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Quote of the Decade: Trillion-Dollar Deficits As Far As the Eye Can See, Thanks to the US Congress


The Congressional Budget Office projects that, over the next ten years, there will be trillion-dollar deficits every year.  This is a result of the recent tax cut and the new budget.  There is no question that Congress has created a situation that is potentially dangerous and without precedent in peacetime:

From 2019 to 2028, the federal government will run cumulative annual deficits of $12.4 trillion. The deficits — the gap between what government spends and what it collects in taxes — average about 5 percent of the economy (gross domestic product, or GDP). Since 1950, deficits have equaled or exceeded 5 percent of GDP in only six years (1983, 1985 and 2009-2012), and most of these occurred after deep recessions. These reduce tax revenue and boost “safety net” spending (unemployment insurance, food stamps and the like).
By contrast, today’s deficits occur with low unemployment and an economy that has been expanding for nine years.

(from the Washington Post opinion piece by Robert J. Samuelson, as fed thru Microsoft News)

There has been, so far, no high-level recognition of this fact, much less the germ of a plan for dealing with it.  Both conservative and liberal economists have addressed the issue, but without compromise, so no clear path forward has been suggested beyond the extreme and unrealistic options of cutting Social Security and Medicare or raising taxes on the wealthy.

However, changes in the character of the population may alter the picture in surprising ways.  For example, a large influx of young workers could improve the balance of benefits versus costs.  Or economic crash could further worsen the cost factors.

There is some black humor in all this: the budget that Congress just passed was, to all intents and purposes, the one that Obama proposed a year ago.  They didn’t have any others laying around.

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