Here’s a sad irony: as the economy (fingers crossed) starts to improve significantly in the upcoming years, people will suddenly start to care a whole lot less about the deficit. And yet, when the economy is booming is precisely when we ought to start paying attention to fixing the long-term deficit risks. When credit is cheap, we should borrow to stimulate. Once things start growing faster, the government can step out of the way and let the rising tide of the economy start to balance the budget for us, and devote its energy to reigning in the long-term mess.
It’s a funny thing, that. Despite it being phrased in terms of ‘handing down these deficits to our children,’ the fever pitch of deficit-mongering always takes place during economic declines and fades away if things are going well. It’s almost as if the average person doesn’t really understand the complex nature of the global economy and fixates on the deficit as an easy signal of Bad Economic Things.
I’m in a predicting mood, so here’s another one. Obama is going to put some serious effort into resolving long-term deficit issues in his second term. And the public, which ostensibly was terrified about the ‘record-breaking’ deficits of his first administration, will be really unhappy about it. Sub-prediction: the vast majority of media outlets covering this issue will not notice the irony.