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Tuesday's CBO report shows a shrinking debt, and provides the best argument for why we don't need a grand bargain.
If the current laws that govern federal taxes and spending do not change, the budget deficit will shrink this year to $642 billion, CBO estimates, the smallest shortfall since 2008. Relative to the size of the economy, the deficit this year—at 4.0 percent of gross domestic product (GDP)—will be less than half as large as the shortfall in 2009, which was 10.1 percent of GDP. [...]

CBO’s estimate of the deficit for this year is about $200 billion below the estimate that it produced in February 2013, mostly as a result of higher-than-expected revenues and an increase in payments to the Treasury by Fannie Mae and Freddie Mac. For the 2014–2023 period, CBO now projects a cumulative deficit that is $618 billion less than it projected in February. That reduction results mostly from lower projections of spending for Social Security, Medicare, Medicaid, and interest on the public debt.

That's with existing law: e.g., the sequester, current tax rates, and continued falling health care costs, primarily for Medicaid. In other words, look what raising taxes can do for the deficit.

CAP's Michael Linden has a fun comparison: Today's CBO estimate puts the deficit at 2.1 percent of GDP by 2015. Simpson-Bowles called for reducing the deficit to 2.3 percent of GDP by 2015. So we got beyond their recommendation without punishing any old people or cutting taxes even more for the wealthy and corporations. Go figure. That's not to say the sequester is not hurting the population and doesn't need to be replaced. But it doesn't need to be replaced with more pain.

Also of note in the new CBO report, it projects that the Treasury's "extraordinary measures" to avoid defaulting on the federal government’s obligations if the GOP continues to take the debt ceiling hostage will expire in October or November, rather than the August-September timeframe they previously projected.

All of which makes a rather large hole in the argument that we need a grand bargain with Medicare and Social Security cuts to save the nation from the scary deficit.

Originally posted to Joan McCarter on Tue May 14, 2013 at 12:38 PM PDT.

Also republished by Daily Kos.

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Comment Preferences

  •  Tip Jar (26+ / 0-)

    "There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning." —Warren Buffett

    by Joan McCarter on Tue May 14, 2013 at 12:38:42 PM PDT

  •  I would love to see this information get at least (10+ / 0-)

    as much exposure as the other stuff currently in the headlines.

    Mother Teresa: "If we have no peace, it is because we have forgotten that we belong to each other."

    by Amber6541 on Tue May 14, 2013 at 12:49:36 PM PDT

  •  Simpson-Bowles (6+ / 0-)

    I'm sure Alan Simpson and Erskine Bowles will respond with a new plan that cuts spending even more and raises taxes even less than their last one. The deficit to so many elite centrists in DC--both in the pundit class and the political class--see not economic data but THE DEFICIT, a problem that "must be solved" through "seriousness," "political will," and "bipartisan, common-sense solutions that piss off people on both left and right."  And, if the deficit became a surplus, those same folks would talk about how we need to GET RID OF THE SURPLUS RIGHT AWAY because it will encourage spending otherwise.

  •  While much of the deficit reduction (2+ / 0-)
    Recommended by:
    Penny GC, Dr Swig Mcjigger

    was accomplished in an ugly way (through the sequester and reductions in worthwhile government investments), it is good news. Too much debt is never a problem until it is a problem. Then it can be a problem that is extremely painful to solve. We're no longer a country that is going to experience high GDP growth rates; we're a mature, stable economy. So it makes sense for us to keep debt levels reasonable (not zero, but also not higher than GDP). Anyhow, this is good.

    •  What evidence do you have... (3+ / 0-)

      That it becomes a problem?  Or that we are even close to the point where it becomes a problem?

      'Where free unions and collective bargaining are forbidden, freedom is lost' - Ronald Reagan, Communist

      by RichM on Tue May 14, 2013 at 01:00:52 PM PDT

      [ Parent ]

      •  Krugman has analyzed this extensively (3+ / 0-)

        and believes that with 400-500B deficits (and our $15T GDP), we should be okay. We're still running higher deficits, our accumulated debt is now about the same as our annual GDP, and our economic growth rate seems to be stalled in the low single-digits. Given that no one can predict the future, and that we may have large unexpected expenditures (for a future stimulus or a war), it is prudent for us to run with less debt than that maximally tolerable. That is why, for progressives, this is a good thing.

        The argument that no amount of debt is harmful is really not one we should be repeating.

