EMAIL DETAILS

The budget deficit is way too low - Vox

http://www.vox.com/2015/10/16/9550311/2015-budget-deficit

The budget deficit is way too low

New data from the Office of Management and Budget shows that the federal
budget deficit for 2015 will be 2.5 percent of GDP, lower than the
historical average and representing a sharp decline from where it was in
Obama's first year in office.

The White House is crowing about it.

Under @POTUS <https://twitter.com/POTUS>, we've seen the fastest deficit
decline over a sustained period since WWII. http://go.wh.gov/ipMPiN
<http://t.co/CCYfrIrLRr>
— The White House (@WhiteHouse) 7:45 PM - 15 Oct 2015
<https://twitter.com/WhiteHouse/status/654805330505797633>

But the question is why?

At the moment, the interest rate the government has to pay on bonds is
extremely low — 2 percent for a 10-year bond, and just under 3 percent for
a 30-year bond. That means even a project with a pretty low rate of return
would be worth borrowing money to do. And if for some reason you take the
view that there are literally no useful infrastructure projects the
government could undertake, we could simply tax people less.

The sad truth is that the deficit has fallen so rapidly not because of any
brilliant scheme on the part of the White House, but because the political
system is operating in a dysfunctional way. Republicans and Democrats
disagree, naturally, as to whether tax cuts or spending hikes would be
better, so the natural thing to do would be to compromise on a little of
both. Instead, between the fiscal cliff and sequestration we "compromised"
on doing exactly the opposite.


Eric D. Schwerin
eschwerin@rosemontseneca.com

Sent from my iPhon