Guess What’s Driving the Deficit?

October 11th, 2012 at 10:15 pm

Hint: As you see in this new chart from CBPP, it’s not the Recovery Act.

Read their update of the factors responsible for the budget deficit for the rest of this decade.  Here are my key takeaways:

–things that get into and out of the system, like the Recover Act and even the TARP, are not the things that drive the deficits;

–things that stay in the system and remain unpaid for, like the Bush tax cuts, do drive the deficits;

–the downturn itself played a large role, by triggering automatic stabilizers and reducing tax revenues;

–absent all of this stuff (see the black line at the bottom) there’s virtually no budget deficit;



(Figure 2 from the CBPP report shows how these factors drive the debt-to-GDP ratio.  Here, the temporary measures raise the level of the debt but not its growth.)


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One comment in reply to "Guess What’s Driving the Deficit?"

  1. John Kurman says:

    I would pay good monies for Joe Biden to hold this chart up at tonight’s debate.