Millard Grimes: Big story not being told

July 7, 2014 

The biggest economic story of the year keeps flying under the radar of the Mainstream Media. In fact, it's hardly penetrated the non-Mainstream Media.

What is it? The federal deficit has declined more in the first eight months of this fiscal year than in any year since 2008. According to the Treasury Department the deficit is 30 percent lower than last year at this time.

From October through March, the deficit was $436 billion compared to $626 billion in the 2012-13, a drop of 30 percent, and the lowest total for eight months since 2008.

Is that good news? In fact, is it news? Isn't the deficit what the fight was all about when the government was going bankrupt because Congress wouldn't raise the debt ceiling? Isn't the deficit why the government closed down for a few days? Why the U.S. credit rating was cut?

The annual deficit did rise to $1.4 trillion in 2009, but it is predicted to be just $492 billion for this full fiscal year, which is about a 40 percent drop or about $900 billion if my arithmetic is right. As the late Sen. Everett Dirksen once remarked, "A billion here , and a billion there, and soon you're talking about real money."

What do the 2014 candidates for the Senate and the House in Georgia think about this? Is a 40 percent drop in the deficit in six years, enough to ease their anxiety about the federal deficit? In fact, why isn't President Obama talking about this economic phenomenon that has happened on his watch? Why isn't Michelle Nunn, the Democratic candidate for the U.S. Senate, making the deficit improvement a rallying cry in her campaign?

To put the decline in some perspective, the government has in hand some $900 billion more in collections over expenditures than it did in 2008. It's the largest windfall of its kind since, 2001, when the government actually ran a surplus in the budget, which was promptly used to lower taxes on the richest Americans.

Then came two wars and the so-called Great Recession which sent the budget into the spiral that peaked with the $1.4 trillion deficit in 2009.

So what should the government do with the $900 billion it will have this year over what it had a few years ago?

Some voices are suggesting another war in the Middle East as the U.S. did the last time it had a deficit this low. That should take care of about $400 billion.

Or the money could be used to restore the cuts in food stamps enacted last year, or extend weeks of unemployment pay to millions of Americans without full- or even part-time employment.

It would even be a good idea to divide the $900 billion among the state governments most of which have had to cut jobs for teachers, policemen and other civil servants.

The problem with planning how to spend the money is that pundits, politicians and business leaders are still complaining about how high the deficit is, not about how much it has been reduced, even if they know.

That's because the deficit is a phantom figure, hard to track down except as a means to lambaste programs one doesn't like.

As a percentage of the Gross Domestic Product and the overall economy the deficit this year will be about the percentage it has been for most of the century. As noted, the budget was balanced for about three years in the late 1990s and and early 2000s, but seldom before.

Interest rates have remained low and the Dow Jones stock average keeps bumping at 17,000, an all-time high. The unemployment rate has dropped below 7 percent.

The main reason the deficit has dropped is that more people are working and paying payroll and income taxes. Income was 7 percent higher for the first eight months of the fiscal year, and spending was down 2 percent.

The economy should be booming, according to all the financial guidelines but for most Americans it isn't. Bank loans are still hard to get or renew, stores are still closing, companies are still laying off employees. Home sales are better but there are still vast areas of empty houses in developments that never have found a market. Shopping malls are still struggling to find their new place in the shopping scheme and the transition is painful for customers, mall owners and the communities that depended on them.

Population growth has stalled in the U.S.; too much money is on the sidelines, in vaults instead of consumers' pockets.

But the federal government has more money to spend above what it collects than it did a few years ago, and it should spend some of it now, to revitalize communities or neighborhoods that were left behind in the good years and have lost more traction in the anemic recovery of recent years.

Before the government reduces its budget deficit, it should spend some money on its weed-covered back yard, not in Baghdad.

Millard Grimes, editor of the Columbus Ledger from 1961-69 and founder of the Phenix Citizen. is author of "The Last Linotype: The Story of Georgia and Its Newspapers Since World War II."

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