        •  The standard gauge (2+ / 0-)
          Recommended by:
          Dr Swig Mcjigger, doc2

          is that deficits of 3% of GDP are sustainable in the long run. This is within your cited $400-$500B figure.

          WRT the % of overall debt to GDP, we had a decline of approx. 14% in just 5 years circa 1995-2000. I expect some revisions in projected overall debt by the CBO next year to bring similar good news.

          There was only one joker in L.A. sensitive enough to wear that scent...and I had to find out who he was!

          by virginislandsguy on Tue May 14, 2013 at 01:46:01 PM PDT

          [ Parent ]

          •  We're still pretty high (in debt) (1+ / 0-)
            Recommended by:
            virginislandsguy

            relative to historic norms. We're at about 100% of GDP, which is not quite as high as after WWII (which was about 125%), but then again we are not expecting another multi-decade boom period for the economy like what we experienced in the 1950s and 1960s. We should be focused on our debt levels; the problem with the Republicans is that they wanted too much focus and they wanted it at the worst possible time (in the aftermath of an economic collapse when debt levels justifiably should have gone higher, not lower). Some on the left are just as wrong when they maintain that debt is irrelevant.

    •  I seriously doubt ANY of the savings accounted for (1+ / 0-)
      Recommended by:
      voicemail

      in that have anything to do with the Fabulous Sequester.

      CBO’s estimate of the deficit for this year is about $200 billion below the estimate that it produced in February 2013, mostly as a result of higher-than-expected revenues and an increase in payments to the Treasury by Fannie Mae and Freddie Mac. For the 2014–2023 period, CBO now projects a cumulative deficit that is $618 billion less than it projected in February. That reduction results mostly from lower projections of spending for Social Security, Medicare, Medicaid, and interest on the public debt.
      We have been lied to and lied to and lied to about this whole circus: there is no real debt problem; all our problems are artificial, created by politicians and other criminals and they can be rectified faster than the Congress fixed their wait for an airplane.

      We are being carjacked.

      I dream of Americans figuring this out and then taking the appropriate action (which one sees in other countries LONG before the shit we are tolerating)

      Those people are not sitting around and wasting time waiting to vote. They are in the street and making demands. They are acting up. That is how governments get pressured.

      America politicians are just too comfortable and insulated.

      •  We must be a long way from that though, (0+ / 0-)

        since we have frequent national elections (every 2 years) and about half the voters are still voting for Republicans. I'd say we are nowhere close to the majority of the country not only despising the GOP, but willing to conduct general strikes against their policies. Let's face it, about half the people in the country are okay with cutting budgets and lowering the tax "burden" on the rich.

        •  depressing beyond belief. (0+ / 0-)

          The process in motion via the GOP and with all the Kabuki support from the dems that I am supposed to feel over-fucking-joyed to have there is going to reach its fruition.

          The idea we will work and make a little money, put it in the bank and 'retire' is not going to be there for me or a lot of people who are just oblivious to this.

          30 years from now, I'll be 82 and hearing people say shit like "I wish we knew the republicans intended to wreck the country and give it to the rich, I would have done something".

          I'll be saying "Yeah, some of us saw it clearly, coming a long way off. We tried to warn people but they were irritated by this and complained that we were interrupting a tv program called "American Idol", a psy-op program of the NSA that was quite effective in dulling the nation IQ enough that people voted against their own interests time and time again. They VOTED themselves into the hellhole this country has become.

          Better we descend into squalor and poverty then break the law now. We should not break the law.

    •  Most of the deficit reduction (0+ / 0-)

      was accomplished by just looking at the faces of Alan Simpson and Erskine Bowles on the website of the Peterson Foundation's Fix the Debt committee to end Social Security. It made many Americans so nauseous that they couldn't go out to dinner.

      Oh, that and the end of the GWB tax giveaways at the highest rate.  

      I'm from the Elizabeth Warren wing of the Democratic Party

      by voicemail on Tue May 14, 2013 at 01:53:44 PM PDT

      [ Parent ]

  •  Somewhere, John Boehner weeps (1+ / 0-)
    Recommended by:
    holocron

    And Mitch McConnell likewise.

    Because waiting until October to take action on the Senate Budget resolution is going to be so obviously delaying until they can take it hostage to the debt ceiling that even the MSM might begin to begin to notice.

    Economics is a social *science*. Can we base future economic decisions on math?

    by blue aardvark on Tue May 14, 2013 at 12:59:34 PM PDT

  •  Are any of you Beltway Bandits listening?....... (2+ / 0-)
    Recommended by:
    xxdr zombiexx, PorridgeGun

    I thought not.

