U.S. Deficit Shrinking At Fastest Pace Since WWII

[BigRedChief]

http://news.investors.com/blogs-capi...rld-war-ii.htm



Believe it or not, the federal deficit has fallen faster over the past three years than it has in any such stretch since demobilization from World War II.

In fact, outside of that post-WWII era, the only time the deficit has fallen faster was when the economy relapsed in 1937, turning the Great Depression into a decade-long affair.

If U.S. history offers any guide, we are already testing the speed limits of a fiscal consolidation that doesn't risk backfiring. That's why the best way to address the fiscal cliff likely is to postpone it.

While long-term deficit reduction is important and deficits remain very large by historical standards, the reality is that the government already has its foot on the brakes.

In this sense, the "fiscal cliff" metaphor is especially poor. The government doesn't need to apply the brakes with more force to avoid disaster. Rather the "cliff" is an artificial one that has sprung up because the two parties are able to agree on so little.

Hopefully, they will agree, as they did at the end of 2010, to embrace their disagreement for a bit longer. That seems a reasonably likely outcome of negotiations because the most likely alternative to a punt is a compromise (expiration of the Bush tax cuts for the top and the payroll tax cut, along with modest spending cuts) that could still push the economy into recession.

Rather than applying additional fiscal restraint now, the government needs to make sure it sets the course for steady restraint once the economy emerges further from the deep employment hole that remains. In fact, a number of so-called deficit hawks are calling for short-term tax cuts to spur growth, rather than immediate austerity.

From fiscal 2009 to fiscal 2012, the deficit shrank 3.1 percentage points, from 10.1% to 7.0% of GDP.

That's just a bit faster than the 3.0 percentage point deficit improvement from 1995 to '98, but at that point, the economy had everything going for it.

Other occasions when the federal deficit contracted by much more than 1 percentage point a year have coincided with recession. Some examples include 1937, 1960 and 1969.

President Obama hasn't gotten much credit for reining in the deficit, probably because a big part of the deficit progress has come from the unwinding of extraordinary government supports that he helped put in place. Stimulus programs have come and mostly gone; the end of stimulus to states led them to enact Medicaid curbs; jobless benefits in recent months have fallen by 50% since early 2010 (due to both job gains and extended benefits being exhausted).

TARP and the bailouts of Fannie Mae and Freddie Mac also make the deficit improvement look better, boosting the fiscal '09 deficit by about $200 billion more than in fiscal '12 (though the initial cost of TARP was overstated).

Still, military spending is now on the decline due to fewer troops in Iraq and Afghanistan; Medicare costs rose 3% last year vs. the average 7% growth in recent years; and after the last year's Budget Control Act, excluding the automatic cuts set to take effect in January, nondefense discretionary spending is already on a path to shrink to 2.7% of GDP, well below the 3.9% average, notes the Center on Budget and Policy Priorities.

[BucEyedPea]

So you're saying a Republican congress and gridlock is a good thing, then?

[go bowe]

[Brainiac]

This is a perfect example of how you can manipulate statistics to support whatever conclusion you wish. Every year of the Obama administration has resulted in deficits in excess of a TRILLION dollars, yet this article would have us believe that the Obama administration is the most fiscally responsible administration ever.

Trillion dollar deficits used to be an unthinkable nightmare scenario. Now when they happen every freaking year of the Obama administration, Obama is congratulated for his "fiscal restraint".

But hey, if it says it on the Internet, it must be true.

[go bowe]

Originally Posted by Brainiac

This is a perfect example of how you can manipulate statistics to support whatever conclusion you wish. Every year of the Obama administration has resulted in deficits in excess of a TRILLION dollars, yet this article would have us believe that the Obama administration is the most fiscally responsible administration ever.

Trillion dollar deficits used to be an unthinkable nightmare scenario. Now when they happen every freaking year of the Obama administration, Obama is congratulated for his "fiscal restraint".

But hey, if it says it on the Internet, it must be true.

yes, grasshopper, the internet is knowledge and the path to inner peace...

