Halving The Budget: A Different View

Reader B:

 

"You note in a post that Obama doesn't in fact "halve" the deficit over ten years in nominal terms. Most any economist or budget geek you'd talk to would tell you that it's the deficit in %GDP terms that really matters.  According to the OMB's projections, the deficit spikes up to 12.3% of GDP in 2009. This drops to 5.9% by 2011 (the "halving") and then drops even further to stay around 3% from 2013 to 2019."

 

Noted -- and it's a good point. But the way the Obama administration is selling their deficit reduction plans to the American people references the current CBO deficit projection as a baseline; as in -- "We'll cut the deficit in half by 2013." Officials talk about inheriting a $1.2 or $1.3 trillion dollar deficit; that's the easy number to hang the concept around.  The deficit as a percentage of GDP would actually decline by two-thirds. If the deficit this year is more along the lines of $1.7 trillion -- that's what OMB projects --  then Obama halves it, assuming that his GDP assumptions, as adjusted for inflation, prove correct.