Pop The Cork? The Biggest Deficit Reduction in U.S. History Occurred from 2009 to 2010

In previous years we would have been breaking out the champagne on this news: The monthly budget review released yesterday by the Congressional Budget Office estimated that the federal budget deficit fell by $125 billion from 2009 to 2010. This by far is the biggest one-year nominal drop in the deficit that has ever occurred.

There were two primary reasons there was no cheering yesterday.

First, it’s not at all clear that reducing the deficit was the correct fiscal policy given the slow growth in the U.S. economy.

Second, in the current political atmosphere even a 50 percent reduction would have still left lots of room for those who want to do so to use the deficit as an issue. To those folks, the $125 billion reduction simply isn’t as important as the $1.29 trillion deficit that’s available for campaign fodder.

In other words, the $125 billion reduction in the deficit was both too much and not enough.

A quick word of caution. The CBO numbers are estimates; the official final number, which will be released later this month by the Treasury, is likely to be a little different. My back-of-the-envelope guess is that it will be a bit lower.

About Stan Collender 126 Articles

Affiliation: Qorvis Communications

Stan Collender is a former New Yorker who, after getting a degree from the University of California, Berkeley, moved to Washington to get it out of his system. That was more than 30 years ago.

During most of his career, Collender has worked on the federal budget and congressional budget process, including stints on the staff of the House and Senate Budget Committees; founding the Federal Budget Report, a newsletter that was published for almost two decades; and for the past 11 years writing a weekly column for NationalJournal.com and now RollCall.com.

He is currently a managing director for Qorvis Communications, where he spends most of his time working with and for financial services clients.

Visit: Capital Gains and Games

Be the first to comment

Leave a Reply

Your email address will not be published.


*