Former Reagan adviser: Federal spending is not out of control and the deficit is manageable

Bruce Bartlett (above), writing in The Fiscal Times, counters the cries of the Chicken Littles with THIS:

It is a standard talking point of Republicans and deficit hawks of all political stripes that federal spending is out of control; that major surgery is needed, especially on entitlement programs such as Social Security and Medicare, to get the budget on a sustainable course.

In fact, our long-term deficit situation is not nearly as severe as even many budget experts believe. The problem is that they are looking at recent history and near-term projections that are overly impacted by one-time factors related to the economic crisis and massive Republican tax cuts that lowered revenues far below normal.

Taking a longer-term view, such as that in a recent Treasury Department report, shows that our longer-term fiscal problem is in fact quite manageable…

[F]ederal spending ballooned in fiscal year 2009 mainly because of what economists call “automatic stabilizers” – programs already in law such as unemployment compensation that rises whenever a recession occurs. Spending rose from 20.7 percent of the gross domestic product in fiscal year 2008 to 25 percent in 2009.

Republicans would have us believe that all of this resulted from Barack Obama’s policies, but this is simply a partisan lie. Fiscal year 2009 actually began on September 1, 2008, and was based on the budgetthat George W. Bush submitted in January 2008.

Moreover, if we look at projectionsfrom the Congressional Budget Office on January 7, 2009 – while Bush was still in office and which do not incorporate any Obama policies – we see that the deficit was projected to rise from $455 billion in 2008 to $1.2 trillion in 2009 under existing law.

The actual deficit for fiscal year 2009 was $1.55 trillion. But the difference was due entirely to lower revenues than expected, not higher spending…

The point is not to assess blame for the deficit; only to emphasize the temporary nature of the historically large deficits of the last few years and show that they did not result from an explosion of new spending initiated by Obama. This is important because Republicans continually make that claim, thus justifying their belief that spending must be massively slashed, especially for entitlements.


[I]t is silly to obsess about near-term nominal budget deficits. What matters is the deficit as a share of GDP minus interest spending, which economists call the primary deficit. On that basis, we are much closer to fiscal sustainability than even most economists realize. Relatively small adjustments to the growth path of federal revenues and Medicare would be sufficient to eliminate the primary deficit. Taking a meat ax to every federal program, as Republicans demand, is neither necessary nor desirable.


1 Comment

  1. It’s not so much about the current spending or deficits, it’s the unfunded liabilities. The total amount of public debt as a percentage of GDP and Adjusted Monetary Base are both at unprecedented levels. I do not take comfort in the ones who created this mess and telling me it will be OK.

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