TEXT OF STORY
Bob Moon: As the government’s fiscal year draws to a close, the latest projections put the deficit at less than $160 billion dollars. That’ll be the smallest deficit since before the 9/11 attacks. Commentator David Frum says we need to keep it that way:
David Frum: In 2001, we saw terrorists lay waste to the financial district of New York, ground the U.S. civil aviation fleet for almost two weeks, impose huge and continuing security costs on governments, individuals and firms. In response, the U.S. has fought two major wars and half-a-dozen small-scale counter-insurgency campaigns from Somalia to the Philippines.
And through all this — oh and a wave of confidence-wrecking corporate scandals — the U.S. economy has posted just one single quarter of negative growth.
Relative to national income, the deficit has now dipped under 2 percent, or about half the level that prevailed in the 1980s. Credit for this improvement goes to the super-strong U.S. economy. And since “the economy” is just a technical word for the hard work of people like you, well: congratulations.
So my question to you is : How long can you keep at it?
The credit markets look ugly. It’s not just housing — credit card defaults have jumped by one-third over the past quarter. Stock markets are shaking. Ditto the housing market.
While economic growth is looking uncertain, government spending continues to grow rapidly, on health care above all. The Congressional Budget Office predicts that total government spending on Medicare and Medicaid will more than double as a share of national income over the next decade.
We could pull out of Iraq tomorrow, quit Afghanistan and even close the entire Pentagon, and still barely make up for the projected rise in healthcare costs. We could abolish all the Bush tax cuts — in fact, they’ll expire soon anyway — and still face massive deficits by the 2020s because of that healthcare spending.
You cannot balance the budget without restraining spending. But with the recent power shift in Washington, the most ferocious critics of Bush administration overspending are suddenly discovering an appetite for even greater spending of their own.
That’s bad arithmetic. It’s bad economics. If Americans want to stop it, they need to act to ensure that it becomes bad politics to.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.