Washington Post Is Confused on the Origins of the Deficit

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Tuesday, 22 January 2013 05:46

It told readers:

"The country faces a fast-growing national debt as a result of waves of retiring workers who expect health care and pension benefits."

This is not true. The reason the debt has been rising rapidly in recent years is that the economy plunged due to the collapse of the housing bubble. In 2007, before the collapse, the deficit was just 1.2 percent of GDP and the debt to GDP ratio was falling. The Congressional Budget Office projected that the deficit would remain in this neighborhood well into the current decade, even if the Bush tax cuts were not allowed to expire.

deficits-per-GDP-10-2012

Source: Congressional Budget Office.