Half Off

President Obama’s announcement this weekend that his administration aims to cut the federal budget deficit in half by the end of his term may come as a surprise given the current economic crisis. Decreasing the current budget deficit, however, is important for the long-term health of the U.S. economy. The 2009 budget deficit is expected to reach $1.5 trillion—and cutting this in half by 2013 will be challenging. Still, it is heartening to see that, although the administration began its term by passing a $787 billion economic stimulus bill, it is making concrete plans that will benefit our country in both the short and long run.

On the heels of a massive economic recovery bill last week, Obama’s announcement that he will drastically cut the budget deficit over the course of his presidency seems highly difficult to accept. Fortunately, the administration has made it clear that it has proposals on how to reduce the deficit, and we are hopeful that it can actually accomplish these promised cuts. Reducing the federal budget deficit is essential to maintaining a healthy economy in the long term.

The timing of this announcement may seem unwise in the midst of the current recession: Keynesian economics holds that the government should counter recessions with more, not less, spending. Given the sizeable federal spending that the administration has already approved, however, this announcement serves as a way to reassure the country that, despite the recession, the administration still has a long-term economic plan and is still committed to responsible fiscal policy.

It is also admirable that the Obama team has chosen to be more forthright than the previous administration when it comes to deficit accounting. The announced changes to budget deficit calculation—which will now include the costs of the wars in Iraq and Afghanistan in addition to other previously hidden government spending—is certainly a step toward more transparent government. Their commitment to reducing the deficit in fact as well as on paper is essential to making real improvements in fiscal responsibility.

Maintaining a minimal budget deficit is essential in order to avoid saddling future generations with a hefty economic burden. On both sides of the political aisle, economists agree that maintaining a large federal budget deficit decreases national saving and lowers living standards in the long run. We cannot sustain deficits at 10 percent of GDP—as they are now—without significant consequences in the future.

Obama’s budget proposal, which he has stated will maintain commitments to health care, education, and energy, specifically, show that he is striving to maintain the priorities he set for his administration during his campaign. Going forward, however, he should be cautious in making too many conflicting promises that he might not be able to fulfill—particularly given changing economic realities since he began his campaign.

Overall, protecting our country’s long-term interests as well as its immediate future is a key responsibility of our politicians, and President Obama’s evident commitment to balancing these often-conflicting goals is commendable.