KRUGMAN: Bad news for Dr Evil fans: Days of 1 TRILLION $$$ deficit-OVER-In fact-deficit falling FAST

[kpete]

May 8, 2013, 4:59 pm
The Dwindling Deficit
Bad news for Dr. Evil fans: the days of a ONE TRILLION DOLLAR deficit are over. In fact, the deficit is falling fast.

Some readers may recall the ridicule heaped on the people at the Center on Budget and Policy Priorities when they produced estimates suggesting that any notion of a debt/deficit crisis was all wrong. It’s turning out, however, that they were probably overestimating debt growth. The deficit is fading, and debt as a medium-term (meaning up to 10 years) issue has largely gone away.

This is not good news — or not unambiguously good news, at any rate. A deficit falling to probably less than 5 percent of GDP this year and well below that next year is MUCH TOO LOW for an economy whose private sector is still engaged in a vicious circle of deleveraging.

Oh, by the way, it is now 26 months since Bowles and Simpson predicted a US fiscal crisis within two years.

http://krugman.blogs.nytimes.com/2013/05/08/the-dwindling-deficit/?smid=tw-NytimesKrugman&seid=auto



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This Should Short-Circuit Their Brains
by BooMan
Wed May 8th, 2013 at 02:56:17 PM EST



Steve Benen makes an observation:
http://maddowblog.msnbc.com/_news/2013/05/08/18127236-a-deficit-shift-the-gop-may-struggle-to-explain

Not only is this year's deficit on track to be significantly smaller than [last] year's, to the tune of about $200 billion, it's also on pace to be even better than optimistic projections from February. Hell, we even ran a surplus in April.

All told, the U.S. federal deficit will be about $600 billion smaller than it was in President Obama's first year in office, making this the fastest deficit reduction Americans have seen since World War II.

http://www.cbo.gov/publication/44144

[AverageJoe90]

1. Thank you, Mr. President! n/t

[Benton D Struckcheon]

2. Surplus in April is normal,

there should also be one in June, Sept, and Jan. That's when quarterly taxes are due. In normal years that happens. This year is the first year since the crisis that looks like it could be a normal year. I don't know how close we are to hitting the debt ceiling, but I have a feeling we won't be hearing about it for longer than you would expect, especially if we do get another surplus in June.

[karynnj]

5. They already changed the forecast for hitting it from August to October

based on the April results. I assume they altered their forecast for the rest of the year as well. However, if June also has unexpectedly high revenue, that could push it out further.

What I wonder is whether this is what was needed to move the economy - which would itself lower costs (fewer people needing assistance) and raise revenues (more people working). The problem is that until there is no deficit, at various points, the debt ceiling must be raised. The Republicans are not doing this because of real concern about the economy, but to eliminate Democratic programs that they dislike. What is sick is that they have been willing to slow the economy to gain their agenda.

Various reports have showed that the Government reductions in jobs has been a drag on the unemployment numbers that have decreased due to private sector gains. We would be in much better shape if government were not contracting. (One thing I wonder about there is how much extra revenue will the states get if the online tax collection bill passes the House and is signed into law. Then, could it be used to rehire teachers, police and firemen etc laid off due to budget.)

[Benton D Struckcheon]

9. Without the gov't drag we'd be in much better shape

We shed some gov't jobs even in the last employment report, which is nuts, as we're now four years into this recovery. By now we should be adding gov't jobs. At minimum the shedding should have stopped by now. You're right, this is deliberate sabotage on the part of the Republicans.

[Wednesdays]

3. K & R

[ProSense]

4. Kick because

WaPo has a sad: http://www.democraticunderground.com/10022819346

[karynnj]

6. Awwww poor Washington Post!

Nice post there - the WP needs to keep opinion on the opinion pages.

[ProSense]

7. The piece by Steve Benen (linked to in the OP) makes a point that

is lost if one doesn't read it in full. Here's Steve Benen smacking down Republicans BS "job-killing tax increases" meme:

<...>

In recent years, the fiscal debate has been mind-numbing for a variety of reasons, but one of the more exasperating elements of the debate has been over the efficacy of tax revenue. Democrats would say, "If you want deficit reduction so much, let's raise taxes and close the budget shortfall." To which Republicans would respond, "That can't work, because higher taxes necessarily serve as a drag on the economy, which in turn prevents job creation, which in turn prevents more Americans from paying taxes in the first place."

GOP policymakers routinely compared this policy -- reducing the deficit through increased tax revenue -- to dog chasing their tails.

Well, here we are several months later. After the higher taxes kicked in, we saw the strongest job creation in eight years and the deficit got even smaller than expected.

<...>

[pa28]

8. James Pethokoukis thinks we might have a balanced budget by 2015.

He wrote a little piece yesterday for the conservative think tank AEI explaining that under current law and with four percent growth in the next year the deficit could be gone (again).

Even the other side is waking up to the fact we don't have a deficit emergency and the case for cuts is strictly an ideological one.