The Real vs. Imagined Deficit - Economic Scene - NYTimes.com

David Leonhardt, Times economics columnist is one of the plainer spoken, most sensible commentators on an issue "the deficit" which is the occasion for hyperbolic rhetoric. BTW - remember that the Bush tax cuts were intended to eat up the Clinton budget surplus; and that the cakewalk in Iraq was going to be paid for by Iraqi oil; and that nobody made a plan to pay for Medicare part D - the prescription drug benefit. - GWC

The Real vs. Imagined Deficit - Economic Scene - NYTimes.com:

by David Leonhardt

"Eventually, the country will have to confront the deficit we have, rather than the deficit we imagine. The one we imagine is a deficit caused by waste, fraud, abuse, foreign aid, oil industry subsidies and vague out-of-control spending. The one we have is caused by the world’s highest health costs (by far), the world’s largest military (by far), a Social Security program built when most people died by 70 — and to pay for it all, the lowest tax rates in decades.

To put it in budgetary terms, the deficit we imagine comes largely from discretionary spending. The one we have comes partly from discretionary spending but mostly from everything else: tax rates, Medicare, Medicaid and Social Security.

Taxes may be the toughest issue politically, but the mechanics of raising taxes are not all that difficult. As the 1990s demonstrated, the economy can grow rapidly even after a modest tax increase. As the last decade showed, a big tax cut doesn’t necessarily prevent mediocre growth."