Bad news about the shrinking deficit
TEXT OF STORY
Bill Radke: As we reported last week, it looks like the federal budget deficit is going to come in smaller than expected today. The Congressional Budget Office
and the White House Office of Management and Budget will give their updates this morning
on the government’s finances. Now a shrinking deficit might sound good to you, understandably, but Marketplace’s John Dimsdale says it’s not that good.
John Dimsdale: Yes, this year’s projected deficit is about to drop. But it’s mostly because the government won’t be spending some $250 billion that had been set aside for another bank bailout.
STAN COLLENDER: It’s not as if the President and Congress sat down and did a big deficit-reduction plan or had a big compromise or something.
Qorvis Communications budget watcher Stan Collender says even the lower deficit, somewhere around $1.6 trillion is by far the largest ever. But he thinks the red ink was necessary to fight the recession.
COLLENDER: Given that consumers weren’t spending and businesses weren’t spending earlier in the year, there was no other place to go.
But budget watchdogs, like Maya MacGuineas at the Committee for a Responsible Budget, say there’ll be hard choices once the economy starts to recover.
MAYA MACGUINEAS: We’re going to have to talk about raising taxes and cutting spending. Things politicians don’t like to talk about but they’re going to be absolutely necessary to do.
Among her recommendations — let the tax cuts sponsored by President George Bush expire next year.
In Washington I’m John Dimsdale for Marketplace.
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