On January 7, 200--two weeks before Barack Obama took the oath of office--the Congressional Budget Office forecast the federal budget deficit for fiscal year 2009 at $1.2 trillion. Now, the CBO is projecting the deficit will be only $642 billion for FY 2013, $200 billion less than the nonpartisan budget scorekeeper estimated as recently as February.

For policymakers in Washington, the implications couldn't be clearer. For starters, the counterproductive Beltway fixation on immediate debt reduction, which economists have warned is slowing U.S. economic growth and costing millions of jobs, should be jettisoned ASAP. And to be sure, the Republicans' next round of debt ceiling hostage-taking should be condemned as the economic sabotage it is.

The CBO explained why the U.S. fiscal picture is improving so dramatically:

If the current laws that govern federal taxes and spending do not change, the budget deficit will shrink this year to $642 billion, CBO estimates, the smallest shortfall since 2008. Relative to the size of the economy, the deficit this year--at 4.0 percent of gross domestic product (GDP)--will be less than half as large as the shortfall in 2009, which was 10.1 percent of GDP...

CBO's estimate of the deficit for this year is about $200 billion below the estimate that it produced in February 2013, mostly as a result of higher-than-expected revenues and an increase in payments to the Treasury by Fannie Mae and Freddie Mac. For the 2014-2023 period, CBO now projects a cumulative deficit that is $618 billion less than it projected in February. That reduction results mostly from lower projections of spending for Social Security, Medicare, Medicaid, and interest on the public debt.

By 2015, the annual deficit is now projected to just 2.1 percent of U.S. gross domestic product, well below the 40-year historical average of 3.1 percent. The gap is expected to grow to 3.5 percent by 2023, "because of the pressures of an aging population, rising health care costs, an expansion of federal subsidies for health insurance, and growing interest payments on federal debt."

The new CBO numbers are just the latest confirmation of House Speaker John Boehner's admission that "we have no immediate debt crisis." Coming on the heels of an analysis by the Hamilton Project estimating that austerity at the federal, state and local level has cost up to 2.2 million American jobs, the CBO report should help put to lie that more budget cutting is needed in Washington. As the New York Times explained just last week:

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While most eyes were trained on the State of the Union address (or a burning cabin in California), PBS last Tuesday aired a documentary on the ongoing fiscal deadlock in Washington titled, "Cliffhanger." In it, the House Speaker John Boehner is portrayed as hopelessly trapped between an equivocating and untrustworthy President Obama who "poisoned the well" and an immovable Tea Party caucus manipulated by the hyper-ambitious Eric Cantor. But the usually excellent Frontline series didn't merely get lost in the weeds of DC politics. When it comes to the unprecedented Republican debt ceiling hostage-taking that precipitated Washington's "cliffhanger," PBS missed the forest for the trees altogether.

What is the Fiscal Cliff? One of the most striking omissions from a film titled "Cliffhanger" is any definition of the so-called "fiscal cliff." That triple witching hour on January 1, 2013 when the Bush tax cuts and the two-year payroll tax reduction set to expire just as the $1.2 trillion, ten-year sequester was to begin is never fully explained. (The sequester drop-dead date was shifted to March 1.) And the risk in that manufactured crisis was not that the United States would suddenly increase its national debt, but instead reduce too quickly and thus trigger a steep (and unnecessary) recession.

Glossing Over the Original Sin. In "Cliffhanger", Frontline's sins are myriad. But none is more crucial than skirting past the original sin itself. That is, the Republican threat beginning in 2011 to trigger a default on the full faith and credit of the United States isn't just without parallel in modern American history. It is the GOP's extortion over the debt ceiling (which Senate Minority Leader Mitch McConnell called "a hostage that's worth ransoming" and a "new template") which is responsible for the sequester and "fiscal cliff" showdowns which followed.

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President Obama made a statement this afternoon calling on Congress to pass temporary measures to stave off impending deep budget cuts, aka the "sequester." His request was preceded by a reminder that he has submitted ideas for how to responsibly reduce the deficit. Unfortunately, those ideas include changes to Medicare which are unspecified in his statement, but reach back to the fiscal cliff negotiations. As I recall, the eligibility age change was not put forward there.

This statement was in response to the breast-beating by Republicans yesterday and today about how the administration has been late with their budget proposals and also the rumblings that Republicans are willing to allow the sequester to take place.

