The White House Needs to Clean Up Its Deficit Message

More

The federal deficit is running lower than the administration anticipated due to higher tax revenue and lower spending on federal bank bailouts. Is this good news? The Washington Post's David Cho says the lower deficit is a "favorable number." Economist Brad DeLong says it's bad news because if unemployment is higher in 2010 than 2009, the federal government should be getting more torque behind the counter-cyclical spending levers and the deficit should be bigger.

They're both right. Higher tax revenue from unchanged tax rates suggests the recovery is gaining steam and Americans are spending and earning more. Lower TARP spending is also good news because it means a healthier financial sector and fewer tax dollars sunk into unsalvageable government bailouts that would have to be made up with higher taxes later on. But DeLong's broad point holds: it's weird to celebrate lower deficits when unemployment is stuck near 10 percent, and it's unclear why the Obama administration would want to point and brag about lower deficits while the Senate mulls over a $150 billion stimulus package that we won't be able to pay for with this year's tax receipts.

This is only the latest reminder that the way policymakers talk about the deficit is a bit schizophrenic. Obama tells us that the government should tighten its belt if families are willing to tighten theirs. Then he runs up the largest nominal deficit in history precisely because too many families have had to tighten their belts. He's reluctant to say that high deficits are bad, because in a recession, they're actually good policy. But then the administration "points out" to the Washington Post that the deficit is running hundreds of billions of dollars low (as though low deficits are inherently good news, again), just months before they want to sign another stimulus bill that will increase the deficit. If the White House has a deficit czar in charge on managing the message on the deficit, he isn't doing a very good job.

Jump to comments
Presented by

Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

Get Today's Top Stories in Your Inbox (preview)

A Technicolor Time-Lapse of Alaska's Northern Lights

The beauty of aurora borealis, as seen from America's last frontier


Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register. blog comments powered by Disqus

Video

A Time-Lapse of Alaska's Northern Lights

The beauty of aurora borealis, as seen from America's last frontier

Video

What Do You Wish You Learned in College?

Ivy League academics reveal their undergrad regrets

Video

Famous Movies, Reimagined

From Apocalypse Now to The Lord of the Rings, this clever video puts a new spin on Hollywood's greatest hits.

Video

What Is a City?

Cities are like nothing else on Earth.

Video

CrossFit Versus Yoga: Choose a Side

How a workout becomes a social identity

Video

In Online Dating, Everyone's a Little Bit Racist

The co-founder of OKCupid shares findings from his analysis of millions of users' data.

Writers

Up
Down

More in Business

Just In