Give the White House some credit for honesty. Their budget projections are now fully in line with the harder, more conservative projections from the Congressional Budget Office. OMB director Peter Orszag notes that the reason for the growth in "outyear" deficits is structural -- higher government transfer payments as the result of the recession -- the deficit to GDP ratio is "higher than is desirable." $9 trillion over 10 years. These are numbers. What about the politics?
Aside from believing that deficits are bad, and that higher deficits are worse, Americans don't seem to pay too much attention to the issue, as much as that might surprise. Instead, they're likely to incorporate the deficit into larger narratives, be it that a president is profligate, or that he is spending money on the wrong things, or that he cannot get his fiscal house -- the nation's house -- in order. This is where the Obama administration faces a challenge. George W. Bush's policy choices, combined with the economic collapse, caused these deficits, so much as cause and effect can be determined. But even as the public knows this, they expect that President Obama will incorporate the state of the deficit into his policy plans, and even though he's not to blame for causing them, he is expected to show that he is serious about eliminating them. That is, he must demonstrate a certain facility with the cards that contingency deals him.
A few weeks ago, an administration official said that the politics of the deficit were easy enough to handle -- it was the deficit itself that was "really, really scary." Does Obama have a plan to reduce deficits in the long-term? The answer is: no. By choice, his policies will take his Bush inheritance and grow the deficit in the near-term. Pay-as-you-go legislation, which the current administration claims would have shaved $5 trillion off of the debt, won't shave more than a whisker off of future debts. If the economy begins to recover, and tax revenues increase, and government transfer payments decrease, it's easy to see how deficits might become more manageable in the near-term. If health care reform passes and Medicare/Medicaid growth rates are slowed, well -- same thing.
Whatever happens to the economy, it seems like structural deficits will be part of the story for years to come.