Posted on 01/11/2013 8:21:14 AM PST by blam
PAUL KRUGMAN: The Deficit Is Basically Solved
Walter Hickey
Jan. 10, 2013, 4:00 PM
Many people think that fixing the deficit is a painful process that involves deep cuts to crucial programs. Some think the process is too hard, and it's not worth trying yet.
That's not correct, according to a chart from from the Center on Budget and Policy Priorities' Richard Kogan showing just how far the United States has come in the past two years.
We've talked before about how the painless and most effective solution to the deficit is additional growth in GDP. As the recovery progresses and GDP rises, the government will get more revenue from increased productivity. We've also pointed out that — fundamentally — we don't have a spending problem.
CBPP
Paul Krugman made the point that the chart shows how far we've come on the deficit and how easy it will be to solve moving forward.
Richard Kogan points out that the debt to GDP is very important indicator, and can't rise forever. "If it did," he says, "that would shrink the amount of national saving available for private investment, ultimately impairing productivity growth and, in turn, living standards."
In short, seeing what we're seeing is a good thing.
The chart shows the stabilization of the debt to GDP ratio of the United States.
As late as 2011, the U.S. was bound for an unmitigated increase in debt to GDP ratio. Thanks to two bills, the deficit is close to coming under control: The Budget Control Act of 2011 (BCA), which came from the debt ceiling negotiations and mandates $1.2 trillion in cuts. The American Taxpayer Relief Act (ATRA), which was signed two weeks ago to avert the fiscal cliff and raised taxes on high earners.
(snip)
(Excerpt) Read more at businessinsider.com ...
I tweeted the author about the growth rate. The assumption is that GDP growth between 14-17 is 4.3%. That’s very, very strong considering the strongest four year average growth over the last decade is 3.0% (and that was 2002 which incuded the end of the dot com boom). This chart would look very different at 3% GDP growth instead of 4%+.
Double plus ungood!
A Fourier transform is completely beyond his ability.
However, his math is evidently good enough to get a Nobel Prize in Economics.
Such is the (dismal) state of both the economics profession and the (laughable) Nobel Committee in Economics.”
Krugman won his Nobel Prize for path-breaking work on the geography of international trade, not for his knowledge of fiscal policy and macroeconomics in general. Issac Newton was an alchemist, Linus Pauling believed that vitamin C was the cure for everything from cancer to the common cold, and Louis Ignarro believes that l-arginine is a cure-all for heart disease. Among scientists, this is called the “Nobel disease”; the arrogance possessed by some Nobel Prize winners that causes them to believe their specific knowledge and achievements in one narrow field of study gives them expertise in some (or all) other fields.
Liberalism: The art of self-deception
Has the author ever tried that line with a credit card company that wants to pull his line of credit ? Just give him more credit and he can then handle the monthly payments. What will happen to US treasury revenue when world war breaks out ? How will we pay for the next world war when spending is already maxed ?
As productivity declines, the debt to GDP ratio would increase. Sheesh.
Krugman’s solution is to basically print up $16 trillion in new money and use that money to buy back all outstanding T-bills. No more debt. (Of course it would take several years of 92% unemployment to ‘fix’ the rampant inflation that would follow).
No, but stupid is.
Remember Ohaha's self-serving SOTU speech? Sounding like "he just took office" in January 2011 with a Republican congress. T'was that 2008 ex-Republican POTUS and Republican congress who screwed everything up.
Therefore Ohaha couldn't fix EVERYTHING with the Republican congress blocking all his GREAT ideas. NO MENTION of the years Democrats controlled everything---and nothing got done---unless you count Congress getting rich on insider info (/snix).
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In a fair accounting, President Obama is responsible (along with the then-Democratic Congress) for the $1.3 trillion in deficit spending in 2010 and the estimated $1.6 trillion in deficit spending in 2011. He [Obama] should not get credit, moreover, for the $149 billion in TARP (Troubled Asset Relief Program) repayments made in 2010 and 2011 to cover most of the $154 billion in bank loans that remained unpaid at the end of the 2009 fiscal year—loans that count against President Bush’s 2009 deficit tally.
