Most developed countries suffer from a longstanding need to get off a long-term course in which growing government expenditures on health care and pensions bankrupt them. Most developed countries also feature large budget deficits today. And around the world, many elites are either willfully or mistakenly confusing the former with the latter. But I’d encourage everyone to pay attention to this chart from the latest IMF fiscal monitor (PDF) which illustrates the fact that short-term deficits are overwhelmingly being caused by declining tax revenues induced by the recession:
Stimulus spending, by contrast, has been only a trivial factor.