How the Grand Bargaineers Hurt America

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Excessive focus on these issues distracts crucial attention from meaningful budget questions which play out on a much shorter time frame. Right now, fiscal policy is set to be much too tight in 2013 with terrible growth effects that are being ignored by the political system. To assess fiscal policy correctly, you have to get off the focus on the long-term and instead pay attention to what politicians actually control.


We don’t have one budget deficit, we have several. They are:

- A short term budget deficit related to the Great Recession. Stimulus and economy stabilizers (UI, AFDC, and so on) increase, revenues go down.
- A deficit created by Bush-era policies that created unprecedented levels of deficit spending: tax cuts, Medicare Part D, Iraq and Afghanistan wars.
- A long-term deficit created by demographic shifts in the US population that cause increase in Medicare and Social Security outlays.
- A long-term deficit created by Medicare cost expansion as a function of overall healthcare cost growth in the US.

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