One of my earliest pieces at PJM was one pointing out that the US budget could be balanced readily so long as spending grew more slowly than the economy.
Dan Mitchell at Cato points out the same thing using new CBO numbers. Freeze spending at today’s levels, leave the tax burden alone — no increases, and continue to index the AMT — and we’re out of a deficit in 6 years.
“If they freeze the budget, we almost balance the budget by 2017. If federal spending is capped so it grows 1 percent each year, the budget is balanced in 2019. And if the crowd in Washington can limit spending growth to about 2 percent each year, red ink almost disappears in just 10 years.”
But there’s another lesson here that Mitchell is too polite to draw — but I’m not. Simply put, if a politician tells you that balancing the budget means “sacrifice”, what the politician means is “we’re still not spending enough money.”