Josh Barro, Columnist

Don't Get Too Excited About the New, Smaller Deficit

The CBO report is yet another reason to focus on boosting the economy instead of cutting debt.Â

May 14, 2013 at 8:20 PM UTC

Josh Barro is the lead writer for the Ticker, Bloomberg View's blog on economics, finance and politics. His primary areas of interest include tax and fiscal policy, state and local government, and planning and land use. Previously, Barro was a Senior Fellow at the Manhattan Institute for Policy Research and a commercial real estate banker at Wells Fargo. He holds a bachelor's degree in psychology from Harvard and lives in Queens, New York.

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The Congressional Budget Office announced today that the projected budget deficit for fiscal year 2013, which ends September 30, has fallen by more than 20 percent: Instead of $845 billion, it will be just $642 billion, or 4 percent of GDP. And by 2015, the deficit should be down to 2.1 percent of GDP, a sustainable level.

This is great news about this year. But it doesn't say very much about the long-term fiscal outlook. CBO's revisions cut this year's deficit by 1.3 percent of GDP, but they only shrink the next 10 years' projected deficits by 0.3 percent of GDP.