Krugaman Deficit Scare is Largely GOP Political Tactic

did not read.

 

well nothing in that article is worth reading. I think it loses all credibility when it starts to blame one political party. Enough of the blame game here. It's very simple a huge deficit is of course not a good thing. It's as simple as that. I think everyone can agree on that point. So why try to justify it? I dont need a econ degree to figure that one out.

 

It's not a good thing in the long run, but short term economic planning deem it necessary because of the crisis. Look, both parties are crap and poo flingers okay. The main thing is the truth, which nobody on either side cares about, and neither does the media.

 

Hey pal this is D&D, stop it with all that sane and reasonable thinking.

 

Wow, I am so glad to know that deficits don't matter! I think I will go on a massive spending spree, and since we really just owe it to ourselves I won't have to worry about paying it back! Yippee! It can't get better than that.

 

Right, the Nobel Prize winning economist who makes his living studying depression economics and wrote a book on the very subject not to long ago doesn't have a clue what he's talking about...back to watching Glen Beck rant and rave.
What exactly in his argument to do you disagree with? (Logically, not ideologically).

 

Well a lot of people thought greenspan was a genius too. The problem is during prosperous time you need to try to cut some of it, but who wants to raise taxes or make government smaller?

 

Do you really believe this? You're one of the most wealthiest and prosperous guys on the block due to hard work and good fortune. Over the years, you foolishly waste money, time after time. Over time, you continue to rack up debt, while still continue to spend foolishly. Then the hard times really come, and you believe for the short term, its wise to borrow more than ever so you can continue to live the same lifestyle, while expecting the future to get better?

 

The pimp does not owe money to the hoes, the hoes owe money to the pimp!

 

http://www.nytimes.com/2003/03/11/opinion/11KRUG.html

March 11, 2003
Op-Ed Columnist
A Fiscal Train Wreck
By PAUL KRUGMAN

With war looming, it's time to be prepared. So last week I switched to a fixed-rate mortgage. It means higher monthly payments, but I'm terrified about what will happen to interest rates once financial markets wake up to the implications of skyrocketing budget deficits.

From a fiscal point of view the impending war is a lose-lose proposition. If it goes badly, the resulting mess will be a disaster for the budget. If it goes well, administration officials have made it clear that they will use any bump in the polls to ram through more big tax cuts, which will also be a disaster for the budget. Either way, the tide of red ink will keep on rising.

Last week the Congressional Budget Office marked down its estimates yet again. Just two years ago, you may remember, the C.B.O. was projecting a 10-year surplus of $5.6 trillion. Now it projects a 10-year deficit of $1.8 trillion.

And that's way too optimistic. The Congressional Budget Office operates under ground rules that force it to wear rose-colored lenses. If you take into account — as the C.B.O. cannot — the effects of likely changes in the alternative minimum tax, include realistic estimates of future spending and allow for the cost of war and reconstruction, it's clear that the 10-year deficit will be at least $3 trillion.

So what? Two years ago the administration promised to run large surpluses. A year ago it said the deficit was only temporary. Now it says deficits don't matter. But we're looking at a fiscal crisis that will drive interest rates sky-high.

A leading economist recently summed up one reason why: "When the government reduces saving by running a budget deficit, the interest rate rises." Yes, that's from a textbook by the chief administration economist, Gregory Mankiw.

But what's really scary — what makes a fixed-rate mortgage seem like such a good idea — is the looming threat to the federal government's solvency.

That may sound alarmist: right now the deficit, while huge in absolute terms, is only 2 — make that 3, O.K., maybe 4 — percent of G.D.P. But that misses the point. "Think of the federal government as a gigantic insurance company (with a sideline business in national defense and homeland security), which does its accounting on a cash basis, only counting premiums and payouts as they go in and out the door. An insurance company with cash accounting . . . is an accident waiting to happen." So says the Treasury under secretary Peter Fisher; his point is that because of the future liabilities of Social Security and Medicare, the true budget picture is much worse than the conventional deficit numbers suggest.

Of course, Mr. Fisher isn't allowed to draw the obvious implication: that his boss's push for big permanent tax cuts is completely crazy. But the conclusion is inescapable. Without the Bush tax cuts, it would have been difficult to cope with the fiscal implications of an aging population. With those tax cuts, the task is simply impossible. The accident — the fiscal train wreck — is already under way.

How will the train wreck play itself out? Maybe a future administration will use butterfly ballots to disenfranchise retirees, making it possible to slash Social Security and Medicare. Or maybe a repentant Rush Limbaugh will lead the drive to raise taxes on the rich. But my prediction is that politicians will eventually be tempted to resolve the crisis the way irresponsible governments usually do: by printing money, both to pay current bills and to inflate away debt.

And as that temptation becomes obvious, interest rates will soar. It won't happen right away. With the economy stalling and the stock market plunging, short-term rates are probably headed down, not up, in the next few months, and mortgage rates may not have hit bottom yet. But unless we slide into Japanese-style deflation, there are much higher interest rates in our future.

I think that the main thing keeping long-term interest rates low right now is cognitive dissonance. Even though the business community is starting to get scared — the ultra-establishment Committee for Economic Development now warns that "a fiscal crisis threatens our future standard of living" — investors still can't believe that the leaders of the United States are acting like the rulers of a banana republic. But I've done the math, and reached my own conclusions — and I've locked in my rate.

 

Regardless of whether or not he's right about the scope of the deficit problem, he's definitely right in pointing out that the media hitting the panic button can only make matters worse.

Because the Democrats were crying doom and apocalypse when Bush was digging us into this huge hole in the first place?

You think it's a coincidence that all this talk only heated up once the Democrats are in power?

 

I fixed it.

 

The deficit is just a talking point for the minority party. Neither party really has a solution. Since Krugman is a Democrat, he thinks it's no big deal right now - just GOP fear mongering. If Bush were in office, his tone would be different. This is obvious - and applies to all these political commentator-types. To deny any bias from a particular side is like saying their crap don't smell. I'm sure some guy like George Will defended deficit spending 5 years ago and is probably against it now.

If McCain won, we would probably have trillion dollar deficits anyways. I don't know the numbers, but I think it's more of a revenue problem.

 

Uh, no. Quite a few conservatives slammed Bush over his growth of the federal government and his idiotic spending. Both parties have failed to reign in it, and many people, regardless of political viewpoint, understand through common sense that deficits are not good.

You've never read Will, have you?

Well, yes. Common sense dictates that government keep spending beyond their limits, bad things will happen. Krugman himself kindly points that out in the article that Shovel Face provided. I'm hardly a populist and I despise Palin, but understanding that a government can't excessively go beyond their limits for prolonged periods of time is not that difficult.

 

as usual you miss the point. in 03 we didn't have to run big deficits, we didn't have to start an elective war, we were coming off budget surpluses

with the last 8 years behind us, we no longer have choice

 

Riiiight.