In his column yesterday, Robert Samuelson expressed his unhappiness that the presidential debate didn't focus on the budget deficit, his pet peeve. Of course it is understandable that the questioners didn't want to waste the country's time on the topic since they probably all knew that the reason that we have large deficits is because the collapse of the housing bubble crashed the economy. If the economy had continued along with 4.5 percent unemployment, the deficits today would be fairly modest, as can be seen from the Congressional Budget Office's (CBO) projections from January of 2008, before it recognized the severity of the downturn.
At one point Samuelson bizarrely asserts:
"And then there’s the “fiscal cliff” — the roughly $600 billion of spending cuts and tax increases scheduled for early 2013 that, if allowed to take effect, would almost certainly plunge the economy back into recession."
Actually there are probably not any economists who think that the economy would plunge into recession if there is not a deal in place by the beginning of 2013. The projections for a recession assume that a deal is not reached all year so that we actually see the full amount of tax increases and spending cuts now scheduled.
However the really strange assertion is:
"Nor will large deficits miraculously vanish even if the recovery continues and strengthens."
Of course this is not consistent with the CBO projections. If the unemployment rate were to quickly fall back to a 4.5-5.0 percent rate, then we would again be looking at deficits in a range of 1.-2.0 percent of GDP, even less if the Bush tax cuts for the wealthy are allowed to expire. If Samuelson has some analysis that shows otherwise, it would be interesting to see.