2010 deficit
I read the same Washington Post story on yesterday's release of the Monthly Treasury Statement as did Stan and Brad DeLong and thought it was one of the worst examples of journalism I've seen lately. No member of the Obama administration spoke on the record for the story. To report anonymous opinions as if they are news is to have The Washington Post lower, not raise, the quality of the discussion.
The proper report on the economic news is that the cumulative deficit since the start of the fiscal year is -- for the first time in the fiscal year -- lower than the corresponding number in the prior fiscal year. That this has finally happened in the sixth month of the fiscal year should indicate to all involved, whether David Cho as the author of the story or the anonymous administration officials, that this event cannot be claimed to be the start of a trend any more than it can be claimed to be another blip.
Today's The Washington Post includes a story by David Cho about how this year's deficit could be substantially -- $300 billion or so -- lower than was projected when the Obama fiscal 2011 budget was released in February. The reduced deficit would be the result of higher revenue because of economic growth and lower spending on the financial bailout.
The question is whether this is a good or a bad thing.
Brad DeLong says that it would be unequivocally bad given that unemployment is so high and more needs to be done to bring it down. But the administration officials anonymously quoted by Cho obviously were leaking the story because they thought the news would be very well-received, that is, they think it's good thing.
And the combination of the two is the tension that has existed in Washington since the start of the Obama administration between economic policymaking and political needs.
I've been saying for a while that, contrary to the GOP rhetoric that the sky is falling, the 2009 and 2010 deficits were and are the absolutely correct fiscal policies. Back in October I called the $1.4 trillion deficit "a triumph" and said it was clear that's what needed to be done given that businesses and consumers weren't spending and, most importantly, that monetary policy had done just about all it was going to be able to do.
Paul Krugman yesterday provided three paragraphs in an excellent longer piece that explained this further:
