An Imaginary Budget and Debt Crisis = Krugman

[pbmus]

For much of the past five years readers of the political and economic news were left in little doubt that budget deficits and rising debt were the most important issue facing America. Serious people constantly issued dire warnings that the United States risked turning into another Greece any day now. President Obama appointed a special, bipartisan commission to propose solutions to the alleged fiscal crisis, and spent much of his first term trying to negotiate a Grand Bargain on the budget with Republicans.

That bargain never happened, because Republicans refused to consider any deal that raised taxes. Nonetheless, debt and deficits have faded from the news. And there’s a good reason for that disappearing act: The whole thing turns out to have been a false alarm.

I’m not sure whether most readers realize just how thoroughly the great fiscal panic has fizzled — and the deficit scolds are, of course, still scolding. They’re even trying to spin the latest long-term projections from the Congressional Budget Office — which are distinctly non-alarming — as somehow a confirmation of their earlier scare tactics. So this seems like a good time to offer an update on the debt disaster that wasn’t.

About those projections: The budget office predicts that this year’s federal deficit will be just 2.8 percent of G.D.P., down from 9.8 percent in 2009. It’s true that the fact that we’re still running a deficit means federal debt in dollar terms continues to grow — but the economy is growing too, so the budget office expects the crucial ratio of debt to G.D.P. to remain more or less flat for the next decade.

http://www.nytimes.com/2014/07/21/opinion/Paul-Krugman-An-Imaginary-Budget-and-Debt-Crisis.html?_r=1

[Wounded Bear]

1. Much like pretty much all of the RW crises of the past 5 years...

[Martin Eden]

2. The debt "Crisis" is necessary for the rightwing agenda

Their long term goal is the destruction of FDR's New Deal and LBJ's Great Society (Social Security, Medicare, etc).

They know these programs are popular and cannot be eliminated as long as there is funding to keep them going.

Therefore, part of their strategy is to convince the people that budget deficits pose a greater threat than the loss of these programs.

This explains why they constantly hype the debt "crisis" ... but more importantly, it explains the fiscal policies they put in place whenever they have the power to do so. It should be obvious to any rational person that cutting taxes while increasing military spending will put the government deeper in debt, and that trickle-down economics will never work because the real engine of economic growth is average Americans with disposable income.

So why do Republicans claim to be deficit hawks while enacting policies that explode the deficit?

Pretty simple. It's called Starve The Beast.

Plunging the government deeper in debt IS THE ONLY WAY they can achieve their long term goals.

The Powers That Be who control the Republican Party are not as stupid as some may think.

What they are is more devious, despicable, and downright evil than most realize.

[Jim Lane]

3. Care to reconsider that grade, Professor?

Just in this excerpt, Krugman sets forth that Obama appointed Simpson-Bowles and sought a Grand Bargain that, if he had achieved it, would have been a macroeconomic disaster.

Also, if "readers of the political and economic news were left in little doubt" about the issue, one reason is that a certain elected official, instead of using his bully pulpit to try to counter deficit hysteria, was one of the culpable people, stating that in tough economic times the government must spend less.

In light of all this, giving Obama a grade of A- seems, to put it charitably, charitable. I have to suspect that Krugman was reacting against the lunatic right-wing criticism of Obama. Certainly that criticism has reached unprecedented levels of stupidity, and the frequent racist aspects are particularly repugnant, but those facts don't justify erring in the other direction.

[pbmus]

4. Yes our elected official has been lets say bi-polar on the deficit issue ...

I have seen the ups and downs of his behavior towards the deficit hysteria ... his lets build infrastructure to supporting chained cpi, just boggles the mind ...