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October 15, 2010

DEFICIT SHRINKS FROM LAST YEAR'S RECORD.... Deficit hawks probably won't be pleased with the total, but they should at least be pleased with the direction.

The federal government budget deficit shrank in fiscal 2010, but the big gap was only $122 billion lower than the record high set a year ago.

The U.S. spent $1.294 trillion more than it collected in the fiscal year that ended Sept. 30, the Treasury Department said Friday.

The deficit amounted to 8.9% of gross domestic product. That's down from fiscal 2009, when the deficit of $1.416 trillion was 10.0% of GDP.

Spending fell and revenues rose in fiscal 2010 as the economy recovered from the deep recession that contributed to the nation's troubled fiscal condition.

If this sounds familiar, it's because the Congressional Budget Office reported on its estimate of the federal budget deficit for FY2010 would just last week. Today's Treasury report is the official deficit tally, though as it turns out, the CBO projection was almost on the nose.

The $1.294 trillion shortfall is smaller than last year's total; it's slightly lower than the deficit President Obama inherited from his predecessor; and the final figure was smaller than projections made by the administration and the CBO earlier this year.

Want to have some fun? Ask your favorite Tea Partier whether the deficit they claim to care so much about is higher or lower now than when Obama took office. They won't care for the answer, but it's true.

What's more, as Stan Collender recently noted, the $122 billion improvement on the deficit "is the biggest one-year nominal drop in the deficit that has ever occurred." We probably won't see headlines blaring, "U.S. achieves biggest one-year deficit reduction in American history," but that just happens to be the case.

So, why won't this news be heralded as a positive development. For all the reasons we talked about last week.

For those of us who want to see the government borrow more in order to invest in economic growth and job creation, news of the deficit going down isn't good news at all. Borrowing more money is exceedingly cheap right now, and the economy desperately needs a boost. The fact that the deficit is shrinking may seem like good news in the abstract, but it's arguably the opposite of what we need.

And for those who consider the deficit a civilization-threatening scourge, we may be witnessing "the biggest one-year nominal drop in the deficit that has ever occurred," but it's not enough because it's still $1.29 trillion. Indeed, Senate Minority Leader Mitch McConnell responded to the report showing a shrinking a deficit with a press release, boasting that the new figure is proof that Republicans are right (about what was unclear).

As Collender put the reduction "was both too much and not enough."

Jonathan Cohn added last week that there were plenty of center-right Dems who balked at deficit spending, even to improve the economy, because they were afraid of a backlash: "Running higher deficits, they thought, would incur the wrath of voters and make re-election difficult. Well, now they've gotten their way. The deficit is coming down. Let's see how much the voters care come November."

Steve Benen 4:40 PM Permalink | Trackbacks | Comments (10)

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Want to have some fun? Ask your favorite Tea Partier whether the deficit they claim to care so much about is higher or lower now than when Obama took office. They won't care for the answer, but it's true.

Kind of a meaningless question since the debt is what they are really concerned about. The real question is if they can explain the difference between the debt and the deficit, and then ask who has added more to the debt, Democrats or Republicans.

Posted by: martin on October 15, 2010 at 4:57 PM | PERMALINK

Sadly, the only true deficit the Tea Partiers are worried about is the white deficit in the White House as of 2008!

I give no quarter to racial haters, and when we peel back all the rotten layers of their stinking onion, racial hatred is the core element of the modern Tea Party movement! -Kevo

Posted by: kevo on October 15, 2010 at 5:00 PM | PERMALINK

"debt is what they are really concerned about"

Actually, deficit is what they say they're concerned about, until you point out that it's going down, and then, in order to have something to complain about, maybe they'll come up with the debt. With them, the anger comes first, the rationale follows.

Posted by: David in NY on October 15, 2010 at 5:00 PM | PERMALINK

So:

- Obama lowered taxes.

- Obama lowered the deficit.

It's not like we expect the tea party to do anything except lie about Democrats, but the "fiscal hawk" "centrists" that infest the media betray a lot about what they really want and believe by refusing to give the Democrats credit for doing the things the "centrists" say they want.

Posted by: mcc on October 15, 2010 at 5:06 PM | PERMALINK

Yes, they say they are concerned about the deficit, then they start yammering about passing it on to their grandchildren, which would be the debt.

Keep the gov't out of my medicare;>

Posted by: martin on October 15, 2010 at 5:45 PM | PERMALINK

If this sounds familiar, it's because the Congressional Budget Office reported on its estimate of the federal budget deficit for FY2010 would just last week.

Huh? Steve, I've read this sentence several times, and I still don't understand what you're trying to say. Is the "would" supposed to be in there? That whole paragraph is awkward.

Indeed, Senate Minority Leader Mitch McConnell responded to the report showing a shrinking a deficit with a press release, boasting that the new figure is proof that Republicans are right (about what was unclear).

Lose the "a" between "shrinking" and "deficit".

As Collender put the reduction "was both too much and not enough."

I think you want an "it," after "put".

Are you trying to make your posts more difficult to read??

Posted by: josef on October 15, 2010 at 6:11 PM | PERMALINK

CNNMoney headline: "Deficit tops $1 trillion again"

Our media is stupid.

What I'd love to see is someone push a "deficit vs jobs" message. You have to pick one. Most people don't even understand what the deficit is, other than some vague measure of "bad".

Posted by: Steve Simitzis on October 15, 2010 at 9:51 PM | PERMALINK

No, deficit hawks won't be pleased that the budget deficit is shrinking, because President Obama remains black. That's all it's about, all it's ever been about.

Posted by: Helen on October 16, 2010 at 5:09 PM | PERMALINK

Yeah, even NPR reported that...

"The Obama administration says the federal deficit hit a near-record $1.3 trillion for the just-completed budget year.

That means the government had to borrow 37 cents out of every dollar it spent as tax revenues continued to lag while spending on food stamps and unemployment benefits went up as the economy slowly pulled out of recession.

The eye-popping deficit figures provide Republican critics of President Barack Obama's fiscal stewardship with fresh ammunition less than three weeks ahead of the midterm congressional elections.

... followed by the point no one cares about:

"The deficit was $122 billion less than last year, a modest improvement."

Fair and balanced!

Posted by: Broadway Carl on October 16, 2010 at 10:17 PM | PERMALINK

Wait, what? If the 2009 fiscal year was from October 2008 - September 2009, Bush wouldn't have even been in office for most of that time. And given that we spent about $700 billion on the bailout, it's unremarkable (to say the least) that the deficit went down. So what's all the excitement?

Posted by: Noah on November 25, 2010 at 3:38 PM | PERMALINK




 

 

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