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December 13, 2011 11:30 AM When an annual deficit loses its ‘t’

By Steve Benen

This would be a fairly interesting development, especially in an election year.

The Treasury Department forecast Monday that the budget deficit for fiscal 2012 will come in at $996 billion, the first time President Obama has presided over an annual deficit of less than $1 trillion.

The budget deficit in fiscal 2011 and 2010 was $1.3 trillion, while the Obama stimulus law pushed the deficit up to $1.4 trillion in fiscal 2009.

It’s worth emphasizing that this is a projection based on currently available data, and we won’t know the actual 2012 deficit until next fall. It’s not unusual for these preliminary forecasts to be off by significant amounts. (The 2011 deficit, $1.29 trillion, was originally projected to be $1.5 trillion.)

But if the Treasury forecast is right, it will point to a marked improvement in the nation’s fiscal conditions. For that matter, a $300 billion one-year reduction in the deficit is likely to be the best in American history, at least in real-dollar terms.

For the record, I don’t consider deficit reduction an especially important goal under the current circumstances, and would be much happier if policymakers were borrowing right now — at remarkably low interest rates — to make vast public investments and boost the economy.

But the political world has accepted as fact the notion that a smaller deficit is a better deficit. And with this in mind, will Tea Partiers and deficit hawks herald the news as a great accomplishment for President Obama?

Somehow, I doubt it.

Steve Benen is a contributing writer to the Washington Monthly, joining the publication in August, 2008 as chief blogger for the Washington Monthly blog, Political Animal.

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  • Surreal American on December 13, 2011 11:42 AM:

    And with this in mind, will Tea Partiers and deficit hawks herald the news as a great accomplishment for President Obama?

    All credit due to the GOP lead House, of course. Despite what the facts may say.

  • gasb on December 13, 2011 11:44 AM:

    From the Washington Post article:

    "Still, part of the reason for the lower deficit is an accounting quirk.

    The CBO estimate does not include an extension of the Social Security tax cut and emergency unemployment benefits. Congress is likely to extend both before they expire at the end of the year. That could push the deficit back above $1 trillion if those programs arenít offset. The two programs are estimated to cost around $200 billion.

    A big reason the first two months are lower than last year is an accounting shift. Roughly $31 billion in benefit payments for October went out in late September. Federal benefits are paid on the first day of the month. But because Oct. 1 fell on a Saturday, the payments went out a day earlier and were accounted for in last yearís deficit."

  • c u n d gulag on December 13, 2011 11:45 AM:

    Tea Party:
    When that Socialist/Fascist/Communist/Muslim/Atheist Darkie in the White House finds that the deficit losses start withe an "M," as in "Millions," maybe then we'll listen.

    Until then, DOWN WITH THE IMPERIAL KENYAN USURPING "NIGER" WITCHDOCTOR AND THE "MORANS" WHO VOTED 4 HIM!!!

  • Mark-NC on December 13, 2011 11:46 AM:

    More likely they will be claiming that it is WORSE than before.

    Remember, this is Republican math where $996 is a bigger number than $1.3 (the billion and trillion part will be ignored).

  • walt on December 13, 2011 11:48 AM:

    Deficits are, by definition, a cosmic evil when a Democrat is president, and "don't matter" when a Republican is president.

    No need to overthink this one. Obama will never get credit for anything.

  • kevo on December 13, 2011 11:50 AM:

    The real tragedy of our modern era - idiots and vested interests dusting up the landscape and noisely polluting earnest efforts to improve our nation's exceptional accomplishments, and provide a certain playing field for all citizens!

    No drama Obama has been met with resistance and obstruction at every Republican turn, but we're still making headway (albeit slowly) out of the meltdown brought to us by the same Republicans who are now spearheading the sabotage!

    President Obama is a reasonable man facing the unreasonable push back sponsored by all the usual suspects - big oil (Koch Bros.), big banks (the idiot CEO who claimed to be doing God's work), and big politicos (seen the rather corpulent Gingrich lately?)!

    Staving off the relentless culture of "rich people good, all others pay cash" can only be done at the polls in 2012. Tell all you know - a vote for a Republican anywhere is a threat to justice everywhere! -Kevo

  • cmdicely on December 13, 2011 12:00 PM:

    But if the Treasury forecast is right, it will point to a marked improvement in the nationís fiscal conditions.

    No, it will point to a marked improvement in the federal government's fiscal conditions, which isn't the same thing.

    The nation is the aggregate of the citizenry and everything belonging to them, including the government. It is not the government alone.

    For example, states cutting Medicaid, which many have been, which cuts federal spending since Medicaid is a has a state-federal sharing ratio for each state, improves the federal government's fiscal conditions in the short run (as well as those of state governments), by moving unmet need from the government to individuals in need of health care.

    It doesn't necessarily improve the nation's fiscal condition, though (if it does at all, it certainly does so less than is apparent by the improvement in the government fiscal condition.)

  • Mac on December 13, 2011 12:07 PM:

    No, the Tea Party will claim that the reduction is thanks to a Republican House.

  • Dave H on December 13, 2011 3:58 PM:

    Don't count your chickens before they hatch. There is ZERO chance of the deficit being

    This "projetion" is the result of a one-time accounting oddity (because Oct. 1 was a Sunday) extrapolated over the entire year, and assumes a GDP growth rate far in excess of what it has actually been so far this year; plus it doesn't count things the President and other Dems still want, like payroll tax cut extension, UI extensions, the Doc Fix, etc.

    If the deficit IS coming down, it is because of increased revenue, not decreased spending (because spending isn't being decreased). That increased revenue is assumed to result from GDP growth that has yet to occur.

    When the deficit is over $1T, will Greg Sargent admit he was fool for ever believing otherwise?

    Somehow, I doubt it.

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