[Bewbies]

This forum would not be nearly as fun if people even displayed the smallest amount of common sense to what they write/post/copy.

[Brainiac]

Originally Posted by Bewbies

This forum would not be nearly as fun if people even displayed the smallest amount of common sense to what they write/post/copy.

Next, some idiot will try to tell us that if we already have good health insurance, we'll be able to keep it when Obamacare is fully implemented.

[BigRedChief]

Originally Posted by Bewbies

This forum would not be nearly as fun if people even displayed the smallest amount of common sense to what they write/post/copy.

So now the criteria is that you have to believe as gospel everything from the media/blog/internet that you post or don't post it at all?

[Direckshun]

Originally Posted by Brainiac

This is a perfect example of how you can manipulate statistics to support whatever conclusion you wish. Every year of the Obama administration has resulted in deficits in excess of a TRILLION dollars, yet this article would have us believe that the Obama administration is the most fiscally responsible administration ever.

Did eternity begin after WWII?

[Direckshun]

The truth is, austerity in a bad economy has been proven again, and again, and again, to be reckless.

Europe, four years ago, as in a similar situation to us. Europe embraced the conservative solution -- austerity.

The United States embraced the liberal solution -- deficit-fueled demand injected into the economy by the government.

Now, one entity is headed in the right direction. The other is at 12% unemployment and rising.

The fact that the Obama administration was able to do this while cutting the deficit he inherited by 300 billion dollars is unheardof.

But it's not terribly surprising. In modern American history, Democrats fix the deficit, Republicans explode it.

[Otter]

I'm no economist but I just checked the numbers of the deficit and they are increasing at the same rate and the totals are higher now than when I began typing this post let alone a month ago

Have I been in the dark all these years concerning the word 'shrinking' or the correct function of a number line? And when did Direkshun and BRC activate wonder twin powers?

Dude, stop please.

[BucEyedPea]

Originally Posted by Direckshun

The truth is, austerity in a bad economy has been proven again, and again, and again, to be reckless.

History shows otherwise. Unless you rely on politically correct data we're spoon-fed by academia and media.

Europe, four years ago, as in a similar situation to us. Europe embraced the conservative solution -- austerity.

No Europe is being run by Euro-commies and technocrats. They've been sucked into social welfare state for so long, it's gonna be harder for them to get out of it. It's ruined the mentality of their people

But it's not terribly surprising. In modern American history, Democrats fix the deficit, Republicans explode it.

That's because Ds like taxes and Rs don't. R's simply do not reduce the welfare-state. Instead they circumvent by not having it paid for because doing so would hurt the economy and impoverish more people. They're damned if they do and damned that they don't.

[Direckshun]

Originally Posted by Otter

I'm no economist but I just checked the numbers of the deficit and they are increasing at the same rate and the totals are higher now than when I began typing this post let alone a month ago

Have I been in the dark all these years concerning the word 'shrinking' or the correct function of a number line? And when did Direkshun and BRC activate wonder twin powers?

Dude, stop please.

Link?

[Direckshun]

Otter,

From fiscal 2009 to fiscal 2012, the deficit shrank 3.1 percentage points, from 10.1% to 7.0% of GDP.

That's the math.

What "numbers" are you looking at? Because I'm calling bullshit.

[Otter]

Originally Posted by Brainiac

This is a perfect example of how you can manipulate statistics to support whatever conclusion you wish. Every year of the Obama administration has resulted in deficits in excess of a TRILLION dollars, yet this article would have us believe that the Obama administration is the most fiscally responsible administration ever.

Trillion dollar deficits used to be an unthinkable nightmare scenario. Now when they happen every freaking year of the Obama administration, Obama is congratulated for his "fiscal restraint".

But hey, if it says it on the Internet, it must be true.

My wife stopped putting $1000 of shoes on the $100,000 limit credit card we are only paying minimum payment on monthly and took it down to $950 of shoes a month. Victory! My wife is a genius! All hail my wife!

****ing idiots