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So the House Republicans are thinking about possibly not driving the economy off a cliff, only a steep hill, in exchange for a promise of serious discussions in the next 6 weeks of how to reduce the U.S.'s crushing budget deficit.

It is urgent that there be a deficit-cutting deal soon, because if they hesitate by more than a year or so, there may be no deficit left to cut. As shown in these charts, the deficit for the fiscal year just ended is already down by 2/3 from when Obama took office; if that trend continues, we'll run a surplus in 2014-2015, for the first time since 2001.

A few months ago my economist friend David D. Friedman (with whom I seldom agree on political matters but who knows a lot more about economics than I ever will) pointed out a problem with the way I was adjusting for inflation in those tables. I concluded he was right and started reworking the tables. In the revised tables, which I haven't posted yet, the deficit has shrunk by not 2/3 but 78% since Obama took office, and at that rate it's entirely possible we'll run a surplus in the current fiscal year.

There are of course longer-term deficit concerns, having to do with health care and other benefits for retiring baby boomers, and these need to be addressed in a sustainable, multi-decade approach, not a crisis-of-the-month approach.  Anybody who tells you we're in a debt crisis now and must cut spending (or raise taxes) drastically now or we'll turn into another Greece is either uninformed or lying.


On the subject of why the deficit isn't an urgent problem to be fixed this week, or even this year, see Brad DeLong's blog entry (he also knows far more about economics than I ever will).