    Re the Grand Bargain, seems our President's theme song is  something like  this:

    http://www.teachertube.com/...

    "Gimme gimme gimme dat ding!"

    "Is that all there is?" Peggy Lee.

    by jm214 on Tue May 14, 2013 at 12:59:44 PM PDT

  •  Pffft! Facts! (3+ / 0-)

    It is well-known that you can use facts to prove anything that's even remotely true. Like untethering our monetary system from gold, our current financial system is no longer dependent on your so-called facts and your ginned-up reality to exist and thrive. What's most important now and forevermore is to funnel as much of the Wealth generated by Labor into the overstuffed pockets of the 1%. If we start rewarding the hoi polloi with the actual fruit of their labor, there's no telling where it might end! Some of those poor people might actually become rich; or worse, middle class. And then where would we be?

    No. No, I say! And No, again. The nation's wealth must be entrusted to the safekeeping of the richest Americans and corporations, for only they know how best to administer it, which is haring around the world for an additional tenth of a percent of return. You lot only spend it on food, clothing and housing, and how does that get Donald T Rump another gold-plated toilet fixture? Huh? I ask you!

  •  Increase in revenue... (3+ / 0-)

    Which means the agreement on the increase in taxes.  Raise taxes and the deficit goes down?  Who would have thought?

    'Where free unions and collective bargaining are forbidden, freedom is lost' - Ronald Reagan, Communist

    by RichM on Tue May 14, 2013 at 01:01:51 PM PDT

  •  Obama needs to have as many press conferences (3+ / 0-)
    Recommended by:
    Mr MadAsHell, PorridgeGun, Amber6541

    right now as he can, and MENTION this at every opportunity.

  •  The "Grand Bargain" is not grand nor a bargain (2+ / 0-)
    Recommended by:
    Involuntary Exile, PorridgeGun

    More like Obama's bargain with the Devil.

    Whatever rosey terms you wish to call it by, it is a ROBBERY.

    it is about taking away from you and yours.

    it isn't about helping you; its about helping republicans and the rich. It's about fucking you blind.

    it's about stealing your future.

    So I imagine this reality-based feedback from the CBO will end up in the t rash while the GOP presses on - successfully - with their agenda to totally fuck the rest of our lics as much as possible.

    They are adding to the suicide rate and happily because repubs and others who sign onto this fucking sequester want more people dead.

    Dead people = Strengthening Social Security.

    So there is nothing but shifting lines of horseshit as to why we need austerity, and we don't need it at all.

    it's not about 'saving' anything, it's not about helping anybody but the rich.

    In other countries people are already in the streets. I fear Americans are just permanently glued to the tube and will not raise an eyebrow when the GOP asks them to wear a 24 hour monitor and starts suggesting cannibalism as a way of helping the poor eat.

    People do themselves a huge disservice the entire time they think any of this is about helping them. God, what a dupe you are. I have an old car to sell you.

    Stop believing your leaders and send them hate mail.

    •  Have you actually read what the grand bargain (0+ / 0-)

      that President Obama proposes?

      I doubt it. The facts are different than your comment indicates. It is on the whole better for the mid and low income Americans than what we have now. And it protects the lowest income seniors. Do you even know what SSI is and how it intersects with Social Security?

      Your rant is a dumb as many on the other side — or supposedly on the other side.

      I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

      by samddobermann on Wed May 15, 2013 at 02:00:29 PM PDT

      [ Parent ]

  •  Great! (2+ / 0-)
    Recommended by:
    jj32, virginislandsguy

    A Democrat in the White House, again, shows that we're the ones to trust with the public purse.

    So let's start impeachment proceedings, the sooner the better.

    Fuck me, it's a leprechaun.

    by MBNYC on Tue May 14, 2013 at 01:08:23 PM PDT

  •  Increasing revenues also makes a hole in any (3+ / 0-)

    argument that a budget deal requires increased revenues.

    And maybe that's OK -- if the economy really does come back, revenues will go up naturally and demand for many services will go down.

    Then -- if we can manage to avoid fighting wars that we don't pay for, maybe we con focus on making life good again.

