The Deficit Trap

The Obama Administration is planning to start cutting the deficit soon for economic and political reasons. To now even merely discuss tax raises, expenditure cuts, and increases in interest rates that are entailed will slow the recovery. We know what must be done; it does not require long preparations. And there is no sign that the feared inflation that deficits are said to cause is anywhere in sight. True, once inflation settles in, it is difficult to eliminate -- but it starts slowly. There is plenty of time.

Note that both Carter and Clinton fought to balance the budget and cut or capped social programs -- only to allow the Republican administrations that followed to provide huge tax cuts to those better-off.

As to politics -- whatever Obama does, the GOP will complain that the deficit is too high and make political hay out of the tax raises and benefit cuts. As to the voters -- while they tell pollsters they fear deficits, they hate increased taxes and benefit cuts many times more.

Last but not least, how much deficit is bad for the economy is far from clear.

In short, for now, worry about those without jobs, not those who are crying about deficits.

Amitai Etzioni is a University Professor at the George Washington University. To contact him, write icps@gwu.edu. www.gwu.edu/~ccps/securityfirst

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