Cutting defense spending is certainly something that should be done, but the sequester was crafted as a deterrent to delay, and has a draconian aspect to it that was intended to force Congress into action. For Republicans to decide now that it should go forward is just brinksmanship similar to their debt ceiling antics.

Personally, I'm tired of the constant procrastination on the part of Congress. They're playing the political gotcha game in order to keep the dialogue on the budget and away from other issues far more important, like immigration reform and gun control. As long as we're talking about deficits, we're in their frame, not ours.

The Campaign for America's Future is calling for a repeal of the sequester. You can join that call here.

Transcript follows below the fold:

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At a $1.7 million fundraiser in Jackson, Mississippi this week, Republican presidential nominee Mitt Romney declared that the GOP is not "the party of the rich," insisting instead that "we're the party of people who want to get rich."

Sadly for Romney, there are two small problems with his assessment. For starters, Mitt's proposals (like those from GOP wunderkind Paul Ryan) would deliver another massive tax cut windfall for the wealthy and shred the social safety net while putting the economic recovery at risk. Just as damning for Mitt and his cheerleaders like David Brooks and Robert Samuelson, the historical record shows that from economic growth and job creation to household incomes, stock market performance and just about every other indicator of the health of the U.S. capitalism, the modern U.S. economy has almost always done better under Democratic presidents.

Nevertheless, Governor Romney offered his GOP extreme makeover during his audience with the haves and have-mores in Mississippi. As ABC reported:

"We're accused, by the way -- in our party -- of being the party of the rich," Romney said. "And it's an awful moniker, because that's just not true. We're the party of people who want to get rich. And we're also the party of people who want to care to help people from getting poor. We want to help the poor."

Americans have good reason to look the dressage horse in the mouth, and not just because earlier this year Romney announced, "I'm not concerned about the very poor." As it turns out, Mitt Romney's program makes George W. Bush look like Karl Marx.

At a time of record income inequality, the lowest federal tax burden in 60 years and plummeting effective tax rates for the top one percent of earners, Romney is promising a staggering payday for the gilded-class. Mitt Romney doesn't merely want to make the Bush tax cuts permanent: he wants to end the AMT and another 20 percent across the board tax cut that could reduce his own future tax bills by half. All told, the Center for American Progress forecast Romney would hand over 60 percent of the benefits from his tax cuts to the top one percent of earners. (And that figure was before he announced his new 20 percent across-the-board tax cut scheme reflected in the chart above.)

That Romney wants to maintain the notorious "carried interest exemption" that allows him to pay 15--and not 35 percent--on his millions in continuing income from Bain Capital may explain why the giants of private equity like Henry Kravis, Julian Robertson, John Paulson, Marc Rowan and Sam Zell are pouring money into his Super PAC. Making matters worse, Romney's plans to slash the corporate income tax and shift to a "territorial" system to treat the foreign revenue of American firms could cost the Treasury $1 trillion and the United States an estimated 800,000 jobs.

But one Romney proposal above all others - the elimination of the estate tax - offers a staggering ROI for the richest families in America.

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While trying to set the record for most banal hash tags in a single tweet, Marco Rubio peddles one of GOP's favorite lies: that no tax increases will be required to pay off the debt that's been run up primarily by historically-low tax rates and the Bush tax cuts.

Oh, and as a reminder.

Bill Clinton raised taxes on the wealthiest Americans and produced 20M jobs -- while turning a deficit into a surplus. So no, Marco, #taxincreases clearly don't #hurt #growth.

#Moran.

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Here's Joe Scarborough on Wednesday morning, blaming President Obama for not paying down George W. Bush's and Ronald Reagan's tab fast enough.

SCARBOROUGH: Let's just talk straight. George Bush left him with a trillion dollar deficit. He has answered that by increasing the deficit for four years in a row. The biggest deficits ever. The fastest rate of growth ever. The biggest entitlement spending ever. The biggest defense spending ever. The biggest discretionary domestic spending ever. In every single category, there is not a close second...this guy makes George Bush look like Calvin Coolidge.

What was absolutely amazing about that remark and this discussion generally was the conflation by Scarborough and former Bush mouthpiece Nicole Wallace of deficits and spending. It shouldn't have to be pointed out that they aren't the same thing.

