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Smyrna/Clayton Sun-Times
The deficit tamed
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By Rick Holmes
March 3, 2013 6:05 p.m.



In 2011, a target was identified for reducing a federal budget deficit then seen as out of control. The Simpson-Bowles commission adopted that consensus when it called for $4 trillion in deficit reduction over 10 years.



With the sequester cuts official, we now have a score: Washington has cut the projected 10-year deficit by $3.9 trillion.



Close enough for government work. Declare victory, and let’s move on.



But before we do, let’s make sure everyone understands what happened.  Washington tamed the deficit in three steps: The debt ceiling deal in August 2011, the fiscal cliff deal on Jan. 1, and the sequestration cuts.



Some highlights from the Times’ analysis of the end product of two years of political wrangling:



-       Where the deficit reduction came from:  66 percent spending cuts; 18 percent new revenues; 17 percent interest on savings



-       Where the cuts come from:  50 percent from non-military discretionary; 44 percent from military; 5 percent from health entitlements



The big picture, then, shows that the U.S. has adopted a fiscal policy heavily weighted toward austerity.  Every people complain about the anemic recovery, austerity ought to get the blame.



Here’s what the deficit fix Washington has arrived at doesn’t include:



-       Tax reform



-       Entitlement reform



-       Investments in growth



The good news from the Sequester showdown is that it appears there will be no fight at the end of March over keeping the government open.  There will be some flexibility given to the White House to shift money between accounts to reduce the impact of the Sequester cuts.  I don’t know if we’ll have another manufactured crisis over raising the debt ceiling, but I would hope the attention will now turn toward the budget for the fiscal year beginning Oct. 1.



I’d like to think there’s still room for a grand bargain that includes tax reform that lowers rates while still producing more revenue, entitlement reform and new investment in infrastructure and education. Arriving at such a deal is likely to be ugly, just as knocking $3.9 trillion off the deficit was ugly. But it would be easier to arrive at if people would  take this deficit reduction at face value and declare mission accomplished.



 



 

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