Thanks, Obama! Deficit Shrinks to Lowest Level in Five Years!

by: Liam O'Conner/Americans Against the Tea Party

In a recent FOX News appearance, House Minority Leader, Eric Cantor (R-VA), said that more than anything else American lawmakers needed to focus on America’s “growing” deficit. Since I am almost certain the host had no intention of informing him of the facts, it falls on me to tell Mr. Cantor that the deficit is, in fact, shrinking!

According to a report from the AP wire service:

“For the first time in five years, the U.S. government has run a budget deficit below $1 trillion.

The government says the deficit for the 2013 budget year totaled $680.3 billion, down from $1.09 trillion in 2012. That’s the smallest imbalance since 2008, when the government ran a $458.6 billion deficit.”

Republicans and members of the Tea Party frequently try to portray the President Obama as an out-of-control liberal who is ratcheting up America’s deficit with reckless spending.  The cold hard truth, however, is that the president has managed to expand healthcare coverage to millions of Americans without breaking the bank.

By allowing some of the Bush-era tax cuts to expire, which in turn increased government revenue, and by reducing government spending, President Obama has overseen the fastest reduction in the deficit since the Second World War. The deficit is now $400 billion lower than last year, and $800 billion lower than since President Obama was sworn into office.

Deficit Falls To Lowest Level Since 2008, Discrediting Argument For More Cuts

BY ALAN PYKE/Think Progress

New Treasury Department figures confirm what the Congressional Budget Office (CBO) projected in the spring: the budget deficit for fiscal year 2013 will bedramatically lower than it was the past four years. The government recorded a $148 billion deficit in August, 22.5 percent smaller than in the same month of 2012, and is on track to total a $642 billion annual deficit when the fiscal year ends on September 30.

Days before the Treasury Department release on August revenue and spending, the CBO updated its statistics on the ratio of debt to gross domestic product. A spring report had projected debt-to-GDP ratios of 76 percent in 2014, 71 percent in 2018, and 74 percent in 2023, but the CBO now says the ratio will fall below 70 percent in 2017 and stay there for four years. Debt-to-GDP is now expected to be 71 percent in 2023 – a difference of about $500 billion in a nearly $17 trillion economy.

These figures reinforce a key point in the argument for resetting the fiscal policy debate: Congress can afford to invest in job creation right now. While Republicans remain committed to the idea of austerity (without being able to pass specific appropriations bills that adhere to the abstract cuts imposed by sequestration), falling deficits and debt levels undercut their argument.

Meanwhile, Congress has already enacted $2.4 trillion worth of austerity measures in the past two years, nearly all of it in the form of spending cuts. Those policies have helped push deficits to their current lows. The fiscal austerity that has helped drive the deficit down has also undermined economic growth, not just in 2013 but for years to come. Cuts to education programs,safety nets, infrastructure investments, and research programs will actually cost the country far more down the road than they save today. The falling deficits and lowered debt-to-GDP projections give the country room to enact targeted spending measures that would kick the economy into the sort of higher gear it needs to bring unemployment back down to pre-recession levels.

The looming end of the fiscal year also signals a renewed fight over spending levels for the coming year. The CBO confirmed yesterday that the spending levels Republicans have proposed violate the terms of sequestration by giving the Department of Defense $20 billion more than is allowed by the law mandating the arbitrary, damaging cuts.