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Yesterday, David Leonhardt wrote an excellent column breaking down the contributors to our budget deficit. I linked it, complete with fulsome praise, here.

The piece was built around an analysis of the various factors that have sent us plummeting from the surplus projected in 2001 to the red ink we're looking at now. My guess is a number of readers wondered whether that analysis was any good. Where did Leonhardt get his numbers? How did he craft the equations? Fair questions. Turns out, thought, that Leonhardt took to his blog Economix and wrote up the methodology, the sources, and the thinking behind the original piece. And since I think that kind of supplemental transparency is a Really Good Thing That Should Be Rewarded, I'm going to link to it.

By Ezra Klein  |  June 11, 2009; 10:14 AM ET
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From a quick read, it seems that this entire exercise is somewhat silly. Government revenues and government spending have both shot up since 2001. I'm not sure it makes a lot of sense to focus solely on what causes the year-by-year difference between these. I also think it's somewhat dishonest to consider the surplus of FICA taxes minus social security benefits paid out as part of this analysis. In my view, there was not a surplus to begin with, since the FICA/social security sum should never have been included as government revenue.

The primary driver of government spending growth and deficit growth in the future is simply natural growth of mandatory spending programs, due in large part to the aging population. The focus of public policy should be either limiting mandatory spending growth, or finding new taxation institutions like the VAT to pay for the obligations that the AARP is demanding.

Posted by: Dellis2 | June 11, 2009 11:29 AM | Report abuse

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