the House Republicans’ budget also bring deficits down to more-than-manageable levels through the mid-2020s. But the best part of the CBO’s analysis isn’t in their report. It’s a chart CBO Director Doug Elmendorf put on his blog that offers an unusually clear look into how the three budgets differ — and how they don’t:
The first thing you’ll notice: All these budgets look pretty similar. In fact, the Senate Democratic budget looks almost identical to the White House’s budget. If you showed a Martian this graph, they would not think Washington is a particularly divided place.
But pay close attention to where the White House and the House Republicans actually diverge. It puts the lie to a lot of what the two parties want you to think they’re arguing about.
For reasons related to both coalition politics and polls, Democrats and Republicans tend to fight over taxes, Social Security and Medicare. But that’s not where their budgets really disagree. Over the next 10 years, spending on Medicare and Social Security is almost identical across the plans. Taxes offer more of a contrast: President Obama’s budget envisions them sixth-tenths of a percentage point of GDP higher than the Republicans do. Defense spending also differs, and cuts against the narrative that Democrats always want to spend more and grow government while Republicans want to spend less and shrink it: Republicans want to spend more on defense than Democrats.
But the real difference comes in government spending on everything that’s not Social Security, Medicare or defense. The difference there is 1.5 percent of GDP — which is almost three times the size of the difference on taxes. It’s 15 times — yes, 15 times — the difference on Medicare and Social Security.
That spending includes everything from Medicaid and Obamacare to food safety, education, infrastructure, housing subsidies, the court system and the FBI. The GOP’s deep cuts there are required if they’re going to fulfill their disparate goals of balancing the budget while holding taxes low and letting defense spending rise.
The question, of course, is why those are their goals. There’s no pressing need to balance the budget in the next decade. Ryan’s 2013 budget, which his fellow Republicans supported enthusiastically, didn’t balance until 2038. And if you believe, as Republicans claim to, that the growth of government is really a story of out-of-control entitlement programs, it doesn’t make sense to spend the next 10 years cutting the non-Medicare and Social Security programs part of the budget. As for taxes, if you believe, as Republicans again claim to, that tax expenditures are equivalent to spending, then it’s unclear why they can’t be cut to reduce the deficit — a decision that would unlock a bipartisan budget deal.
Deficit reduction picks up speed
May 14, 2013 4:05 PM EDT By Steve Benen – maddowblog
If the current laws that govern federal taxes and spending do not change, the budget deficit will shrink this year to $642 billion, CBO estimates, the smallest shortfall since 2008. Relative to the size of the economy, the deficit this year — at 4.0 percent of gross domestic product (GDP) — will be less than half as large as the shortfall in 2009, which was 10.1 percent of GDP.
Thanks in large part to higher taxes on the wealthy, which Republicans said would not reduce the deficit, deficit reduction is picking up speed at a pace few could have predicted. We’re now looking at over $400 billion in deficit reduction in just one year, and about $800 billion in deficit reduction since President Obama took office.
Let’s say this plainly: for those who saw the federal budget deficit as a “problem,” it’s fair to say this problem has been largely fixed.
And while we’re at it, let’s also not forget that Republican talking points on fiscal policy have effectively been left in tatters, and every conservative political figure who’s declared “Socialist Obama is turning America into Greece!” looks incredibly foolish right now.
The president took some heat for failing to cut the deficit in half in his first term, and the criticisms had merit, at least insofar as he didn’t reach his original goal. That said, Obama’s on track to cut it by well over half — both in real terms and as a percentage of GDP — in five years.
It’s time to stop worrying a shrinking deficit and start worrying about creating a more robust economic recovery.
White House Press Secretary Annoucement on the CBO’s Deficit Report:
“the CBO report yesterday, the so-called baseline reestimate. And the improvements in the CBO’s report show that the President’s policies of cutting the deficit by more than $2.5 trillion in a balanced way are contributing to the most rapid deficit reduction since World War II. The most rapid deficit reduction since World War II.
While there is still more work to be done to cut the deficit, this is important progress because we strengthen America by growing the economy from the middle out. Working with leaders from both parties, President Obama has cut the deficit by more than half when measured as a share of GDP. This is a balanced deficit reduction that cuts waste, asks millionaires and billionaires to pay their fair share in taxes, and preserves investments we need in energy, education, and manufacturing to grow the economy and create jobs.
The administration is committed to continuing to work with Congress to create jobs, reduce the deficit, and replace the sequester in a balanced way.
Later this week, we understand that CBO will be putting out a reestimate of the President’s budget, which includes, as you know, his plan to replace the economically damaging sequester with a balanced approach to deficit reduction that would help drive stronger economic growth in the short.”
White House Press Secretary Jay Carney at the 5/15/13 White House Press Conference