Unless something drastic happens soon, it appears the U.S. Congress will seamlessly pass a two-year budget that does little to tackle the vast challenges facing the federal government’s budget today and in the future.
With few measures in the bill to cheer, there is one piece of current law that conservatives should be sad to see go: the sequester.
Benefits of the sequester include, but are not limited to, a lower budget deficit last year-below $1 trillion for the first time under Obama-a shrinkage of the federal bureaucracy, and imposing a measure of fiscal restraint without any major economic repercussions. There appears no reason to end the sequester other than choosing specific cuts rather than an across the board strategy.
Last fiscal year’s budget deficit of $680 billion is the fifth highest on record-all five under the current administration-and the national debt has increased by about $5.8 trillion since 2009. In other words, the current administration has increased the national debt by about 50percent and brought total public debt as a percentage of GDP to near 100 percent in five short years (see figure below).
What benefits from this Keynesian experiment are there: 7 percent unemployment rate, lowest labor-force participation and employment-population rates in decades, 2 percent annual growth rates, and a host of below long-run trends in economic output and job creation.
And for the poverty this experiment has imposed on millions, let us thank the current administration and Keynes.