The Associated Press reports on the latest piece of evidence showing that the deficit is falling, even as ongoing spending cuts from sequestration may be putting a damper on the economic recovery:
The White House said Monday that the federal budget deficit for the current fiscal year will shrink to $759 billion. That’s more than $200 billion less than the administration predicted just three months ago.
The new figures reflect additional revenues generated by the improving economy and take into account automatic, across-the-board spending cuts that the White House had hoped to avert.
The White House projected that economic growth would be slightly slower in the coming years than it forecast in April. The report said the automatic spending cuts that kicked in during March will slow down economic growth this year from the 2.6 percent increase it forecast for the fourth quarter of this year to a 2.4 percent increase.
The report is here. Now obviously this is coming from the White House but it mirrors the findings of the nonpartisan Congressional Budget Office, which also recently determined the deficit is shrinking.
The White House report will likely be greeted with a fusillade of arguments from liberal economists that it’s time to focus on jobs and not on the deficit or austerity. But really, why bother? The case against the need for more immediate austerity has become overwhelming, yet nothing is changing. Doesn’t citing the latest evidence of declining deficits to make the case for more investment in jobs seem kind of pointless?
I put the question to Jared Bernstein, a former White House economics adviser and frequent critic of Washington’s deficit obsession.
“I don’t expect this Congress to do much good for the economy, but I would like it to stop doing things that are bad for it,” Bernstein said. “I would be happy at this point if Congress simply agreed to stop doing harm.”
Alas, no such luck. Even as the deficit continues to fall, House Republicans are busily drawing up a list of spending cuts they will demand in exchange for the debt ceiling hike that even Speaker John Boehner has already admitted is inevitable. (As the debt ceiling crisis of 2011 showed, even the threat of default poses risks to the economy by potentially leading to downgrades.) They will continue to do this even as the sequester is set to lead to furloughs for more than 650,000 Defense Department workers. Even some Republican governors are protesting the impact some of the sequester cuts will have on their states’ disaster preparedness (yes, there are spending cuts some Republicans don’t like). But that won’t stop Congressional Republicans from insisting that any budget deal to replace the sequester must be accomplished only with spending cuts elsewhere without a penny coming from ending tax loopholes enjoyed by the rich.
The continued falling of the deficit confirms again that the push to cut the deficit isn’t really about cutting the deficit at all — it’s about cutting government for its own sake. And the continued threat of a debt ceiling showdown — even as the deficit continues to fall — is a reminder that all the debt limit ceiling saber-rattling is truly hollow. The argument in favor of such a standoff was never coherently about controlling spending in any case — the debt limit is only about paying debts Congress has already incurred — but even if it were, the argument for it would be evaporating. Conservatives are spoiling for a debt ceiling fight, and have been led to believe they are getting one, so they must have it, even if the deficit is dropping and sequestration cuts continue.