360° Coverage : Why No One Is Celebrating The Much-Lower Deficit

2 Updates

Why No One Is Celebrating The Much-Lower Deficit

Apr 15 2014, 6:20pm CDT | by

The basics are straightforward and unambiguous: The Congressional Budget Office yesterday reported that the federal budget deficit will fall to 2.8 percent of GDP this year, almost one-third below...

Filed under: news

 
 
 

22 weeks ago

Why No One Is Celebrating The Much-Lower Deficit

Apr 15 2014, 6:20pm CDT | by

The basics are straightforward and unambiguous: The Congressional Budget Office yesterday reported that the federal budget deficit will fall to 2.8 percent of GDP this year, almost one-third below what it was in 2013.

As a percent of GDP, not only will that be the lowest deficit since 2007, the drop from 9.8 percent in 2009 to 2.8 percent in 2014 is the largest five-year reduction in federal red ink since the end of World War 2, that is, in almost 70 years.

There was no celebration.

The president didn’t appear in the White House Rose Garden to make a statement.

There were no dueling press conferences on Capital Hill to claim credit for the improvement.

And the deficit hawk groups didn’t send letters to their funders saying that this was a monumental accomplishment for which they have worked tirelessly.

In fact, just the opposite occurred. The White House, House and Senate were silent while the deficit hawks focused instead on CBO’s almost certainly inaccurate 10-year projection that showed the debt rising as a percent of GDP from 72 percent in 2013 to 78 percent in 2024.

Why no dancing in the street?

This is one of the few times the real politics of the federal budget deficit are laid bare for all to see.

The White House didn’t take a victory lap for two reasons.

First, it sees the budget as a losing issue and doesn’t want to talk about even good news when it happens. Talking about a falling deficit gives the administration’s opponents the opportunity to say the president can’t take credit for reducing the deficit unless he first takes the blame for raising it so high. Even though much of the deficit increase was already baked into the budget baseline when Obama took office and wasn’t completely his fault, that’s hard to explain and the criticism will hurt.

Second, talking about a falling deficit means you still have to talk about a deficit that to some will seem too high no matter how much it has fallen. It’s the political rather than the economic arguments that are important in Washington, and the current politics of the budget mean that even a $1 deficit would be mischaracterized by some as being evil. Because of that, CBO’s projection of a nominal $492 billion 2014 deficit looks — and can be made to sound — positively catastrophic even when it’s not.

Congress didn’t gloat about the falling deficit because neither house has a good story to tell about what it did during the time the deficit was falling. The House was busy passing hyperpartisan budgets that had no chance of being adopted by the Senate. The Senate either wasn’t passing budgets or was passing budgets the House refused to consider. Neither situation earns you many plaudits.

There was also the fiscal cliff and the shutdown. That’s ancient history but still politically painful.

The deficit hawk groups? They will have no reason to exist or be funded if the deficit is understood to be falling. It’s not at all surprising, therefore, that they focused on the longer term even though the projected increase in the debt as a percent of GDP is barely important economically and a 10-year forecast is basically just a straight line extrapolation. Doing that simply justifies staying in business.

The only real surprise from what happened yesterday is that the Congressional Budget Office wasn’t demonized for its new numbers. In the current environment that lack of criticism is the closest we’re going to anyone saying anything positive.

 
Update
2

3 weeks ago

Khazanah throws MAS RM6b lifeline

Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

August 30, 2014 1:15 AMKHAZANAH Nasional will inject RM6 billion (SS$2.4 billion) over three years to resuscitate loss-making Malaysia Airlines (MAS) under a recovery plan that includes even an Act of Parliament. Other key moves are migrating its operations, assets and liabilities to a new company (NewCo) an ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 
Update
1

3 weeks ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

August 29, 2014 1:13 AMMALAYSIA Airlines (MAS) registered a loss of RM307 million (S$122 million) for the second quarter to end-June, but warned of worse to come in the second half when the "full financial impact of the double tragedie ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Pakistanis prominent winners at UK's Asian achievers awards
London, Sep 19 (IANS/RAY) Persons of Pakistani-origin emerged as prominent winners at the 2014 Asian Achievers Awards in Britain Friday while Sir Tejinder Singh Virjee, a professor of physics at Imperial College, London, headed the list of Indian-origin recipients.
 
