‘The deficit chart that should embarrass deficit hawks’

Jed Graham calls this "the deficit chart that should embarrass deficit hawks":

"Here's a pretty important fact that virtually everyone in Washington seems oblivious to: The federal deficit has never fallen as fast as it's falling now without a coincident recession," he writes for Investor's Business Daily.

This is true whether or not the sequester goes into effect.

And we may well have a coincident recession this time, too. According to the initial GDP numbers, the economy shrank slightly in the fourth quarter of 2012, largely because government spending fell. As federal spending continues to fall and the effects are compounded by new tax increases (the payroll tax cut expired in January, for instance), it wouldn't be a huge surprise to see more quarters of negative growth. So, given that the typical definition of a recession is two consecutive quarters in which the economy shrinks, this drop in deficits might yet be accompanied by another recession.

Hence, two things to remember in the deficit conversation: First, the deficit is expected to fall faster in 2013 than at any time in the last 60 years. And second, that kind of austerity tends to be accompanied by recessions, and we've already seen evidence that the same might be true this time, too.

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Ezra Klein · February 12, 2013