David Brooks Bemoans the Fact that We Didn't Have the Fiscal Cliff a Year Ago
Friday, 24 August 2012 04:33
He didn't use exactly those words, but that is one implication of his column on Paul Ryan's decision to not support the Bowles-Simpson deficit plan when he was a member of the deficit commission back in 2010. (Brooks attributes Ryan's action to his hope for a larger scale overhaul of Medicare. More cynical types might attribute it to his adherence to the Republican dogma of never supporting tax increases.)
Anyhow, fans of the Bowles-Simpson report might recall that it would have first put budget cuts in place in October of 2011. The projected deficit for fiscal year 2013 (Figure 2), which begins on October 1 of this year, is less than 4.0 percent of GDP. The people running around Washington worried about the end of the world fiscal cliff scenario are worried about tax increases and spending cuts that will shrink the deficit to 4.0 percent of GDP as of January 1, 2013.
The timing of the tax increases and budget cuts in the Bowles-Simpson scenario is obviously somewhat different than the fiscal cliff story, and it does assume a stronger growth path than we have actually seen, but it is more than a bit bizarre to see many of the same people who have been screaming about the horror of large deficits now terrified by the horror of large deficit reduction.
Just to be clear, deficits are needed now. There is nothing other than the budget deficit to replace the private sector demand we lost when the housing bubble collapsed. But you don't get to run around one day screaming the deficits are horrible and then turn around the next day and say we need them; or at least you shouldn't be able to do this and still expect to be taken seriously.