This is the little bait and switch Republicans have been pulling all along. The deficit isn't just a product of "spending" but of historically-low taxes and the worst economic crash since the Great Depression, which started in 2007, under their watch.

Question: who thinks President Obama was going to reduce the deficit with two wars in progress, the worst crash since the Great Depression and with historically low taxes?

Scarborough, who's not too big on facts these days, must not have Bruce Bartlett's column in the New York Times yesterday, which he clearly demonstrates that the bulk of the debt is due to George W. Bush and the GOP's policies.

Republicans assert that Barack Obama assumed sole responsibility for the budget on Jan. 20, 2009. From that date, all increases in the debt or deficit are his responsibility and no one else’s, they say.

This is, of course, nonsense – and the American people know it. As I documented in a previous post, even today 43 percent of them hold George W. Bush responsible for the current budget deficit versus only 14 percent who blame Mr. Obama. [...]

Republicans would have us believe that somehow we could have avoided the recession and balanced the budget since 2009 if only they had been in charge. This would be a neat trick considering that the recession began in December 2007, according to the National Bureau of Economic Research.

They would also have us believe that all of the increase in debt resulted solely from higher spending, nothing from lower revenues caused by tax cuts. And they continually imply that one of the least popular spending increases of recent years, the Troubled Asset Relief Program, was an Obama administration program, when in fact it was a Bush administration initiative proposed by the Treasury Department that was signed into law by Mr. Bush on Oct. 3, 2008.

If he missed that, there was also the MarketWatch piece that showed that debunked the "Obama spending binge" myth -- not to mention all of the work Paul Krugman's done in exposing this Big Lie.

Under their hero Ronald Reagan, the debt nearly tripled, and under George W. Bush, it doubled. Republicans therefore have absolutely no credibility on the matter, and the appropriate response when they bring it up is to mock them dismissively, as Obama did.

Imagine that you are completing your federal tax return. After looking up the tax rate for your income level, you decide you will pay 20 percent less to Uncle Sam. But along with your underpayment, you include a handwritten note to the IRS letting the government know that you promise to make up the difference at some future date by not claiming some deductions to which you are currently entitled. That, you tell the tax collector, makes your tax return "revenue neutral."

If you're like most Americans, your fraud will earn you a fine at best and prison time at worst. But if you're Mitt Romney, you believe that plan qualifies you to be President of the United States.

To understand how Romney's shell game works, a short primer is in order first. In essence, the GOP presidential nominee has proposed what might be called the "Bush-Dole" plan. Under a President Romney, that would make the budget-busting Bush tax cuts permanent, and then enact another 20 percent across-the-board reduction reminiscent of Bob Dole's failed 1996 scheme. As Matthew O'Brien summed it up in The Atlantic:

First, he extends all of the Bush tax cuts. Second, he cuts income tax rates an additional 20 percent. Third, he undoes the tax hikes and credits from Obamacare and the stimulus. Finally, he eliminates the capital gains tax for all but the richest households. The first three parts of this plan shower high-earners with most of the money. The last part is a bit of a fig leaf for the rest of us. After all, the top 0.1% of households earn half of all capital gains. Exempting middle-class households from this tax certainly helps them, but there's just not that much money there.

(It's also worth noting that Romney wants to eliminate the inheritance income tax, a move which could theoretically divert over $80 million from the United State Treasury to his heirs.)

Unfortunately for a man who loves numbers, Mitt Romney's math simply doesn't work.

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First, let's be clear. Republicans don't give a rat's behind about deficits or the national debt. Their hero Ronald Reagan tripled it, George W. Bush doubled it -- and Dick Cheney famously said that deficits don't matter. That Paul Ryan proposal Republicans love so much? Yep, it makes the debt worse.

All of that background makes this rather amusing indeed.

National Republicans, paired with Mitt Romney's presidential campaign, will focus their attention this week on President Barack Obama's handing of the national debt, the groups announced Monday.

The effort will include a "major policy speech" from Romney, according to Iowa Republican Rep. Steve King, who was part of a conference call announcing the effort Monday morning.

"Governor Romney will be in Des Moines tomorrow afternoon at Drake University to give a major policy speech and it'll be based on the out-of-control spending and debt," King said on the call.

First, there is no "out of control spending" -- that's a lie. Total government spending under Obama has decreased. The debt is where it is because taxes are at historic lows and revenues are even more depressed by the fact that we're still emerging from the biggest economic collapse since the Great Depression.

