General Discussion
In reply to the discussion: We've just added $3.6 trillion in debt. [View all]frazzled
(18,402 posts)The so-called "crisis" involved a number of things:
(1) taxes going up on everyone (not just the wealthy) during a period where the economy was still in a fragile state; people having less money to spend could have put the economy back into a slide.
(2) automatic sequestration that had been enacted by Congress in 2011 kicking in, which was tantamount to a severe austerity budget--another thing that would be bad for the economy in the short term.
It's really the austerity part of the budget, still to come, that is the most dangerous. All the cuts, with insufficient increased revenues, would have been hurtful not only to individuals (especially the poor) but to the recovering economy as well. As it stands now, no new spending cuts have been enacted that could affect the deficit. We just kicked that can down the road.
All I was saying above is that the interpretation of the deficit is (a) a relative one, since it is being measured against a total and permanent lapse of all the tax cuts, which neither Congress or the White House was ever going to let happen; and (b) an incomplete one, since no grand bargain was made in which spending cuts and further revenues were decided on.
The harder part of this deficit reduction thing is going to come in two months: spending cuts will be decided (whether they are the ones the WH wants, such as letting Medicare negotiate drug prices, or Republican ones, such as cutting everything that isn't nailed down and isn't defense), and additional revenues gained from closing loopholes and dealing with corporate taxes. This thing is simply only about 1/3 done at this point. So it's too early to be getting our knickers in knots about final deficit projections.