What causes deficits?

Source: Ezra Klein

James Fallows posts a table created by Chuck Spinney that shows — or attempts to show — the change in debt under different types of administrations. The basic takeaway is that it’s not just that Democrats tend to reduce the deficit or Republicans increase it, but that it’s specifically Republican presidents who arise out of the post-Goldwater conservative movement who increase it:
There’s important information in there — notably that tax cuts do, indeed, increase the deficit. But to understand why deficits happen, I’d direct people to this mega-chart that The Post’s Alicia Parlapiano made: It compares GDP growth, deficits and control of both the Congress and the White House, and gives you a more comprehensive idea of what’s going on:

Thumbnail image for deficit-ezra.jpg
Basically, deficits happen when recessions happen. Anytime GDP shrinks, deficits explode. Sustained growth, by contrast, tends to bring the budget into balance. That’s not to say policy doesn’t matter. If you put $4 trillion of tax cuts on the deficit, you need a whole lot of growth to make that back up. But policy — and even control of the White House — matters a lot less than the economy does.


About James Crist

How do we stop America's decline? The country is in trouble and we can all feel it. Where did we go wrong? How do we fix it? We now have an auction-based government, for sale to the highest bidder. Politicians have become nothing more than corporate whores and pawns for the rich. If we want our representatives to represent us, let them get their campaign money from us, their constituents. We have to amend the constitution to get the big money out of politics.
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