02.06.13 8:30 PM ET
We're Cutting the Deficit too Quickly
Jed Graham scolds deficit hawks for ignoring historical examples for setting fiscal policy:
Outside of the demobilization from WWII, the only time the deficit has fallen faster was when the economy relapsed in 1937, turning the Great Depression into a decadelong affair. Other occasions when the federal deficit contracted by much more than 1 percentage point a year have also coincided with a recession, including 1960 and 1969.
A long-term deficit problem needs to be addressed, but we're going about it the wrong way, at an unnecessarily high cost. Even if the automatic spending cuts did not go into effect this year, the deficit of 5.5% of GDP would still show by far the biggest three-year improvement since World War II.