Deficit Follies

In a recent edition of Ezra Klein's WonkBlog over at the Washington Post, Klein claims that "[t]he falling deficit has been a disaster for the GOP," and that "the deficit has fallen dramatically. In fact, it's fallen at a faster rate than at any other time since World War II. And the Congressional Budget Office [CBO] sees it stabilizing in the (totally manageable) two-to-three percent range through the next decade." Has the federal deficit over the past few years "fallen at a faster rate than at any other time since World War II"? Maybe. Between 2009 and 2012, the federal deficit declined from 10.1% of GDP to 7.0% of GDP, for an annual average change of +1.03%. The next highest three-year deficit reduction period average since 1950 was +1.00% between 1995 and 1998 with Gingrich as Speaker of the House. Given the error bars on budgeting, I'd consider the two periods a tie.   But the real questions are whether CBO predictions of reaching a 2-3% of GDP federal deficit by 2015 are...(Read Full Article)

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