Want low deficits? Grow.
IMF economists Olivier Blanchard and Carlo Cottarelli offer a nice reminder on the importance of strong economic growth to low deficits:
Strong growth has a staggering effect on public debt: a one percentage point increase in potential growth -- assuming a tax ratio of 40 percent -- lowers the debt ratio by 10 percentage points within 5 years and by 30 percentage points within 10 years, if the resulting higher revenues are saved.
For a lot more deficit wonkery, see my Sunday column. For those of you who don't click on the link, the conclusions, based off a raft of numbers that the Committee for a Responsible Federal Budget worked up for me, are that you'll never get deficits under control if you don't get growth back on track; you'll never get deficits under control if you refuse to consider tax increases; and it would be wise to look for "two-fer" policies, like carbon taxes and health-care reform, that allow you to reduce the deficit and further another policy initiative at the same time.
June 28, 2010; 9:00 AM ET
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