'Get serious' on debt, Obama told
WASHINGTON —Senate Republican leader Mitch McConnell says it's time for the president to “get serious about spending.” The budget numbers suggest President Obama has — with beneficial effects on the deficit.
Federal outlays over the past three years grew at their slowest pace since 1953-56, when Dwight D. Eisenhower was president. Expenditures as a share of the economy sank last year to 22.8 percent, their lowest level since 2008, according to Congressional Budget Office data. That's down from 24.1 percent in 2011 and a 64-year high of 25.2 percent in 2009, when Obama pushed through an $831 billion stimulus package.
“If you strip out the stimulus, discretionary spending over the last few years has been quite modest and is scheduled to go to levels we haven't experienced in modern times,” said Robert Reischauer, a former director of the CBO. “Obama signed on to that,” partly in response to Republican pressure.
The slowdown in government spending has helped bring down the budget deficit, especially when measured against the size of the economy.
The shortfall fell to $1.1 trillion, or 7 percent of gross domestic product, in the 2012 fiscal year ended Sept. 30, from $1.3 trillion, or 8.7 percent of GDP in 2011. In fiscal 2009, it was $1.4 trillion, or 10.1 percent of the economy, the highest since World War II.
The deficit probably will fall to $500 billion, or just below 3 percent of GDP, by 2015, as businesses and consumers step up their spending since bringing their own debts down, said Jan Hatzius, chief economist at Goldman Sachs. The improving economy will increase tax receipts while lowering government expenditures for benefits including food stamps and unemployment compensation.
“Concerns about the federal deficit are likely to diminish over the next few years,” the New York-based economist wrote in a Jan. 11 report to clients.
Michael Darda, chief economist at MKM Partners in Stamford, Conn., says much the same. He blamed the elevated budget gap on the recession and the slow recovery that followed.
“In the next few years, if growth really picks up, the deficit will simply melt away” to low levels, he said.
A budget gap of about 3 percent of GDP, such as Hatzius envisions, would be enough to stabilize federal debt as a share of the economy, said Donald Marron, who was acting CBO director in 2006 and who heads the Urban-Brookings Tax Policy Center in Washington.
Outstanding marketable debt, which excludes bonds held by the Social Security pension fund and other government entities, stood at $11.3 trillion, or 73 percent of GDP, on Sept. 30, according to the CBO. As a share of the economy, that's the most since 1950.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Corinthian Colleges to shut down more than two dozen remaining schools
- Presley’s planes will remain at Graceland
- McCain renews push to have military, not CIA, manage drone strikes
- Severe storm with tornado roars into north Texas
- Supreme Court leans toward legalizing gay marriage nationally
- High morale linked to longer survival among elderly
- Mourners attend Baltimore man’s wake
- At New York City rally, United States urged to acknowledge slaughter of Armenians as genocide
- Study a surprise: Commercial bees unfazed by pesticides
- Hostility at VA lingers, panel told
- ‘Organic’ tag on water-raised produce raises ire