Obama said in his State of the Union speech on Tuesday, "over the past few years, both parties have worked together to cut the deficit by more than $ 2.5 trillion,".
What was the mean? $ Was $ 2.5 trillion deficit reduction over a decade compared to things in August 2010, according to accounts from the bipartisan Commission "federal budget".
Why August 2010?And that was the point all used by the Committee headed by President Erskine Bowles and Alan Simpson.
Where do they come from 2.5 trillion dollars? Several sources: the savings from the budget control Act "2011, lower spending levels in the interim Government funding decisions since 2010, and pass the deal the financial abyss earlier this year.
In fact, most savings in fact closer to $ 2.7 trillion, according to Marc goldoin, Senior Policy Director at krfab.
1.57 trillion dollars comes from that amount of spending cuts and $ 690 ?????? of increasing tax revenues and 430 $ ?????? interest savings.
But you may check the amount of deficit reduction could be measured in a different way. For example, the savings seem much smaller if you choose a starting date earlier.
This is in part because August 2010 high point for federal spending on programs that "discretion". If, say, August 2007 is the point of comparison, savings up to only about 450 $ ??????, according to estimates in the krfab.
In the summer of 2007, of course, before the sharp drop in revenue and more than $ 1 trillion in stimulus injected into the economy as a result of the financial crisis and economic recession.
How much should the deficit has now fallen?Obama said again Tuesday that the $ 4 trillion over the next decade. Even after counting about $ 2.5 trillion in savings, he said, "we're more than half way towards the goal".
In other words, you need Washington to come up with another $ 1.5 trillion.
The article can achieve another $ 1.5 trillion in deficit reduction?It can stabilize the public debt as a share of the economy. Under this scenario, the debt over the next decade will be level-at least for the moment-73 per cent of GDP in 2012.
Related: more budget busters
Some deficit hawks independent 73% is still very high.
"It would leave no margin for error, will result in a slowdown in economic growth and will leave a lot of financial flexibility, and will have little chance of stabilizing the debt outside the framework of the Decade," krfab noted in a recent report.
In other words, a recession or war can be a strain on the federal Treasury and debt payment in the past 73% very quickly.
Reason: so that if anything goes wrong, the debt is expected to rise again as a percentage of the economy soon after 2023.
To help ensure that does not happen, the Falcons will be aimed at stabilizing the debt at 70% or less. This will require at least $ 2.4 trillion in deficit reduction over the next decade, and krfab.
On the other hand, Josh Gordon, policy Director of "convergence" non-partisan, that strict adherence to the objective of reducing 10-year deficit is less important than policies designed to achieve this-the point krfab.
Recently wrote a blog post Gordon "one can easily imagine the deficit reduction package fails to stabilize the debt. But still more financially responsible package that would reduce the debt-to-GDP ratio [within 10 years]. "
This plan may include ways to control the growth of spending on health and medical care and social security for the retired new inflation over the next two decades, promoting economic growth and raising more revenue through tax reform.
In fact, notes krfab, "should govern theses deficit reduction package parameters, instead of just what is the objective of the debt it achieves."
Finance; Investment; Business; Economics
Finance; Investment; Business; Economics
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