What to Make of the Record-High Deficit
As Obama unveils his new budget, the deficit is expected to rise to $1.6 trillion
Despite State of the Union promises to get tough on the deficit, President Obama's budget announcement Monday is expected to show debt rising to $1.6 trillion in the current fiscal year. That's up from $1.4 trillion last year, and "a new post World War II high," reports The New York Times. What is all that money going to be spent on, and how bad is the deficit really likely to get? Here are commentators' first attempts to parse the news, which was packaged with assurances from the White House that the deficit will then begin to decrease in the years following.
- Hard to Say "One of the most difficult problems," explains 24/7 Wall St.'s Douglas McIntyre, "is agreeing on what the deficits will be." It turns out the White House and the CBO have wildly different estimates, "which means it will be difficult to moderate spending because there is so little agreement on what expenses and revenue will be." Why the gap? "Managing revenue is nearly impossible. It relies on economic growth, unemployment, and tax rate. There has been a school of thought for many years that raising tax rates slows economic activity so the net collections by the IRS actually fall." Then, too, social services costs are about to skyrocket as the Baby Boomers age.
- Spending on Jobs, reports Adam Raymond at New York Magazine. The rise from last year's $1.4 trillion deficit to next year's $1.6 trillian is going to be largely "due to spending on a jobs package and funding for states struggling to pay for programs like Medicade." Then, "if all of [Obama's] magic tricks do what they're supposed to, the deficit will be down to around $700 billion in 2013. Sadly, in the world we live in, that's cause for celebration."
- Could Get Worse--See Taxes At the National Review, Daniel Foster points out that projections could get grimmer if Obama makes the expected move of extending Bush's middle-class tax cuts.
- Going to Be Dreadful--Just Because Democrats Like Spending Money That's the gist of the Wall Street Journal editorial, at least. Calling them a "merry band of spendthrift Senators," the editors write that "no fewer than 57 Senators voted against saving $20 billion by consolidating 640 programs that are duplicated across government," a proposal put forth by Republican Tom Coburn. "The votes reveal how phony the new antideficit Beltway posturing really is. Congressional liberals are already howling about Mr. Obama's proposed spending freeze, vowing to fight even this token gesture."
- Nonsense, responds ABC's Rick Klein, who announces that budget day is "that annual Washington tradition of making far too much out of a proposed budget that needs to thrash its way through a Congress that has its own ideas." Here's the thing, he says: "the ideas President Obama is leading with--the discretionary spending freeze, the slashed programs, the jobs package built on tax incentives--have a particular design to them: They will test the commitment among his opponents to stand in his way." Will newly relevant Republicans, he asks, "seek to sink Democrats in a sea of red ink, focusing on the new deficit records ... ?"
This article is from the archive of our partner The Wire.