Second, if Willard is so worried about the debt, why does he want add trillions to it?

Romney proposed to cut federal income tax rates by 20 percent more for all earners, which would slash U.S. revenue by more than $2 trillion over 10 years.

Romney economic adviser Glenn Hubbard said the lost cash would be recovered by closing tax loopholes and boosting economic activity. But until the campaign offers a more specific plan, Budget Watch analysts said Romney’s entire framework would add about $2.6 trillion to the debt by 2021.

Proving, yet again, that Republicans don't care about debt and deficits.

You wish, just once, that a reporter would ask, "Governor, if the debt is such a problem, why do your tax proposals add trillions of dollars to it?" But that's probably asking too much.

Krugman calls out Times contributor Steve Rattner as a concern troll for his economic distortion of the "true" cost of the Affordable Care Act. (You may have heard the wingnuts parroting the so-called "study" on which this horse hockey is based all last week?) Krugman doesn't pull any punches:

The way to cut through the whole double-counting nonsense is to ask the following: did the ACA improve or worsen the fiscal outlook compared with what it would have been without the legislation? The answer is that it improved the outlook – the additional revenues plus cost savings outweigh the cost of the subsidies. End of story. Don’t take my word for it — that’s what Robert Reischauer, the good trustee, says.

So what about the alleged double-counting? That exists only in the minds of the trolls. The Obama administration has never claimed that a dollar of savings somehow counts twice.

Does it matter that some of the savings accrue to the Medicare trust fund? Not for the unified budget. And as it turns out, not for the non-trust-fund budget either, because everyone understands that Medicare will be supported out of general revenues when the trust fund is exhausted, so any savings on trust fund spending eventually redound to general revenues.

There’s nothing here, except in the tortured word games of people who are desperately looking for a way to make trouble.

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I'm not sure if Nancy Pelosi is playing smart politics or she's lost her mind. I'd like to think it's the former.

It's true, the Simpson-Bowles commission report has turned into something larger than a failed effort at deficit reduction. It has attracted a cult following among DC insiders, like Rep. Jim Cooper, who has lionized it as That Thing That Should Have Passed But Didn't, as if they actually agreed on the recommendations.

So Nancy Pelosi does an interview with Charlie Rose, who has apparently joined The Cult of B-S (Bowles-Simpson), and Rose pushes her all over the place on the Grand Bargain during the debt ceiling debacle, before pushing her hard on The Great B-S report, and after endorsing it as having "good bones," she says this:

The Republicans and Democrats -- it was bipartisan -- brought a version of Simpson-Bowles to the floor last week, but it was more of a caricature of Simpson-Bowles and that's why it didn't pass. If it were actually Simpson-Bowles I would have voted for it.

Really? She would have voted for something that touched Social Security even though Social Security isn't even a budget or deficit problem? Why? She would have raised the Medicare age because why?

Here's something I learned from David Corn's new book, Showdown: Senate Democrats were told at an early 2011 strategy session that voters were focused on deficit reduction and they'd better be too.

But the lawmakers had left Washington not to relax but to cogitate on the issues they would confront in the coming year. One session that would stick the most with many of them was not led by a policy expert but by Democratic pollster Geoff Garin, who had one major point to impart: you have to be serious about deficit reduction or the voters will not listen to you.

Garin based this warning on polls and focus groups, that showed voters supporting deficit reduction as the major pathway to job creation. We can thank right-wing message muddling for that misunderstanding, but nevertheless, there it is. As Corn put it:

They had imbibed the GOP message: the problem with the economy was governmental red ink.

And that message led to the bottom line:

But Garin measured voter perceptions, not whether voters were correct. And he told the senators that voters would not listen to what the Democrats -- including the president -- had to say about jobs and investments if they did not sense that the Democrats were willing to wrestle the debt monster to the ground.

Clearly the Senators heard this, as did the White House, which is why there was the laser-like focus on the deficit. Not that it made a difference, since in the long run, it just doesn't matter what Democrats do. If they're for it, Republicans will oppose. In everyday life, we call that "oppositional defiant disorder." In politics, it's just standard operating procedure.

So when you hear Nancy Pelosi talking about the Grand Bargain in these terms, think in that context, and then think about her conclusion:

"It was a way to say we are serious about this, we can govern. And they walked away from that."

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