The Treasury Department says that all but $5 billion of the TARP bank loans has now been repaid. The portion of repayments that was for loans issued in 2009 should be deducted from Bush’s deficit tally, not credited to Obama as deficit savings. There is some astounding number crunching in this article, and a chart of modern day president’s “average annual deficit spending” ........a frightening conclusion of what happens if Obama has an 8 year term.
Yep, if we spend it on investments to grow just like a business. If we borrow our money to import expendables from China, we are heading for the drain.
Or at least some of the Dems in charge do understand it, and pretend they don't. But since GWB and the GOP got to spend borrowed money, it would be politically "unfair" for the Dems to be responsible. They think, and they may be right, that a bare, but growing, majority of voters, through ignorance or selfishness, will punish any party that they think is going to spend less than the other.
I can blame the Dems and GOP, but look at whom the voters elect.
Great intro to my next point: I came up with an answer to the question I been posting for days. It was :
“Why doesn't the House GOP go after the debt ceiling rather than the actual spending in the CR?” as O and Dems dare them to try?
The answer is that the national debt polls high in voters worries, so Rs take a symbolic stand against debt by holding out the debt ceiling.
And if Rs take the stand on the CR instead they are going on the record on specific spending cuts which as you point out are unpopular and O crucifies them.
But that doesn't mean Rs will win this because as we have seen Dems will pull all sorts of tricks and scare the daylights out of voters.
So the endgame is : Rs cave again, and they know it, this helps explain what they are doing relative to my question.
When they cave on the debt limit it is after they took a symbolic stand against unpopular debt, but if they take a stand on CR spending cuts they are hated for cutting ‘my ...”, hated for caving, and hated for playing games. Lose-lose-lose
Lastly Rs want distant future entitlement cuts which is even more unpopular than cutting CR spending, so they play this game saying that that Obama has to come to the table and sign on or else... because Obama will skin them alive if they go it alone on that.
“Why doesn't does the House GOP go after the the debt ceiling rather than going after the actual spending in the CR directly?”
sorry
It is long past time for everybody to get a grip. There will never be any spending cuts. Never.
This is why the sequestration cuts MUST be allowed to happen, and the cowardly Rs better come up with a great scheme to have the African communist Ubanga share at least some of the blame. ...Which will be no easy task since that scumbag Ubanga has his Democrat “mainstream” newsrooms dishing out the propaganda on his behalf, 24/7.
Business Insider is a rat publication, IIRC.
They elect the Dems and the GOP ??
To me it looks like human nature.
Tell your kids (if you had 14 like that welfare case) that next Christmas you will put all the presents (say 3 times 14 of them) under the tree and that they are on the honor system to not get greedy and take more than their fair share, and to make the experiment work you plot with one of the kids to start grabbing presents as if he is out of control while the others watch.
By noon the Christmas tree will be down and all the presents will be destroyed after the big fight feeding frenzy.
Human nature DDD. "The presents are running out, so I better get mine fast".
I wonder if Krugman borrows and spends himself out of debt?
No? Why not? He should be taking out huge lines of credit and declaring that he has no debt.
Despite what anyone says, debt is debt regardless of the size. It has to be paid off. It cannot be relieved by taking on more debt.
This is why I ping you, I agree with you 100% on this. I mean All three of your points above.
No. You only need to be a big government socialist to win that laughingstock of a "prize", and maybe a homo, too. Or, you can win it by being a member of a politically correct minority whom the Nobel Committee is pretty sure will do something in the future such as maintain a "kill list" and increase drone attacks and keep Gitmo up and running. Whatever. The whole thing is a joke, and I doubt anybody with an IQ above room temperature pays much attention to Nobel prizes anymore.
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