A trick question: If Congress takes no action in coming years, what will happen to the budget deficit?
It will shrink — and shrink a lot. This simple fact may offer the best hope for deficit reduction.
As federal law currently stands, some significant tax increases are set to take effect in coming years. The most important is the scheduled expiration of the Bush tax cuts at the end of 2012.
As long as the President vetoed any change to current law and Congress couldn’t muster the two-thirds vote in both chambers to overturn the veto, according the the CBO (PDF), our deficit would drop to a very manageable 3.2 percent of GDP.
The problem is that leaders of both parties have both pledged an unshakable commitment to, in the near future, make our deficit projections dramatically worse by extending all or most of the Bush tax cuts.
Se, we live in a bizzaro world where we are told that a legitimate political debate is our politicians telling us how critical it is to force regular people to sacrifice to solve problems that don’t actually exist currently but that the politicians have decided they will fight to create.