There Will Be No Deficit Problem Unless Congress Chooses To Create One

There Will Be No Deficit Problem Unless Congress Chooses To Create One

There Will Be No Deficit Problem Unless Congress Chooses To Create One

Moneybox
A blog about business and economics.
Jan. 31 2012 2:04 PM

There Will Be No Deficit Problem Unless Congress Chooses To Create One

Congressional Budget Office Director Doug Elmendorf prepares to testify before the Senate Budget committee on Capitol Hill
Congressional Budget Office Director Doug Elmendorf prepares to testify before the Senate Budget committee on Capitol Hill

CHIP SOMODEVILLA/Getty Images

Another year, another edition of the Congressional Budget Office's long-term outlook document. There are no really important changes to the substantive analysis here, but I think this new graphical presentation of an old finding helps drive home an important point—if Congress consistently deadlocks on everything, there is no medium-term deficit problem:

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The CBO, in its wisdom, chooses to believe that current law will not stay fixed. They believe that Bush tax cuts will be extended, that Medicare reimbursement rates will be raised, etc. And they forecast that those things will be done without offsets. I don't question their wisdom in projecting these things, but they are worth flagging. It's often said that Washington needs a big bipartisan agreement on deficits. It doesn't. All that would be needed is for critical masses of members of either party to block these changes. That doesn't even need to be a coherent unitary group of people. There could be one bloc of conservative Republicans who refuse to vote for SGR fixes, plus one bloc of liberal Republicans who refuse to vote for even partial repeal of the Bush tax cuts, plus a separate bloc of "deficit hawks" who refuse to vote for anything that increases the budget deficit. Indeed, I sort of wonder if the CBO's habit of lumping together likely-to-be-extended policies into this Alternate Fiscal Scenario hasn't become counterproductive at this point. The original motivation for constructing the Alternate Scenario was to drive home the gravity of the budget outlook. But having persuaded people that this represents the "real" fiscal outlook, members of Congress now feel free to vote for deficit-increasing measures as long as their extension is included in the AFS. The law, however, is what it is and says what it says. Members of Congress who think it's very important to reduce budget deficits (I don't agree with this view, by the way) should stop voting for things that make the deficit bigger. It really is that simple.