It is tough to be a deficit hawk.
Rather than our typical spike in wartime spending, we have a peacetime deficit. (Please note that the federal deficit is just how much spending exceeds revenue during one year.):
- Social Security
- Children’s Health Insurance Program (CHIP)
- ACA health insurance exchanges’ subsidies
…has become an increasingly large share of GDP. Cutting these big spending categories would affect well-being, be unpopular and perhaps contrary to American values.
And, the cuts would have to be relatively large:
More specifically, the…
- Aging Baby Boomers
- Health care costs per beneficiary rising faster than projected per capita GDP
- Income assistance initiatives from Medicaid
- Health insurance subsidies from the ACA
…are fueling the spending that is so tough to cut:
And so, as economists, we can say that the tradeoffs are the one big reason it is so tough to cut the deficit.
Sources and resources: Having become a fan of xkcd, again for today, I discovered a relevant “cartoon” for all of the facts, graphs, data from the Congressional Budget Office’s “2013 Long-Term Budget Outlook” report. At econlife, we last looked at the deficit here and here.