 
Sierra Leone launches 'stay at home' drive to fight Ebola
Freetown, Sep 19 (IANS) Sierra Leone started a three-day "stay at home" campaign to raise awareness about the Ebola virus that has killed close to 500 people in the West African country.
 
 
Kenya to have security, health centre with EU's $65 help
Nairobi, Sep 19 (IANS) The European Union Friday said it will provide 65 million dollars to build a new regional security and health center in Kenya.
 
 
Pakistan says it values China's support for SCO membership
Islamabad, Sep 20 (IANS) Pakistan Friday said it appreciates China's support for the country's quest to become member of the Shanghai Cooperation Organization (SCO) as the group has agreed to expand its membership.
 
 
 

Latest from the Network

Asian Games: Indian women's badminton team in quarterfinal
Incheon, Sep 20 (IANS) Indian badminton women's team Saturday entered the quarterfinal of the Asian Games after thrashing Macau 3-0 in their pre-quarterfinal tie at the Gyeyang Gymnasium here. For India, singles stars...
Read more on Sport Balla
 
'Fashion Police' will continue without Joan Rivers
'Fashion Police' is set to continue following the death of Joan Rivers. A new season of popular style series, which the late comedienne hosted for four years until her death earlier this month and is produced by her...
Read more on Celebrity Balla
 
Tim McGraw intimidates daughters' boyfriends
Tim McGraw enjoys intimating his daughters' boyfriends. The 47-year-old country singer - who has three children, Gracie, 17, Maggie, 15, and Audrey, 12, with wife Faith Hill - admits he isn't entirely comfortable with...
Read more on Celebrity Balla
 
Dylan Penn wants to be a director
London, Sep 20 (IANS) Model Dylan Penn, who is making her acting debut with "Condemned", aspires to be a screenwriter and director in future. In an interview to Vanity Fair magazine, Penn, daughter of Sean Penn and...
Read more on Celebrity Balla
 
Shweta shoots first medal for India, wins bronze
Incheon, Sep 20 (IANS) Shweta Chaudhry shot the first medal for India in the 2014 Asian Games after she won the bronze in the women's 10m air pistol at the Ongnyeon International Shooting Range here Saturday. Shweta,...
Read more on Sport Balla
 
China clinch first gold medal at Incheon Asian Games
Incheon, Sep 20 (IANS) Chinese markswomen Guo Wenjun, Zhang Mengyuan and Zhou Qingyuan won the women's 10m air pistol team event Saturday morning, the first gold medal at Asian Games. It was the fourth consecutive...
Read more on Sport Balla
 
Paltrow acquires new culinary skills
Los Angeles, Sep 20 (IANS) Actress Gwyneth Paltrow has added baking to her culinary skills by taking private lessons from top chef Zoe Loeb. The 41-year-old jumped at the chance to work with her long time friend Josh...
Read more on Celebrity Balla
 
Lille to stage 2014 Davis Cup Final
London, Sep 19 (IANS) The Stade Pierre-Mauroy in the French city of Lille will stage the Davis Cup World Group Final between France and Switzerland Nov 21-23. The tie will be played indoors under a retractable roof...
Read more on Sport Balla
 
Scottish First Minister resigns after defeat in referendum (Roundup)
Edinburgh, Sep 19 (IANS) Scottish First Minister Alex Salmond Friday announced his resignation after his Yes campaign's defeat in the independence referendum, Xinhua reported. Addressing a press conference broadcast...
Read more on Politics Balla
 
UN Security Council calls for international support against IS
United Nations, Sep 20 (IANS) The UN Security Council Friday urged the international community to "further strengthen and expand support" for Iraqi government in fighting Islamic State (IS) in Iraq and Syria. In a...
Read more on Politics Balla