Friday, January 25, 2013

Taking a Deep Breath on the Deficit

Over at Washington Post's Wonkblog, Dylan Matthews has a great review of a new paper that really breaks down how all the hand-wringing over U.S. debt in the long term is misguided. We need to lower out debt over the long term, but it's not an immediate concern.

It's a little technical to break down here and Matthews does a much better job of explaining it than I can (with graphs!). But the takeaway is with current policy we are on pace to get our fiscal house in order. Should we tweak some things around the edges? Yes, but the kind of wholesale redefinition of the social safety net being espoused by those like Rep. Paul Ryan is unnecessary.

1 comment:

  1. Well, that's a pretty hopeful analysis that assumes discretionary spending cuts, which is good news as it means no new government programs are being created. Indeed, that's perhaps the lone salutary effect of our entitlements problems -- the growing proportion of dollars that is being spent on them means less money for politicians to dream up new programs. In any case, long-run projections are by their nature problematic. In the early 1990s the CBO projected that Clinton's budget would result in a $200 billion deficit in 1998 when there was actually a small surplus. Around 2000, meanwhile, there was talk of surpluses as far as the eye could see with the national debt being retired. Wars, tax cuts, increased spending and two recessions all helped ensure that did not occur.