Columbia International Affairs Online: Policy Briefs

CIAO DATE: 05/2010

Myths about Budget Deficits

John H. Makin

February 2010

American Enterprise Institute for Public Policy Research

Abstract

February always brings with it the president's proposals for taxing and spending in the coming fiscal year. The president's budget proposals are accompanied by congressional and administration estimates of the path deficits and government debt are expected to take in coming years. Last year, those projections, especially a three-year string of actual and projected deficits over a trillion dollars from 2009 through 2011, excited widespread comment and handwringing about runaway deficits and their allegedly damaging effects in the form of lower growth, higher inflation, and higher interest rates.