Photo (cc) by ericskiff
Quartz says that, fiscal cliff or not, the U.S. has already been sharply reducing deficit spending the past couple years…
This year’s $210 billion reduction in the deficit represents the fastest year-over-year fiscal consolidation since World War II. And as Investor’s Business Daily points out, the deficit has shrunk by 3% of GDP over the last three years, slightly more than it did between 1995 and 1998, when the economy was growing much faster than it is now.
The main point to draw from this, though, is a reminder that the fiscal cliff is something of a manufactured crisis. It was designed to solve a disagreement about how fiscal consolidation—shrinking the deficit by means of either tax hikes or spending cuts—should occur, not to enforce debt reduction as a priority. If anything, the challenge before Washington now is not to cut the deficit faster; it’s to do it more slowly than the fiscal cliff would, to avoid the risk of hurting economic growth.
Check out the link for charts. Of course, the deficit is still around $1 trillion, and that’s nothing to be proud of if you care about balanced budgeting.