Our Deficits aren't as bad as Washington thinks - Ezra Klein

[Bill USA]

[font size="3"]...Here's one for 'Blow-hard' Joe Scarborough to read - not that it would sink in.[/font]


http://www.washingtonpost.com/blogs/wonkblog/wp/2013/03/13/our-deficits-arent-as-bad-as-washington-thinks/

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Today’s deficits are, if anything, too small. Yes, I said it. Too. Small. We’ve seen real, clear damage from spending cutbacks — if public employment had remained steady since 2008, unemployment would be down to about 7.1 percent — and the world is begging us to borrow more money. In fact, they’re paying us to borrow more money; real interest rates on Treasury debt have, amazingly, turned negative. We should accept the world’s generous, limited-time offer.

This is the moment to pass a big tax cut for employers who hire new workers, to rebuild our infrastructure at bargain- basement rates, and to help state and local governments reverse the deep cuts they’ve made in recent years. It’s not the moment to begin sequestration.

Future deficits are a legitimate concern. But as either Yogi Berra or Niels Bohr said, predictions are very difficult, especially about the future. And future deficits are, annoyingly, situated entirely in the future. So most everyone in Washington has outsourced the difficult task of estimating future deficits to the genial and diligent wonks at the Congressional Budget Office.

The CBO has come back with two projections. One is a simple, mechanical projection of future deficits based on current law. Everyone pretty much ignores this analysis, because, in recent years, current law has been a poor predictor of future policy. The law said, for instance, that all the Bush tax cuts would expire at the end of 2012 and that huge Medicare cuts would be imposed. Everyone knew that Congress wouldn’t let that happen, and that the current-law projection was wrong.


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