The incredible shrinking budget deficit

Noel King May 15, 2013
HTML EMBED:
COPY
A congressional aid looks over the fiscal year 2014 budget proposal documents. T.J. Kirkpatrick/Getty Images

The incredible shrinking budget deficit

Noel King May 15, 2013
A congressional aid looks over the fiscal year 2014 budget proposal documents. T.J. Kirkpatrick/Getty Images
HTML EMBED:
COPY

The Congressional Budget Office expects the federal deficit to shrink from more than $1 trillion in 2012 to $642 billion in the 2013 fiscal year. Economists say a few factors, including higher taxes, are contributing to the dramatic shift, and many caution against celebrating the news.

“What we’re doing is looking at what’s happening to a little bush in front of a forest of obligations,” said Boston University Professor Laurence Kotlikoff, who warns that while the CBO’s near-term projections may look bright, the federal government’s obligations like social security and health care costs will tick up inexorably as a growing number of Americans live longer.

The shrinking deficit isn’t likely to resolve any disputes in Washington over whether austerity measures are a boon to the economy.

“If what you think the government should be doing is trying to stimulate the economy in a time of mass unemployment, then this is in fact the result of a bad set of policies,” said Justin Wolfers, a professor of economics and public policy at the University of Michigan.

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.