The Deficit Bogeyman under your bed

Whoa, now that was a bracer -- yesterday's little by-the-way snowflake from CBO that The Apocalypse's Last-Supper timetable for America is now officially known.

Well, that's pretty much the way the press reports read, wasn't it?

The AP was the first, to my knowledge, with the horrifying, lights-out news that the Congressional Budget Office now reckons Obama's spending plan will produce $2.3 trillion more of red ink over the next ten years than previously expected. That grandly totals $9.3 trillion of debt, meaning, the AP continued, that "the deficit under Obama's policies would never go below 4 percent of the size of the economy, figures that economists agree are unsustainable....

"By the end of the decade, the deficit would exceed 5 percent of gross domestic product, a dangerously high level." (I don't know about you, but to me, the unsustainability of 4 percent sounds worse than the dangerously high of 5. Go figure.)

One had to read nearly to the lengthy story's end, however, to find this: "[I]f the economy outperforms CBO's expectations, the deficits could prove significantly smaller."

Again, I don't know about you, but I'd call that a close competitor for the friggin lede: some earlier, weightier mention of realistically smaller deficits would have been nice (perhaps even advisable?) among the journalistic vortex of "dire outlook" and "eye-popping ... numbers," rather than, simply, "if [estimates] prove to be accurate."

Also submerged was this: "The worsening economy is responsible for the even deeper fiscal mess inherited by Obama." Yet not mentioned at all, let alone emphasized, was just how ghastly the federal deficit might nevertheless become if spending-countermeasures aren't taken to reverse that "worsening economy."

And then there was this: "The dismal deficit figures ... inevitably raise the prospect that Obama and his allies controlling Congress would have to consider raising taxes after the recession ends or paring back his agenda."

It was, granted, refreshing indeed to see some suggestion of the looming reality that fiscal responsibility will someday have to cut both ways -- Americans are historically undertaxed, compared to the rest of the industrialized world -- but, on the other hand, dispiriting to see the usual reference to "paring" social agendas, sans a whisper about the fiscally suffocating effects of our bloated defense spending.

Yet that's the bipartisan political reflex in this nation: Preserve the military fat at all costs; just slash and burn through any civilizing impulses. And sure enough, from this morning's Washington Post came the underwhelmingly commonplace -- that "Sen. Kent Conrad (D-N.D.), chairman of the Senate Budget Committee, said he has already made 'lots of adjustments' that will slice billions from Obama's spending proposals."

I can't resist, despite the length of his remarks, quoting economist James Galbraith, who in the March/April issue of Washington Monthly addresses Sen. Conrad and others among "the chorus of deficit hawks":

[T]he deficit and the public debt of the U.S. government can, should, must, and will increase in this crisis. They will increase whether the government acts or not. The choice is between an active program, running up debt while creating jobs and rebuilding America, or a passive program, running up debt because revenues collapse, because the population has to be maintained on the dole, and because the Treasury wishes, for no constructive reason, to rescue the big bankers and make them whole.

Second, so long as the economy is placed on a path to recovery, even a massive increase in public debt poses no risk that the U.S. government will find itself in the sort of situation known to Argentines and Indonesians. Why not? Because the rest of the world recognizes that the United States performs certain indispensable functions, including acting as the lynchpin of collective security [lynchpin, though, not sole provider] and a principal source of new science and technology....

Third, in the debt deflation, liquidity trap, and global crisis we are in, there is no risk of even a massive program generating inflation or higher long-term interest rates. That much is obvious from current financial conditions: interest rates on long-maturity Treasury bonds are amazingly low. Those rates also tell you that the markets are not worried about financing Social Security or Medicare. They are more worried, as I am, that the larger economic outlook will remain very bleak for a long time.

To reiterate -- as apparently required for the Kent Conrads of Congress -- the deficit will mushroom no matter what. We, however, have a choice. We can benefit from its growth in "rebuilding America," or suffer its growth "because revenues collapse."

Furthermore, in the post-recession period we are facing advisable increased taxes, which were not a factor in the CBO's quite spooky forecast. As for the always-anticipated trillions in defense spending? Well, perhaps our fiscal convulsions and increasingly profound regret over needless wars and so many other things that merely go boom will someday, soon, compel taxpayers to say: Enough.

Lump these together -- vaster social-safety nets and equal-opportunity advancements that would morph into the politically inexpungeable, just as Social Security and Medicare did; a more reasonable, more realistic, more internationally comparable tax rate to offset debt; and determined restraints on offensive D.O.D. wastefulness -- and The Apocalypse no longer seems so inevitable.

But that would, of course, require political will -- oodles and oodles of it. And, sad to say, one doubts that this Congress has the necessary foresight and backbone. What it likely will serve up is just more debt and less progress; then everybody can blame Obama.