One of the few justifications I’ve heard for focusing so much time on reducing the deficit at this moment, even though people are practically paying the federal government for the privilege of being able to loan it money, is that somehow we can “fix the problem forever.” The logic goes that if only we could get a grand bargain we would take all these issue off the table for over a generation. It could try to explain why, on a theoretical level, this logic is flawed; but fortunately I don’t need to. In just the past decade there have been two dramatic real world examples of why this idea is so silly. The problem is that a previously Congress can’t bind the decision of a future Congress, especially on the issue of deficit reduction.
|By: Jon Walker Friday December 7, 2012 2:05 pm|
|By: Attaturk Tuesday December 4, 2012 1:30 am|
Hey look it’s the Republican plan finally…
|By: Dean Baker Sunday December 2, 2012 6:15 pm|
The folks running around yelling about deficits are confident that their serious demeanor, powerful positions, and financial backing will prevent anyone from scrutinizing the substance of their claims. Thus far their confidence has been warranted, as nearly all the voices in major news outlets have accepted their assertions at face value.
However any careful look at their claims quickly reveals that they do not hold water. The basic story in their deficit story is that we have not been saving enough to afford the retirement of the baby boom cohort. The story is that by increasing saving, we would be able to make ourselves rich enough to afford the retirement of the baby boomers.
|By: Dean Baker Tuesday November 27, 2012 6:11 am|
Millions are no doubt wondering how we know that the government has to reduce deficits by $4 trillion over the next decade. This appears to be the magic number that underlies the budget discussions between President Obama and the Republicans in Congress, and it is widely accepted by Serious People everywhere, but where did this magic number come from?
|By: Peterr Saturday November 24, 2012 9:00 am|
Like little children scared about monsters under their beds, DC appears to be in thrall to fears of Invisible Bond Vigilantes. Krugman has been trying to slay these fears with logic and rational argument, but as any parent can tell you, fears like these are irrational and succumb to only one thing: mockery.
As the pressure for a Grand Bargain mounts and screaming about the Invisible Bond Vigilantes rises, let the mockery begin. It’s the only weapon that has a chance of success.
|By: letsgetitdone Saturday November 24, 2012 7:52 am|
Obama for America, the campaign apparatus with the very large e-mailing list and great segmentation techniques that exploited Romney’s weaknesses to help the President to eke out (yes, I know the electoral vote involved no “eking out,” but the popular vote was something else again) his re-election victory, is now trying to mobilize people who voted for the President to work against their own interests by supporting his deficit/debt cutting activities. So, I couldn’t resist the following commentary on their mobilization e-mail.
|By: Jon Walker Wednesday November 21, 2012 1:10 pm|
Goldman Sachs CEO Lloyd Blankfein calling for Social Security and Medicare spending to be “contained.”
|By: Jon Walker Tuesday November 20, 2012 8:55 am|
It is amazing to watch how desperate some of the so-called “deficit hawks” are to cut Social Security and Medicare. Peter Diamond wants to see these programs cut so badly that he is effectively advocating we sacrifice the core principles of democracy just to make it happen.
|By: letsgetitdone Friday November 16, 2012 4:31 pm|
Like many others, I’m not worried about the so-called fiscal “cliff,” and the ravages to the economy that are likely to occur if Congress doesn’t do something about it before the end of the year. That’s because a lot of the impact can be cushioned in the short run by Executive Branch manipulations while negotiations continue to go on. But if measures aren’t taken to reverse the contractionary effect of the sequestration-induced changes, we’re looking at deficit cuts of $487 Billion over 9 months of the fiscal year.
By comparison, the American Recovery and Reinvestment (ARRA) of 2009 produced only $350 B in stimulus during its first year. And, if the full sequestration were allowed to proceed unmodified, then it would result in a “claw-back” of about 60% of the total ARRA stimulus.
|By: Dean Baker Tuesday November 13, 2012 12:19 pm|
It’s so cute to see all the serious people like David Brooks who are so worried about economic crises that do not exist. They are constantly telling us how the “job creators” (a.k.a. rich people) who run businesses are just so nervous and uncertain they don’t know what to do. The current concern is that taxes could rise at the end of the year and government spending will fall.