A $642 billion federal budget deficit is better than a $1.4 trillion deficit. How much better? The latest Bloomberg Businessweek sets out to answer the question and includes at least some sensible commentary.

Republican deficit hawks are unimpressed by the short-term reductions and want more cuts to head off exploding long-term debt driven by rising spending on Medicare, Medicaid, and Social Security.

“I must have missed the Kool-Aid,” says Douglas Holtz-Eakin, a former CBO director who served as John McCain’s chief economic adviser during the 2008 presidential campaign. To Holtz-Eakin, a deficit that’s 4 percent of GDP isn’t worth bragging about. Plus, the short-term reductions are mostly from technical revisions such as tax code changes and a $95 billion, one-time payment from Fannie Mae and Freddie Mac. The long-term situation is still scary, he says.

As millions of baby boomers retire, entitlement spending will start eating up government funds. Unless those programs are reined in, the CBO projects the budget deficit will start to rise again in 2016 and hit $895 billion by 2023. Also, today’s low interest rates, which allow the government to sell 10-year Treasury bonds below 2 percent, won’t last forever. The CBO projects that by 2023, annual interest payments on the country’s debt will nearly quadruple, to $823 billion. A new plan being floated by über-austerians Erskine Bowles and Alan Simpson, co-chairs of President Obama’s 2010 debt commission, calls for replacing the $85 billion in cuts from the sequester with $2.5 trillion in additional deficit reduction, including $220 billion in defense cuts and $585 billion in health-care savings through reforms to Medicare over the next 10 years.

Erskine Bowles, über-austerian? (Pause for chuckling.) Now for something serious: Those who would look at the Congressional Budget Office’s numbers and predict blue skies ahead might want to revisit a recent warning from Barron’s columnist Gene Epstein.