Monday, 19 August 2013
Deficit Disorder Needs Prudent Attention
Is the U.S government budget deficit (a) shrinking rapidly and no longer an urgent problem or (b) a looming threat to American prosperity that Congress is neglecting?
(a): The Treasury reported this week that the deficit for the first 10 months of the fiscal year was $607.4 billion, far smaller the $973.8 billion in the same period a year earlier. Revenues are running 14% ahead of last year and spending 3% below, the result of the tax increase that took effect in January, the spending restraint of the so-called sequester and a slowly improving economy.
(b): Federal debt is stabilizing at a very high level, around 73% of GDP. That’s higher than any time since the end of World War II and about 30 percentage points higher (about $5 trillion) than it was before the financial crisis and recession.