It was about a year ago when House Majority Leader Eric Cantor (R-Va.) appeared on Fox News and told viewers that Congress should be “focused on trying to deal with the ultimate problem, which is this growing deficit.”
There were a couple of glaring problems with the comment. For one thing, to prioritize the deficit as the “ultimate problem” – as opposed to, say, creating jobs and reducing unemployment – is to have a fairly warped sense of urgent policy needs. For another, the deficit, in reality, is most certainly not “growing.”
The U.S. government ran a big surplus in April, thanks to a flood of tax payments that helped keep the budget on track for the lowest annual deficit in six years…. Through the first seven months of the 2014 budget year, which began Oct. 1, the deficit totals $306.4 billion. That’s down 37 percent from the same period last year.The Congressional Budget Office is forecasting a deficit of $492 billion for the full budget year. That would be the narrowest gap since 2008.
To be sure, none of this should come as a surprise, at least not to the policy mainstream. In recent years, the federal government has raised taxes and cut spending – and wouldn’t you know it, when Washington takes in more while spending less, the deficit gets smaller.
This is a basic budgetary truism that Republicans continue to resist. Indeed, last year, when top marginal rates increased on households making more than $400,000 a year, a variety of GOP lawmakers argued that this would likely cause the deficit to go up – as they saw it, higher taxes on the wealthy would slow growth, which would mean fewer jobs, which would mean fewer people paying income taxes, which would mean a larger deficit.
It appears on this, Republicans had it backwards, which will do nothing to shake the Beltway perception of the GOP as the “fiscally responsible” party.
Let’s also note that the shrinking deficit – we’re seeing the fastest reduction since the end of World War II – is also one of the nation’s best-kept secrets. It was just last year when an independent national poll asked Americans whether they thought the deficit was increasing, decreasing, or staying about the same. Only 6 percent of the country recognized reality. That’s not a typo; it was just 6 percent.
The fact remains, however, that the annual budget deficit is on track this year to have shrunk by about $900 billion since President Obama took the oath of office.
There are still quite a few politicians who claim, just a matter of course, that in the Obama era, the United States runs “a trillion-dollar deficit every year.” It’s well past time for those folks to update their talking points, or at least try to keep up with current events.
To reiterate a point from last fall, I should note that I don’t consider this sharp reduction in the deficit to be good news. On the contrary, I strongly believe the nation should be borrowing more, not less, taking advantage of low interest rates, investing heavily in infrastructure and economic development, creating millions of jobs, and leaving deficit reduction for another day.
That said, if we’re going to have a fiscal debate, it should at least be rooted in reality, not silly misconceptions. And the reality is, we’re witnessing deficit reduction at a truly remarkable clip. Every conservative complaint about fiscal recklessness and irresponsibility in the Obama era is completely divorced from reality.
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