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Why the Deficit Is Simply Not an Economic Problem Now, or in Future Decades

The profound disconnect between what Americans expect to receive from the government in services, and what they expect to pay for it in taxes.

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Although many Americans respond positively to the idea of small government in the abstract, when it comes to specifics, people really like most, if not all, of what the government does.

So the Corporate Right has had to frame the debate on different terms. Armed with the rather dubious projections discussed above, they’ve presented the issue as a structural economic problem, arguing that the United States is headed toward a gazillion-dollar deficit just around the corner, and that the only way to stave off this looming budgepocalypse is to swallow the bitter medicine of “entitlement reform.”

As Glenn Hubbard, former chair of George W Bush’s Council of Economic Advisors, explained, “we have designed entitlements for a welfare state we cannot afford.” But it’s worth noting that in the CBO’s dire projections, the cost of those entitlements, if we do nothing at all to change them, is expected to increase by seven percentage points of GDP over the next 30 years -- which we could cover, if everything else remained constant, by bringing our tax burden up to the OECD average.

The problem for the rest of us is that, as is too often the case, the Right’s preferred narrative has been almost universally embraced by the mainstream media and pretty much our entire political class. But that doesn’t make the ‘deficit crisis’ story objectively true -- at least not in an economic sense -- or any less of a scam.

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