Perhaps no issue has received more media coverage and less illumination over the past year than the U.S. budget deficit, so to help clarify matters, let's do what the late, great governor of New York Al Smith would do: "Let's look at the record."
As a baseline, let's begin with the fact that Congressional Budget Office estimates the deficit will total $1.42 trillion in fiscal 2010 and $1.15 trillion in fiscal 2011. Those numbers look huge, but let me state that if the United States needs to increase the deficit to provide additional stimulus to get this economy moving again, it should do so. As economist John Maynard Keynes demonstrated, incurring short-term deficits while an economy is in a recession and operating well below its potential is not a serious policy flaw. The bigger problem facing the United States now is a weak economy that isn't creating enough jobs, not the deficit.
Second, the budget deficit is not as big a problem as some assert. To see why, let's review some research compiled by the Center on Budget and Policy Priorities (CBPP), a liberal, Washington, D.C.-based think tank.
How Did We Dig Such a Deep Hole?
The CBPP dug into the root causes of our current $1.42 trillion deficit, and found three primary culprits: The 2001 Bush tax cuts, spending for the Iraq and Afghanistan wars, and the Great Recession, which started in December 2007, more than a year before President George W. Bush left office. Here's how the elimination or the end of each would improve the nation's fiscal condition in 2011, assuming stimulus spending is allowed to decline, as expected, to $176 billion.
• If the Bush tax cuts are allowed to expire, as the law currently calls for, that will decrease the fiscal 2011 deficit by $295 billion.
• U.S. deployments in Iraq and Afghanistan will cost about $193 billion in fiscal 2011. Had these deployments not occurred, the next year's deficit would be roughly $200 billion smaller.
• Finally, the Great Recession, which has eliminated more than 8 million jobs, will reduce federal tax and fee revenue -- particularly from the income tax -- to the tune of $400 billion in fiscal 2011, the CBPP forecasts.
Add the three up and they account for $888 billion, or 77.2% of the projected fiscal 2011 $1.15 trillion budget deficit.
Let's be clear: Despite the claims of those on the right of the political spectrum that the policies of the Obama administration are to blame for the bulk of the nation's deficits, it simply isn't true. The large majority of the budget deficit projected for next year will be due to three factors that predated the Obama administration and the 111th Congress.
Which Is Harder: Entitlement Reform or Defeating Hitler?
Now, critics will counter that even if those three items were eliminated, we'd still be left with a projected $266 billion deficit for fiscal 2011. That's not a small sum: Eliminating it would require belt-tightening by federal agencies and, most likely, entitlement reform.
But to say that the United States, over, for example, a 10-year period, can't find $266 billion in spending cuts, entitlement program adjustments, and tax and fee increases, underestimates the ingenuity and resiliency of the American people. This is a nation, after all, that overcame a great internal crisis (the Civil War), defeated the modern world's greatest evil (Adolph Hitler and Nazi Germany), and turned back the greatest threat to human freedom in the post-World War II era (communism).
This may be my own idealism shining through, but compared to those threats, closing a $266 billion budget gap and restoring a healthy economy don't seem like such big problems.
Joseph Lazzaro is writing a book on the U.S. presidency and the U.S. economy.
Could Congress Eliminate the Federal Budget Deficit?