Fox & Friends co-host Brian Kilmeade reacted to a new Congressional Budget Office (CBO) report showing the 2013 deficit dropping by $200 billion by lamenting that the report might discourage further austerity measures.
In a May 14 report, the non-partisan CBO estimated that in 2013, the federal deficit will be $200 billion lower than previously projected, the smallest deficit since 2008. The report also predicted that the deficit over the next 10 years will be $618 billion less than previously thought.
Kilmeade reacted to this news with calls for increased austerity, lamenting that the “positive news” in the CBO report might lead away from a mindset of “fiscal discipline.” Kilmeade concluded, “I just hope we still feel the urgency to get our budget in order.”
However, Kilmeade's concern may be misplaced. As The Washington Post's Ezra Klein noted in a May 14 post, the new CBO estimate makes the deficit look “downright manageable”:
[T]he debt disaster that has obsessed the political class for the last three years is pretty much solved, at least for the next 10 years or so.
In fact, that's probably too much deficit reduction, too quickly.
Many economists agree that too much in spending cuts too quickly can hurt economic growth. In an April 27 post on his New York Times blog, Nobel Prize-winning economist Paul Krugman called continued efforts at deficit reduction through austerity measures “very bad policy,” explaining that recent declines in government spending -- at the federal, state, and municipal levels -- have contributed to slow economic growth. Similarly, in a February 8 Guardian op-ed, the Center for Economic and Policy Research's Dean Baker asserted that “deficit reduction is throwing people out of work” and concluded that “we need deficits today to fill a huge hole in demand created by the private sector.”
Additionally, data from the Bureau of Economic Analysis show that austerity has led to a decline in government spending, which has turned into a drag on economic growth: