A Respectable Note of Optimism in the Budget Numbers

I've spouted alot of budget doom and gloom here for a while now, justifiably I think.  I thought to be fair, I'd give some space to a much more optimistic take from a highly respected source.  You can read the full analysis here, but here is a taste:

The budget deficit is still very high from an historical perspective, but it is also well within the range of what is manageable and sustainable. If current trends were to continue, the budget would be balanced within the next 3 years! (Interesting note: in a January 2011 post, I suggested that the improvement already evident in the budget outlook at that time could result in a balanced budget by 2016. Things have evolved accordingly.)

There's lots of good news to be found here. On the one hand, Congress has managed, for whatever reason, to rein in the growth of federal spending. Four years ago it was out of control, but now spending is back within historical ranges relative to GDP. On the other hand, we've seen a significant amount of fiscal retrenchment in the past four years, yet the economy has managed to grow. Keynesians four years ago would have been apoplectic at the thought of reducing the deficit from 10% of GDP to 4% of GDP in four short years, but it turns out the sky has not fallen. Looking ahead, Congress now has more freedom of action because the budget is in much better shape. If done right, fiscal policy could become genuinely stimulative (e.g., simplifying the tax code and reducing marginal rates) in coming years.

This is sound analysis.  Where I part ways with Grannis, is that these past few years' deficits haven't merely faded from the scene, they now reside, rather perilously, on our balance sheet.  We can't simply wave goodbye to deficits in the rear view mirror, we have to live with their progeny, which is the debt.  And it is the debt that can bring on a crisis.  Unless we make a commitment to undo the debt accumulation and/or keep deficits de minimus for a long time to come while we grow out of the debt, the deficit reduction is not cause for much celebration.  It is merely unfinished business.  Looking at the political landscape, I don't see the commitment nor the discipline to compete the task.