- The Big Picture - http://www.ritholtz.com/blog -

About That Ballooning Deficit . . .

Posted By Barry Ritholtz On November 21, 2012 @ 12:10 pm In Credit,Politics,Taxes and Policy | Comments Disabled

Source: IBD [2]


Wow, this is a rather surprising data point: “From fiscal 2009 to fiscal 2012, the deficit shrank 3.1 percentage points, from 10.1% to 7.0% of GDP [3].”

It is even more surprising when you consider its source is the usually conservative Investors’ Business Daily.

Here is a longer excerpt:

Believe it or not, the federal deficit has fallen faster [4] over the past three years than it has in any such stretch since demobilization from World War II.

In fact, outside of that post-WWII era, the only time the deficit has fallen faster was when the economy relapsed in 1937, turning the Great Depression into a decade-long affair.

If U.S. history offers any guide, we are already testing the speed limits of a fiscal consolidation that doesn’t risk backfiring. That’s why the best way to address the fiscal cliff likely is to postpone it.

Yet more proof that the fiscal cliff is a manufactured crisis [5] of minimal importance.


U.S. Deficit Shrinking At Fastest Pace Since WWII, Before Fiscal Cliff [2]
Investors Business Daily, 11/20/2012

Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2012/11/about-that-ballooning-deficit/

URLs in this post:

[1] Image: http://www.ritholtz.com/blog/wp-content/uploads/2012/11/WEBcaphill01_1120_600.gif.cms_.png

[2] IBD: http://news.investors.com/blogs-capital-hill/112012-634082-federal-deficit-falling-fastest-since-world-war-ii.htm

[3] 7.0% of GDP: http://www.cbo.gov/sites/default/files/cbofiles/attachments/43698-Nov-MBR.pdf

[4] the federal deficit has fallen faster: http://www.whitehouse.gov/omb/budget/Historicals/

[5] manufactured crisis: http://www.ritholtz.com/blog/2012/11/cjr-says-fiscal-cliff-is-a-cnbc-scam/

Copyright © 2008 The Big Picture. All rights reserved.