“This could have been brought to our attention yesterday.” That was Jonathan Chait’s bottom line in a great article today, Debt Scolds: Pay No Attention to the Falling Deficit! You see, the Congressional Budget Office (CBO) has revised its estimate of the federal deficit this year. Before the year started, the CBO estimated that the deficit would be $680 billion. But government revenue was up quite a lot, and now the year is almost over, it looks like the deficit will be only $486 billion dollars.
Some would say, “Well, that’s still a very big deficit!” But the truth is that if the economy were fully recovered, we would be seeing a surplus. So this is very good news indeed. There is no reason for the federal government to cut spending. In fact, it is rather the opposite: the federal government should be spending more. And so if we lived in a rational world, or if we just didn’t pay attention to politics, we would think that the debt scolds would be thrilled. Of course, they aren’t.
Now, the debt scolds are saying that they never cared about the short term deficit. They were only worried about the long term deficit. The Committee for a Responsible Federal Budget (CRFB) is out today with a statement, “Washington’s myopic focus on short-term deficits has likely slowed the recovery by cutting deficits somewhat too fast in the short term while leaving substantial imbalances in place over the long term.” You see, it was always about the long term. How could anyone have gotten the impression that there was a short term problem with the budget?
Maybe they got it from the CRFB:
I don’t blame them. Even at the time, if you nailed them down about the fact that short term cuts would only hurt the budget outlook, these people would admit it was true. At the same time, they pushed debt hysteria with statements like the one above. They also talked about “trillion dollar budget deficits” all the time. And most important, these where the people who claimed that the deficit was such a big problem that any short term stimulus had to be tired to long term budget cuts.
And let’s not forget: these people’s jobs depend upon making people afraid of federal budget deficits. As I discussed last year, the CRFB Social Security calculator was designed to scare people about the program. Even if you made all the changes necessary to make Social Security solvent for the next 75 years (the stated purpose of the exercise), it told you that what you did wasn’t good enough because the plan wasn’t stable for the infinite time horizon — as if making Social Security viable for the year 2525 was a reason exercise.
The truth is that the whole deficit scold community is made up of a bunch of charlatans. Every one of them is primarily interested in lowering taxes on the rich. That’s not what you do when you care about the deficit. Matt Yglesias put it best two years ago:
So of course the debt scolds don’t care that the deficit is way down. Their purpose is to cut social security and lower taxes on the wealthy. Nothing the CBO published today has any bearing on that.