The Congressional Budget Office predicts the deficit will reach $1.5 trillion this year:
The government’s budget deficit will soar to nearly $1.5 trillion this year, the nonpartisan Congressional Budget Office said Wednesday, an anticipated but politically galvanizing calculation that further intensified the partisan battle over the nation’s fiscal future.
The $1.5 trillion deficit projection is $414 billion higher than its previous estimate, in August, and reflects in part the tax cut deal last month between President Obama and Republicans. The deficit was $1.4 trillion in 2009 and $1.3 trillion in 2010.
I expect Republicans to begin weeping and gnashing their teeth over this new projection, but this increase has more to do with the GOP-pushed tax cuts than it does with any new spending from the administration. To wit:
Since the last projection, in August, estimated 2011 revenues dropped from $2.67 billion to $2.228 billion, which accounts for entire discrepancy between this estimate and the previous one. The difference comes from the tax cut deal passed during the lame-duck session, which extended the Bush tax cuts, cut payroll taxes, and patched the Alternative Minimum Tax. This isn't a surprise; tax cuts, by definition, lead to smaller revenues. Republicans, however, have convinced themselves that cuts are separate from normal budgetary concerns: "If you cut taxes," they say, "then the deficit will eventually decrease." This is a fiction, but that hasn't stopped the GOP from supporting every tax cut under the sun, then and now.
-- Jamelle Bouie