    LG: You know what? You got spunk. MR: Well, Yes... LG: I hate spunk!

    by dinotrac on Tue May 14, 2013 at 01:09:48 PM PDT

  •  a shrinking deficit (0+ / 0-)

    Doesn't mean that we don't necessarily need a "Grand bargain." We still need to do something over the long term on Medicare and Social Security and still do need to worry about long term deficit and debt reduction. These projections are just that, and if the economy does tip back into recession, could well reverse themselves. What this news does mean is that we don't need a drastic "Grand Bargain" immediately and don't need to accept the GOP's terms in the interest of getting a deal done now.

    •  Dr SM We are doing something (0+ / 0-)

      about Medicare. Didn't you read this carefully. We have cut over $700 billion from Medicare spending already — and the ACA is not fully in effect.

      Have you actually read what the grand bargain that President Obama proposes?

      I doubt it. The facts are different than your comment indicates. It is on the whole better for the mid and low income Americans than what we have now. And it protects the lowest income seniors. Do you even know what SSI is and how it intersects with Social Security?

      I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

      by samddobermann on Wed May 15, 2013 at 02:16:41 PM PDT

      [ Parent ]

  •  well, keep in mind . . . . . (2+ / 0-)
    Recommended by:
    milton333, voicemail

    The goppers do NOT want to cut SS and Medicare because "deficit oh noes!!!"---they want to cut them because they've always hated those programs and never wanted them in the first place.

    The REAL question is why the DEMS seem so eager to cut them . . . .

  •  We are pretty snarky today (1+ / 0-)
    Recommended by:
    voicemail

       The GOP will say that we can't believe the CBO and public really needs to suffer for another 2 years.

  •  the best argument for why we don't need a grand... (0+ / 0-)

    bargain?

    Screw that.

    What i want to know is how the hell is Obama going to undo his and the GOP's god damned sequester?

    The modern Democrat is one who promotes old GOP ideas and calls them progressive in comparison to new GOP ideas.

    by masswaster on Tue May 14, 2013 at 01:47:13 PM PDT

    •  Good for blaming the sequester on (0+ / 0-)

      Obama. We don't have enough Republicans doing so.

      I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

      by samddobermann on Wed May 15, 2013 at 02:18:45 PM PDT

      [ Parent ]

      •  It's easier for some than others.... (0+ / 0-)

        to forget that Obama negotiated and signed the sequester law.

        He and the GOP own it.

        The modern Democrat is one who promotes old GOP ideas and calls them progressive in comparison to new GOP ideas.

        by masswaster on Sat May 18, 2013 at 01:34:50 PM PDT

        [ Parent ]

  •  I know this sounds radical but perhaps (0+ / 0-)

    we could replace the sequester to cuts to Medicare (no benefits) and defense without touching social security. In addition passing immigration reform and other an infrastructure bank that will increase GDP to 4 or higher.

    President Obama, January 9, 2012: "Change is hard, but it is possible. I've Seen it. I've Lived it."

    by Drdemocrat on Tue May 14, 2013 at 01:56:24 PM PDT

  •  Okay, so clearly (0+ / 0-)

    We should be repealing the sequester.

    The economy added 332,000 jobs in February. Then the sequester hit in March, and we added only 138,000. It picked up in April with 165,000, but that still puts us far below where we should be. Imagine having three of those Februaries in a row - that's one million new jobs in three months. That'd go much further to boosting the economy and lowering the deficit than blindly whacking at government spending.

    If they don't want to relinquish that 85 billlion, just take it out of war savings like Harry Reid suggested. It's not like it's going anywhere else. I'm pretty sure the Iraq/Afghanistan drawdown saves us more money than the sequester does anyway.

  •  Shrinking debt? Or Shrinking Deficit? (1+ / 0-)
    Recommended by:
    samddobermann

    There's a difference.

    •  Sssshhhh. Don't bother her with (0+ / 0-)

      the facts.

      I'm just glad to see that at least one other person notices it.

      I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

      by samddobermann on Wed May 15, 2013 at 02:23:07 PM PDT

      [ Parent ]

  •  well yeah ... given the corporate profits (0+ / 0-)

    going through the roof.  This proves that the sequester is stupid.  Just end it.

    "The real wealth of a nation consists of the contributions of its people and nature." -- Rianne Eisler

    by noofsh on Tue May 14, 2013 at 07:51:42 PM PDT

  •  It still boggles my mind that (0+ / 0-)

    in order to authorise debt, Congress has to take two steps: one to spend the money and only AFTER that a second to actually authorise the borrowing.

    What jackass designed that way of doing things?

    "Violence never requires translation, but it often causes deafness." - Bareesh the Hutt.

    by Australian2 on Thu May 16, 2013 at 01:28:52 PM PDT

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