All is quiet on the federal deficit front – or so many in Washington would like to pretend. Exhausted by the past couple of years of political trench warfare over a grand bargain, congressional Republicans and Democrats are doing nothing to end the across-the-board cuts to discretionary programs, known as sequestration, or to address the nations long-term fiscal predicament. The forces of complacency may find more ammunition in the Obama White Houses most recent fiscal update. The Office of Management and Budget estimates that the federal deficit will be $759 billion in the year ending Sept. 30, or 4.7 percent of gross domestic product – rather than $973 billion and 6 percent of GDP, as it calculated in April. The OMB numbers rest on the unlikely assumption that President Obamas tax and spending policies get enacted. Still, they are consistent with declining deficit forecasts from the Congressional Budget Office, which assume no change in current law.
We hope President Obama, who has been conspicuously silent about fiscal matters since dining with potential Republican Senate negotiation partners in April, does not take the OMB numbers as cause to write off this issue.
The report projects that net public federal debt will remain above a historically abnormal 65 percent of GDP through 2023, assuming no wars or major recessions in the interim. If Obama and his Republican counterparts find that rationale for action too farsighted, Congress needs to pass a new spending bill by Sept. 30, and the United States will hit its legally authorized borrowing limit in October, according to the CBO.
We have no objection to cutting any part of government – if and when those cuts take place in response to considered policy judgments, as opposed to the automatic manner in which the sequester operates. Obama and Congress need to turn their attention back to fiscal policy precisely because current law sets a path for government under which more and more money will flow on autopilot – into Social Security, Medicare and other entitlements – while the resources to deal with any other needs, defense or non-defense, get squeezed. In other words, when our leaders avoid the countrys long-term fiscal issues, they avoid their most basic responsibility: to govern.