You Grow, Not Cut, Your Way Out of a Deficit


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President Obama has refused the most draconian budget cuts proposed by Congressional Republicans. The result of his refusal has been a growing economy and a falling deficit.

WASHINGTON — The federal budget deficit fell this year to its lowest level since President Obama took office, his administration reported Thursday, a change propelled by an increase in tax receipts amid a strengthening economy.

The deficit was $439 billion in the 2015 fiscal year, $44 billion less than last year, the Treasury Department and the Office of Management and Budget said in a report. The shortfall represents 2.5 percent of the economy, the lowest share since 2007.

“Under the president’s leadership, the deficit has been cut by roughly three-quarters as a share of the economy since 2009 — the fastest sustained deficit reduction since just after World War II,” Treasury Secretary Jacob J. Lew said in a statement released with the figures. The deficit ballooned to $1.4 trillion in 2009, in part because of stimulus spending during the recession.

Government receipts rose by 8 percent over the last year, the report said, which “can be attributed to a stronger economy.” Rising wages drove up collections of individual and payroll taxes, and higher corporate profits led to an increase in business income tax receipts. Also, fees and payments under the Affordable Care Act that took effect in 2015 helped increase federal collections.

Now it is true that in 2017, the deficit is supposed to start rising again. For that reason, the fiscal hawks on the right are calling for massive overhauls to Social Security, Medicare, Medicaid, and other major programs. Cuts to those programs will not help bring down deficits though. You can’t cut your way to balance, because these cuts cause a drop in growth. We know how to bring down the deficit though, we’re seeing it now. The policies we’ve followed the last six years reduced the deficit. There’s no reason to believe the people who were wrong before, in the future.

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