Revenues and outlays simply don't match up in the near future. For the next few years, that's fine: You run deficits amidst a recession. Beyond that, there are a number of policy changes -- like health system reform -- that can substantially cut spending. But we've now had two presidents in a row cut taxes substantially. Eventually, that has to stop, or we have to start spending less.
Krugman is more optimistic:
What the projections suggest is that Obama’s longer-term agenda, or a progressive agenda in general, needs more revenue; that’s probably true, although there’s huge uncertainty about any long-term projection. That revenue might come from environmental policies: I’ve been hearing that realistic projections of the revenue from cap and trade might be much higher than assumed in the budget. In any case, however, it’s really a political question: are we willing, ultimately, to pay the modest costs of a better society.
The assumptions in that last sentence are why I remain a conservative. I'm unsure why a "better society" means social, tax-payer-funded welfare and healthcare for the wealthy till the end of their days; or why large agricultural subsidies help us at all; or why the countless corporate tax shelters add anything but distortion to the economy; or why an open-ended commitment to turning Afghanistan - yes, Afghanistan - into a stable democracy is worth more billions; etc. I'm happy with short-term costly fixes to emergent problems - especially if they help restrain long-term healthcare costs or stall climate change. But only if we balance them with long term cuts in the entitlements state and defense retrenchment. Obama said he'd do that. He hasn't. It's a major break with those of us in the center who supported him.
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