This is not a record budget deficit. I know The New York Times wrote otherwise, saying, "the White House predicted Monday that President Bush would leave a record $482 billion deficit to his successor." But it's not a record deficit. Most every year, the economy grows, and so if we're running the same size of deficit, it will be more dollars without having changed its size relative to the economy, which is the only metric that matters. As Dean Baker says, "The relevant measure is the deficit as a share of GDP. The 2009 deficit will be equal to about 3.3 percent of GDP. Even if you add in 1.3 percent of GDP for the money borrowed from Social Security this only gets you to 4.6 percent, well below the 6.0 percent deficit hit in 1983." This may seem like a bit of a pedantic point, but the size of the deficit -- both how big it actually is, and how big it's perceived to be -- matters. For the past eight years, Bush has been blowing through the budget and passing emergency Iraq supplementals with hardly a whisper of concern. But you can bet that if a Democrat is elected next year, a lot of Republicans will suddenly find their fiscal conservative membership card in their other pants pocket, and become extremely worried that investment in health care, renewable energy, or anything else will harm our budget situation (Democrats will, of course, do much the same if McCain is elected). But the budget deficit isn't that bad, and there's fairly little evidence that it exerts an economic drag at these levels. All else being equal, it might be nice to have no deficit, but it's not a high priority, particularly during a likely recession when most economic theory would call for spending infusions able to kickstart the economy.
