The Congressional Budget Office recently lowered the expected budget deficit by $62 billion. The news was generally well received. Democrat’s claim that it is proof that austerity would have been ill conceived, and the GOP is calling for more “starving of the beast” in order to lower the deficit further.
“Both responses are wrong, but for different reasons,” claims R. Glenn Hubbard and Tim Kane on the New York Times.
“First, ‘the deficit is now under control’ fallacy. The C.B.O. did indeed say that the average federal budget deficit would be $62 billion lower per year than was predicted before. That sounds good, but it lacks context. The C.B.O. still anticipates a 2015 deficit of $378 billion.” They argue that while a reduction in deficit spending is certainly a good thing, it fails to meet the requirements for celebration.
But the blame does not rest solely on the Democrats. “The still larger problem lies with Republicans who refuse to face facts. 'Starve the beast' has been the mantra of conservatives since Ronald Reagan was president, a belief that, if taxes were low enough for long enough, rational Democrats would have no choice but to agree to bring federal spending down as well. Even though total federal revenue held level at around 18 percent of gross domestic product in recent decades, spending soared.”
Hubbard and Kane conclude that both parties are at fault for failing to follow a more conservative approach to economics.
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