Who says they can’t get anything done in Washington?
by digby
The government on Monday reported a $97.6 billion deficit for July but remains on track to post its lowest annual budget gap in five years.
July’s figure raises the deficit so far for the 2013 budget year to $607.4 billion, the government says. That’s 37.6 percent below the $973.8 billion deficit for the first 10 months of the 2012 budget year.
The Congressional Budget Office has forecast that the annual deficit will be $670 billion when the budget year ends Sept. 30, far below last year’s $1.09 trillion. It would mark the first year that the gap between spending and revenue has been below $1 trillion since 2008.
Steady economic growth, higher taxes, lower government spending and increased dividends from mortgage giants Fannie Mae and Freddie Mac have helped shrink the deficit.
And to think they did it while millions of people were suffering from the crash of the housing crisis and the worst long term unemployment rate since the Great Depression. That’s quite an achievement.
The good news, of course, is that we don’t have to worry any more about all this budget cutting. The deficit is coming down sharply and we can finally relax.
Well … not exactly:
Still, looming budget fights in Congress are complicating the picture. When lawmakers return from their recess in September, they will need to increase the government’s borrowing limit. They will also have to approve a spending plan for the budget year that begins Oct. 1. Republicans and Democrats remain far apart on both measures.
Republicans want President Barack Obama to accept deeper cuts in domestic government programs and in expensive benefit programs such as Medicare and Social Security. Obama has argued that Republicans must be willing to accept higher taxes on the highest-earning Americans.
Deja vu all over again.
I’m just going to reprise this little quote from Stephen Moore I posted last night for everyone to ponder:
The sequester is squeezing the very programs liberals care most about—including the National Endowment for the Arts, green-energy subsidies, the Environmental Protection Agency and National Public Radio. Outside Washington, the sequester is forcing a fiscal retrenchment for such liberal special-interest groups as Planned Parenthood and the National Council of La Raza, which have grown dependent on government largess.
But the fiscal story isn’t all rosy. The major entitlements remain on autopilot and are roaring toward insolvency. Thanks in large part to Mr. Obama’s aversion to practical fixes, the Congressional Budget Office calculates that through July of this year Social Security, Medicare and Medicaid spending are up $73 billion from just last year. This doesn’t include ObamaCare, which is scheduled to add $1 trillion of new costs over the next decade.
[…]
Welcome to the new fiscal reality in Washington. All Republicans need to do is enforce the budget laws Mr. Obama has already agreed to. Entitlement reforms will come when liberals realize that the unhappy alternative is to allow every program they cherish to keep shrinking.
What a fine mess, eh?
The real negotiation isn’t between the “programs liberals cherish” and “entitlements” since they are the same thing. That’s called “lose-lose” for the Democrats and I’d guess even the dumbest of them see just how foolish it would be for them to make that deal at this point. Being the “grown-up” in the room is highly overrated as a vote getter.
The real negotiation is between the defense hawks in both parties and the budget hawks in the GOP joining with the Democratic doves. It’s possible that the military will be able to continue to squeeze its civilian workforce but at some point they are going to face real spending cuts to programs that make their patrons real money. Moore said that the military was going to have to wind down anyway so no harm no foul. But that’s never stopped them from pitching a fit before and I’d guess they’re not going to suddenly decide that it’s their patriotic duty to give up their profits.
But who knows? Sequestration has resulted in real pain for the least able to withstand it and it’s shameful. But the proposed “entitlement” cuts will do the same. There is no easy way out. But then we had the leaders of both parties demagogueing deficits for the past several years with the only question between them being how much chump change the millionaires were willing to temporarily accept in order to paper over the fact that many of the safety net programs were being radically downsized in the middle of an epic recession. This outcome is exactly what you’d expect.
Who says they can’t get anything done in Washington?
.