…official forecasters will have to radically alter their projections this summer. The CBO forecast of $845 billion in red ink this year, 5.3% of GDP, is hopelessly outdated; the deficit will fall well below 5% of GDP, perhaps to about $700 billion. Then the improvement really takes hold – instead of the official forecast of a $616 billion deficit in fiscal 2014, we’d anticipate something like $500 billion, close to 3% of GDP. And in fiscal 2015, the deficit could drop below 2% of GDP, perhaps to $300 billion.
Call us crazy, but if the economy finally lifts off in 2014-2015, with GDP growth in the 4% neighborhood — with the sequester still in place – a surplus by fiscal 2015 is not totally out of the question.
Fantastic news for fiscal hawks… who will probably ignore this in lieu of focusing on the national debt because they need to perpetuate the cartoon caricature of the president as a recklessly spending socialist.
And right on cue, the House Republicans passed a “debt prioritization” bill today. Good times.