Is The Decline In US Budget Deficits Merely "Interesting"?

In yesterday's Washington Post, the execrable Robert J. Samuelson declared, "So the latest deficit numbers, although interesting, settle nothing.  They don't provide a road map for long-term budget discipline or resolve the debate over the short-term effects of deficits. They do not provide an excuse for both Congress and the White House to postpone genuine discussion an decisions."  And what, pray tell, should those "genuine" discussions and decisions deal with?  Well, of course, the fave topics of the Washington Very Serious People (VSPs), cutting Social Security and Medicare for those naughty and undeserving baby boomers.

He makes his disdain for the recent austerian moves by the US government clear in an earlier passage of this pathetically silly column: "Nothing of consequence has changed.  A few numbers have shifted slightly. That's all."  Really?  So, shall we play (Bill) Clintonian games over the defintions of "consequence" and "slightly"?  I mean we are talking about a budget deficit that is now more than a quarter less than it appeared to be just a few months ago. "Slightly," of no "consequence."  Really?

Not that good old RJS is completely out of it.  He recognizes that major austerian moves have been made recently in the US on both the spending and taxation side, however stupid and ignorantly put in place.  So, the major spending cut has been the Sequestration, something that was never supposed to happen, a cooked-up nightmare that was supposed to scare the two US parties into negotiating the "Grand Bargain," much loved by DC VSPs, that would really take an ax to those "entitlements" for some sort of figleaf tax increase, but in the end failed to overcome the deep partisan divides in the nation, with, in the end, the GOP embracing this massive stupidity as their own.

As it has been, the GB has happened, if not in the way the VSPs would approve, a New Year's tax increase in the form of letting the Bush tax cuts for high income people expire, along with letting those for middle and lower income fica tax payers also expire, along with the blunt and stupid Sequestration. Curiously, while these appear to have reduced US GDP growth by at least as much as 1/2%, all the media noise has been about the increase in taxes for the rich, even as most economists observe that the bigger hit to GDP growth is coming from the fica increase.  In any case, the combo of these spending cuts, however mindless, and tax increases, have, along with continued US GDP growth led to these "interesting" budget deficit decreases.

Anyway, RJS and his VSP pals are really annoyed by all this.  RJS sneers at economists who supposedly are upset about this deficit reduction.  But in fact nearly none of them are bothered at all by the deficit reduction; they are upset at the growth-slowing policies that led to it, which RJS actually recognizes without realizing how this fine point distinction undermines his position, and, of course, he has been loudly calling for such austerian policies repeatedly, particularly if they include cuts in Social Security and Medicare in line with the VSP consensus.

Needless to say, as usual, RJS fails to mention the reduced rate of increase in medical care costs, the main source of the scary scenarios that keep the VSPs up at night.  As it is, he views the slight improvements this year as part of some sort of random walk process ready to be offset next year: "They moved in a favorable direction.  Next time, they might go the other way."  Sure, Robert.  Bet on it.

Barkley Rosser