With the 2013 fiscal year over and the government “shutdown” ended, the Treasury Department released the official deficit for 2013: $680 billion. This is the lowest deficit since 2008, which has some in the media proclaiming victory over federal deficits. However, these claims ignore the real harm the federal debt is doing to the American people, as well as mislead on facts related to spending cuts, tax revenues, and other matters.
A sheet of rare and sought after star notes is seen after the phase of production where the new 100 USD bills are applied with a serial number, a US Federal Reserve seal, are cut and stacked at the US Bureau of Engraving and Printing's Western Currency Facility October 11, 2013 in Fort Worth, Texas. Photo Credit: AFP PHOTO/BRENDAN SMIALOWSKI
Here are two of those voices, at prominent media locations:
At The Washington Post’s Wonk Blog, Neil Irwin writes some are concerned the deficit is falling too fast, and this will hurt the economy. This ignores how the economy is being badly hurt right now by America’s high level of debt as compared to GDP. Furthermore, as analyzed and gathered by Just Facts, CBO’s current policy (read: political reality) projections predict the deficit going up in 2014, and barely going down in 2016 and 2017 before skyrocketing for decades.
Perhaps most importantly, Irwin’s post sidesteps not only how the economy is being hurt right now by high national debt, but the solution to that: aggressive budget cuts. Contrary to Irwin’s claim, with the economy harmed by high national debt, the deficit shouldn’t just be cut – it should be eliminated, so the economy can grow and get America’s debt-to-GDP ratio down as quickly as possible. This would improve the nation’s ability to actually provide wealth to more than just the rich and those specially connected in Washington.
At Marketwatch, Robert Schroeder reported “slightly lower government spending” caused the deficit to go down. While sequestration did help lower the deficit, it only did so by slowing the rate of growth in spending, not actually bringing spending down.
Schroeder also cites a Treasury official in saying federal revenues for 2013 were at record highs. However, the $2.8 trillion in tax revenues is only a record high in nominal terms. Accounting for inflation, it’s a much more modest level of revenues. Similarly, as a percentage of America’s Gross Domestic Product (GDP, which is the most accurate way to measure revenues), it is less than 17 percent of GDP. This is far less than what was seen in 2000, when revenues reached their post-World War II record high of over 20 percent of GDP.
For those who care about America’s national debt and its closely related economic concerns, a large but temporarily smaller deficit should be modest good news. However, we must push back on attempts by the media to manipulate the 2013 deficit as being anything more than what it is – bad news that is simply less awful than 2012’s $1.1 trillion deficit.
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