The MSR [Mid-Session Review] shows that the projected deficit in 2013 has decreased by more than $200 billion as compared to the projection included in the Budget. The 2013 deficit is now projected to be 4.7 percent of GDP. That is down from a deficit of 10.1 percent four years ago – representing the fastest period of deficit reduction since the years immediately following World War II.So not only has the president took the deficit that was handed to him by George W. Bush and more than cut it in half, his budget will reduce it to 2% of GDP by 2023. Well, not if the GOP can help it, I suppose.
Going forward, the MSR shows that, under the President’s Budget, deficits will be reduced to below 3 percent of GDP by 2017 and continue to fall to about 2 percent in 2023. Importantly, the MSR also shows that the Budget achieves a core goal of fiscal sustainability by putting Federal debt on a declining path as a share of the economy.
Before the GOP goes out celebrating that this is due to the sequester they forced on the American people - which is stunting job growth - the Washington Post reports exactly how much the sequester has contributed of that $214 billion in reduced estimate:
The administration counts $43 billion in reduced spending on defense and domestic programs — largely the result of the sequestration — as contributing to the smaller deficit.This, of course, does not include an estimate of how much revenue we are missing out on because of the sequester. Even in the sequester's "best-case" scenario, it contributed about a fifth of the reduced estimate. Looked at another way, if the sequester were averted, and no revenue whatsoever were generated from the economic activity, the deficit would have been a mere 5% bigger. That is the GOP's "big idea."
Other factors included much higher tax revenue in a year when a variety of taxes went up and an unusual payment from the federally backed mortgage finance giants Fannie Mae and Freddie Mac as a result of their improving financial condition.
I am going to try to do a more detailed post on the Mid-Session Review from the OMB for tomorrow, but for now, make this your Monday night open thread.