47° Good Afternoon
47° Good Afternoon

Bessent: Some actual good news about the deficit

Credit: TMS illustration by Michael Osbun

Remember all the recent caterwauling in Washington about trillion dollar plus budget deficits?
Never mind.
The latest estimate puts this year’s deficit — the difference between what comes in and what goes out — at $642 billion. That’s half what it was four years ago and $200 billion less than was projected just three months ago.
So, what happened?
The economy got off the mat and began growing. That payroll tax cut we all enjoyed for two years went away. Congress cut spending a bit and raised taxes a bit. The rate of increase in health care costs slowed. That’s all good news.
What now?
If Congress is true to form it will use the eased budget pressure to claim credit and an excuse to do nothing. That would be a mistake. It’s an opportunity to do what needs doing.
That means retooling entitlement programs such as Social Security and Medicare — going to a less generous cost of living calculation for instance, and ramping up means testing for the affluent — to ensure they’ll be healthy for years to come.
And it means simplifying the income tax code by limiting deductions and breaks, and lowering rates, which would be great for taxpayers and good for the economy.
If the $642 billion projection from the nonpartisan Congressional Budget Office, and the earlier $618 billion one from the administration’s Office of Management and Budget are on target, this fiscal year’s deficit will total about 4 percent of the nation’s economy’s output. That’s a sustainable level. But it isn’t expected to last without some changes in entitlement spending.
Congress and the White House should seize the moment. With what seems like a scandal a day popping up, that’s not likely. But it’s what a responsible government would do because that's what would be best for the public.