tbo: Tampa Bay Online.
Monday, May 21, 2018
  • Home

Don't write off the deficit

All is quiet on the federal deficit front - or so many in Washington would like to pretend. Exhausted by the past couple of years of political trench warfare over a "grand bargain," congressional Republicans and Democrats are doing nothing to end the across-the-board cuts to discretionary programs, known as sequestration, or to address the nation's long-term fiscal predicament. Republicans refuse to entertain a deal that might raise revenue. Democrats argue, variously, that deficit-fighting is a false flag for cruel "austerity" or that federal borrowing has already come down enough due to previous policy changes and a few lucky breaks. The forces of complacency may find more ammunition in the Obama White House's most recent fiscal update. The Office of Management and Budget estimates that the federal deficit will be $759 billion in the year ending Sept. 30, or 4.7 percent of gross domestic product (GDP) - rather than $973 billion and 6 percent of GDP, as it calculated in April. The OMB numbers rest on the unlikely assumption that President Obama's tax and spending policies get enacted. Still, they are consistent with declining deficit forecasts from the Congressional Budget Office, which assume no change in current law. We hope Obama, who has been conspicuously silent about fiscal matters since dining with potential Republican Senate negotiation partners in April, does not take the OMB numbers as cause to write off this issue. The report projects that net public federal debt will remain above a historically abnormal 65 percent of GDP through 2023, assuming no wars or major recessions in the interim. If Obama and his Republican counterparts find that rationale for action too farsighted, Congress needs to pass a new spending bill by Sept. 30, and the United States will hit its legally authorized borrowing limit in October, according to the CBO.
Then there is the fact that sequestration, though responsible for $43 billion of the additional deficit reduction predicted by the OMB, has imposed counterproductive cuts on federal agencies, especially the Pentagon, where civilian employees could face layoffs if the reductions continue unchanged next year. Gen. Ray Odierno, the Army's chief of staff, has warned that active-duty and reserve units of his force would have to be trimmed. We have no objection to cutting any part of government - if and when those cuts take place in response to considered policy judgments, as opposed to the automatic manner in which the sequester operates. Obama and Congress need to turn their attention back to fiscal policy precisely because current law sets a path for government under which more and more money will flow on autopilot - into Social Security, Medicare and other entitlements - while the resources to deal with any other needs, defense or non-defense, get squeezed. In other words, when our leaders avoid the country's long-term fiscal issues, they avoid their most basic responsibility: to govern.
Weather Center