Economy

Stop the Austerity. The Deficit Is Dropping Precipitously.

Via David Frum, here’s AEI’s John Makin with the positive news:

The United States has actually made substantial progress toward deficit reduction in 2013 …

On January 2, as part of an agreement to avert the sharpest austerity that would have been triggered by the “fiscal cliff,” Congress did pass a total of about $180 billion of annual tax increases. The result is that, by the 2014 fiscal year, the fully phased-in sequester, along with the January 2013 tax increases, will cut the US deficit—already on a downward path—from $1,089 billion in 2012 to $845 billion in 2013, and then further to $615 billion in 2014. In terms of the deficit-to-GDP ratio, that is 7 percent in 2012, down to 5 percent in 2013, and down further to 3.7 percent in 2014.

We already knew about the $845 billion number, but I was unaware of the $615 billion figure. And regarding the president’s promise to cut the deficit in half in his first four years, he only missed the goal by a year — the deficit has dropped from 9.9 percent of GDP in 2009 to 5 percent of GDP at the end of this year.