Investors Business Daily has some very interesting news.
Believe it or not, the federal deficit has fallen faster over the past three years than it has in any such stretch since demobilization from World War II.
In fact, outside of that post-WWII era, the only time the deficit has fallen faster was when the economy relapsed in 1937, turning the Great Depression into a decade-long affair.
If U.S. history offers any guide, we are already testing the speed limits of a fiscal consolidation that doesn't risk backfiring. That's why the best way to address the fiscal cliff likely is to postpone it. ...IDB
Okay. That changes our plans for Thanksgiving.
We are going to take the whole cooked turkey and all the pies down to the church that's serving Thanksgiving dinners to people who wouldn't otherwise have one. Then, if the precip holds off, we are going to make and burn effigies of John Boehner, Mitch McConnell, and Paul Ryan in our driveways.
We will then join some of our neighbors in drinking the wine we would have had with the turkey and pies and talk about the punishment we are going to deal out to Congressional Republicans, American Crossroads, the Kochs, and the entire tea party. The drunker we get, and the more lethal the punishment, the better.
Sound too good to be true? Read a little more from the IBD report and have another bottle of that halfway decent $15 dollar red while you read about the credit we owe President Obama for his role in bringing down the deficit.
The moral of this story is, once again, if you want federal deficits to fall, vote Democrats like Bill Clinton and Barack Obama into office. Save Republicans for jobs that don't involve dealing with finance, budget, the economy, and prosperity for all.
... The "fiscal cliff" metaphor is especially poor. The government doesn't need to apply the brakes with more force to avoid disaster. Rather the "cliff" is an artificial one that has sprung up because the two parties are able to agree on so little.
Hopefully, they will agree, as they did at the end of 2010, to embrace the disagreement for a bit longer. That seems a reasonably likely outcome of negotiations because the most likely alternative to a punt is a compromise (expiration of the Bush tax cuts for the top and the payroll tax cut, along with modest spending cuts) that could still push the economy into recession.
Rather than applying additional fiscal restraint now, the government needs to make sure it sets the course for steady restraint once the economy emerges further from the deep employment hole that remains. In fact, a number of so-called deficit hawks are calling for short-term tax cuts to spur growth, rather than immediate austerity.
From fiscal 2009 to fiscal 2012, the deficit shrank 3.1 percentage points, from 10.1% to 7.0% of GDP.
That's just a bit faster than the 3.0 percentage point deficit improvement from 1995 to '98, but at that point, the economy had everything going for it. ...IDB