By Dean Baker, Truthout.org:
Last week, the Congressional Budget Office reported that the deficit for the 2014 fiscal year that just ended was $460 billion, considerably lower than they had previously projected. This puts the deficit at 2.7 percent of GDP. At that level, the size of the debt relative to the economy is actually falling.
Not only is the deficit down sharply from its levels of 2009 and 2010, when it was near 10 percent of GDP, it is below the levels that even the deficit hawks had targeted back in those years. In other words, even if we had followed the lead of deficit crusaders like Erskine Bowles and Alan Simpson, the deficit would be no lower today.
If anyone thought this would make the deficit hawks happy, they are badly mistaken. They are furious.
Fred Hiatt, the editorial page editor of the Washington Post, fumed about Obama’s “false victory over the deficit,” and warned that if there are no changes in policy, the debt to GDP ratio will soon begin rising again hitting an “insupportable 106 percent by 2039.” One could find similar expressions of outrage from the various Peter Peterson funded organizations like Fix the Debt or the Committee for a Responsible Federal Budget.
This ranting is utter nonsense. If Fred Hiatt had bothered to do any homework he would have discovered that if the debt held by Social Security is included, the current debt to GDP ratio is already 103 percent of GDP, almost identical to 106 percent number that for unknown reasons he asserts is insupportable....