The idea of trying to somehow minimize or reduce the FY 2011 budget deficit strikes me as hopelessly misguided. But over the longer term, there’s a real need to staunch the flow of red ink. But as I write for the Daily Beast all the meaningful options are off the table. Most Democrats won’t embrace tax hikes, most Republicans won’t embrace spending cuts, and nobody wants to seriously re-evaluate the US military’s mission:
These are the real options we have to close the deficit—taxes that are higher than where they were in the 1990s, cuts in Medicare, or a redefinition of the mission of the American military. For now, there’s no political support for any of them. Which is why even though you’ll hear a lot of complaints about Obama’s proposed deficit being too high, Congress is much more likely to return a document with deficits that are even higher than one that trims them.
The other factor here is that while you can easily look at a budget projection and forecast a coming fiscal crisis, we’re not actually in a fiscal crisis. Interest rates are quite low and there’s just no real way to cut the deficit back further within the bounds of current politics. The actual arrival of a crisis will presumably expand the bounds of what can be put on the table.