Good News about the Federal Budget
The article strikes the right balance. One fear is that the good news about the short-run fiscal outlook will induce policymakers to ignore the longer-term fiscal outlook, which remains grim.
Surge in Tax Revenue Cuts Federal-Deficit Projections
A surge in federal tax revenue, mainly in payments from rich Americans, is driving down government and private-sector projections of this year's federal deficit to as low as $300 billion, well below current forecasts that are near or over $400 billion....That would be good news for President Bush and the Republican-led Congress....
But the brighter short-term outlook doesn't change long-run forecasts of unsustainable deficits as more Americans age and draw Medicare, Medicaid and Social Security benefits.In its annual long-term outlook in January, the CBO wrote that spending for those programs "will exert pressures on the budget that economic growth alone is unlikely to alleviate. A substantial reduction in the growth of spending and perhaps a sizable increase in taxes as a share of the economy will be necessary for fiscal stability to be at all likely in the coming decades."
Related link: Economist David Henderson has an excellent new article (alternate link) on the long-term challenges facing fiscal policy.