By Teresa Welsh |
Last month, the Congressional Budget Office, Congress' non-partisan bookkeeper, reported that the deficit will fall to $642 billion this fiscal year. Since 2009, the deficit has fallen from more than 10 percent of the nation's gross domestic product to about 4 percent.
This – combined with the confluence of Europe's worsening experience with austerity and an Excel error dealing a blow to a pro-austerity study – has reignited debate over the wisdom of cutting more spending from the U.S. budget in the short-term. Last week, the Center for American Progress, a progressive think tank, released a report arguing that the fiscal debate needs to pivot away from the deficit since so much progress has been made.
"The fiscal outlook for both the medium-term and the long-term has improved substantially compared to what it was just a few years ago," writes the report's author, Michael Linden, the Center's managing director of economic policy. "These changes should dramatically affect the debate on federal economic policy in general and the federal budget in particular." As U.S. News managing editor Robert Schlesinger adds, "Spending isn't the problem – jobs (or lack thereof) are. It would be nice if the debate accorded with the reality."
But at the moment, the so-called "sequester," which results in automatic budget reductions, is cutting spending anyway. And as Sen. Jeff Flake, R-Ariz., said yesterday, some members of Congress are more than happy to let the sequester keep on churning. "A lot of members of Congress will publicly complain and moan about the sequester and privately say better that somebody else makes the decision than us. Unfortunately that's what happens," he said.
Others make the case that short-term economic pain is worth it in order to reap long-term rewards. "There is a strong case to be made that cutting spending and reforming a country's fundamental structural problems should be done independently of the impact on short-term growth, mostly because the alternative of doing nothing and letting our long-term problems continue is not acceptable and will bring much more harm," writes Veronique de Rugy at National Review.
Has the short-term deficit been reduced enough? Here is the Debate Club's take:
Gordon Gray Director of Fiscal Policy at the American Action Forum