The deficit is shrinking.

The deficit is shrinking at a really fast pace.  In the last three years the deficit has gone from 10% of GDP to 7%.  Here are the various charts that are floating around. (Continued below).

This is good news, certainly.  But it doesn't mean that all our problems are solved.  As Slate's Matthew Yglesias points out, the deficit reduction is not a matter of successful economic policy by the Obama administration, but is, at least in part, "the flipside of the huge increases in the deficit that were associated with the recession."  And Mother Jones points out that a deficit that is too small can be just as dangerous as a deficit which is too big.  So, the upshot is that the conversation about the fiscal cliff need not include the question of the size of the deficit. 

Watch out for that CLIFF!

Tuesday night brought with it several changes--no, there was no change in the White House; the House is still Republican and the Senate still Democrat.  But the congressional elections were a huge win for women and for doctors.  So now it's time for the legislature to get to work.  First on the agenda is avoiding a natural disaster--not Sandy, not the Nor'easter, but the Fiscal Cliff.  If you're like me, you've seen this phrase in the news often lately and wondered what this proposed precipice problem is all about.  As it turns out, the phrase is only half accurate: the problem is fiscal, but it is not a cliff at all (as Matthew Yglesias explains here).  Indeed, the so-called cliff is simply the expiration of certain fiscal policies including the Bush tax cuts, and which will affect the economic recovery of and slow growth in the US.  How do we avoid such a burden at a time when the US is already suffering a slow recovery in a terrible recession?  Well, congress and the White House need to work together to replace the existing-but-getting-ready-to-expire policies with new ones--or as I like to put it: Speaker Boehner and President Obama need to do their jobs.  In other words, all this fiscal cliff talk is simply the professional politician's version of waiting to write your essay until the night before it is due when you've known about the deadline since the beginning of the semester.