The Democratic Policy Committee (DPC) hosted an economic forum on October 11. Subtitled “Securing Our Economic Future,” it was billed as an attempt to offer a bi-partisan discussion of and debate about the issues underlying the nation’s economic woes. Though the point was clearly made that no Republican Members of Congress accepted the DPC’s invitation, the forum’s first panel was comprised not only of former members of Clinton’s Council of Economic Advisors, but also a former Associate Director for economics in President Reagan’s Office of Management and Budget and a former economic advisor to House Majority Leader Dick Armey (R-TX).

The Congressional Budget Office’s (CBO) Monthly Budget Review reports that the $137 billion drop in revenue for FY 2002 represents the largest one-year drop in 50 years. The combination of this reduction in revenue and the increase in spending in response to last year’s terrorist attacks, the increase in the unemployment rate, and steep increases in Medicaid costs amounted to a $157 billion deficit for FY 2002, which ended September 30. Though this return to a deficit represents a $254 billion turn-around from last year’s $127 billion surplus, the deficit is only 1.5 percent of GDP, a manageable size and a great deal smaller than the deficits of the mid-1980’s, which amounted to 6 percent of GDP. For an overview of CBO’s report on what happened to the surplus, see this OMB Watcher article.

Only 9 billion dollars separates the House and the Senate Budget Committee FY 2003 discretionary spending totals, but this small divide has been widened by continuing efforts to limit spending on domestic programs. Each of the budget proposals that has been put forth calls for reductions in this year’s real per capita spending from last year’s levels. Yet a recent analysis from the Center on Budget and Policy Priorities (CBPP) argues that we are nowhere near a discretionary “spending explosion,” in either domestic or military spending.