While Washington failed to reach the so-called “grand bargain”, it did end up passing a series of significant small deficit reduction bills. Combined with the fact that public health care spending has slowed noticeably over the past several years, the projected long term deficit now appears relatively manageable. Our projected long term deficit has improved remarkably. From The Center for Budget and Policy Priorities:
Under current budget policies, the federal debt will edge down as a share of the economy in the middle of this decade but then resume a gradual rise. The projected ratio of debt to gross domestic product (GDP) — which was 73 percent at the end of fiscal year 2012 — will reach 78 percent in 2023 and 99 percent by 2040. (See Figure 1.)
Although the rising debt-to-GDP ratio remains a concern, we no longer project the debt to grow at an explosive rate, as many previous estimates (including ours) indicated and as many analysts and policymakers have taken as conventional wisdom about the long-term outlook. Since we issued our previous long-term projections in early 2010, the projected debt-to-GDP ratio in 2040 has shrunk by half — from 218 percent of GDP to 99 percent
At some point we should do more to reduce the incredible amount of waste and excess profit in our entire health care system. This is a smart idea in its own right and would have the added effect of reducing our deficit substantially more.
In the short term, though, there is simply no justification for Washington to remain so absurdly fixated on the deficit when there are so many more pressing issues to deal with. The economy is still weak and unemployment is still unacceptably high.
Photo by peasap under Creative Commons license