Stephen Slivinski at Cato at Liberty wonders how the news about the shrinking deficit is really all that good:
Although the deficit is certainly smaller, it’s not because the White House and Congress suddenly have a newfound respect for spending discipline. Federal spending grew in excess of 7 percent this fiscal year. That’s faster than the expected growth in GDP of 6.5 percent. Besides, the federal budget is chomping on 20 percent of GDP. It consumed 18.5 percent of GDP when George W. Bush was inaugurated. And unfunded liabilities of entitlement programs continue to grow. Remind me again how this is progress?
The shrinking deficit is good. But the deficit is not the real issue…spending is. As Slivinski points out federal spending still went up this year. What happened is revenues outpaced spending because of the Bush tax cuts. The federal government cannot always count on revenues to outpace spending. Spending needs to be curtailed so that deficits shrink even in the years where revenues are not so high.
Slivinski offers the following prediction:
For the next few weeks, Republican candidates will be engaged in an attempt to persuade fiscally conservative voters to forget everything that annoyed them about the GOP’s rush to expand government and instead welcome a much larger federal budget simply because it’s closer to being balanced.