Federal Deficit Decreases Sharply during Obama Presidency

Patton: "Shhh. Quiet. I'm waiting for the cheering to begin."

Joe Con: "What cheering? What are you talking about, Patton?"

Patton: "The good news, Joe. Conservatives like you should be delighted. You should be cheering. According to the non-partisan Congressional Budget Office (CBO), the federal deficit for this fiscal year ending Sept. 30 will fall to $642 billion, about $200 billion less than this agency predicted just three months ago." (New York Times, 5/14/13).

"Isn't reducing the federal deficit what the Tea Party's all about?", I asked. "Where's the shouting, Joe? Where's the joy? And, would you believe it Joe, the news gets even better. Look at the drop in the deficit  that's occurred under the Obama Administration. When Obama took over the presidency in 2009, the deficit was a record $1.4 trillion, a full 10.1 percent of the economy. This year's shortfall
has been reduced to 4.1 percent. Isn't that exciting?" (Associated Press, 5/14/13)

"What's more, Joe, the CBO expects the deficit picture to continue to improve in 2015 when the deficit is predicted to be only $378 billion, just 2.1 percent. (Associated Press, 5/14/13) What's the matter, Joe. You're not happy. Oh, how could I forget. According to you Republicans, the whole idea is not to govern the nation effectively; it's to make Obama look bad. Oppose anything Obama proposes, even if it's an idea the GOP supported previously. Keep your eye on the goal: to seize power in Washington. Worry about the well being of the country after that. The decrease in the deficit  makes Obama look good, so according to
right-wingers, it must be bad."

Joe Con: "Well, Patton, don't be so smug. We still have a deficit, don't we? I won't
be satisfied until the deficit is completely gone."

Patton: "First of all, Joe, according to economists, entirely eliminating the deficit is not necessarily a good thing. It slows the economy. There's not enough money in the system to stimulate growth. That sounds strange, doesn't it? But bear with me. A deficit level below 3 percent (but not zero) is considered to be sustainable (Washington Post, 5/14/13), if not desirable at this point in time."

The New York Times notes (5/14/13), "Given that the economy continues to perform well below its potential and that unemployment has so far failed to fall below 7.5 percent, many economists are cautioning that the deficit is coming down too fast, too soon."

Carlo Cottarelli, head of the International Monetary Fund's fiscal affairs division
adds, "Most economists think the U.S. economy would be growing much more quickly were it not for efforts to shrink the deficit. . . The fiscal consolidation is
putting further drag on an economy by  weakening household finances, which were battered by the 2007-2009 recession." (Reuters, 5/20/13)

Joe Con: Oh, that's hogwash!  If we just got rid of government entitlement programs, the deficit would disappear; the free market would take over; and our economic engine would be running full blast."

Patton: "Ah, Joe, I think that you've hit on another reason that
conservatives aren't overjoyed by the deficit reduction. The reductions didn't
get rid of entitlements. Hear what Nobel-winning economist Paul Krugman has to
say about that. "for many deficit scolds, it was never really about the debt, it
was about using deficits as a way to attack the social safety net. Deficits may
have come down, but not the way they were supposed to - hey, we were supposed to be kicking 65 and 66 year- olds off Medicare, not doing something so goody-goody as managing costs better." (New York Times, 5/20/13)

Joe Con: "Come on, Patton. Get real. Stop being so inconsistent. First, you tell me
deficit reductions are great. Then you tell me they're slowing the economy. Which is it?"

Patton: "Well, Joe, actually both. Most things aren't black or white; they're gray. When deficits get too great (above 3 percent), they threaten the economy by, for example, making lenders feel they will never get their money back. On the other hand, in an underperforming economy, such as the one we currently face, drastic deficit reductions cause job losses and take money out of circulation, slowing the economy further."

"Goldilocks wasn't the first one to discover that sometimes the
porridge can be too hot and sometimes too cold.  Moderation in all things, Joe, including porridge and deficit reductions."