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Aug 28, 2009

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bubba

Krugman now:

"According to the White House projections, by 2019, net federal debt will be around 70 percent of G.D.P. That’s not good, but it’s within a range that has historically proved manageable for advanced countries, even those with relatively weak governments."

No big deal, right?

Krugman 2003:"Passing It Along":

"Mr. Bush's officials profess to see nothing wrong with the explosion of the national debt on their watch, even though they now project an astonishing $455 billion budget deficit this year and $475 billion next year. But even the usual apologists (well, some of them) are starting to acknowledge the administration's irresponsibility. Will they also face up to its dishonesty? It has been obvious all along, if you were willing to see it, that the administration's claims to fiscal responsibility have rested on thoroughly cooked books...

...But Mr. Bush shows no inclination to deal with the budget deficit. On the contrary, his administration continues to fudge the numbers and push for ever more tax cuts. Eventually, markets will notice. And tarnished credibility, along with a much-increased debt, is a problem that Mr. Bush will pass along to other Congresses, other presidents and other generations."


Krugman 2004:"Krugman calls on Bush to reign In The red":

"Well, basically we have a world-class budget deficit not just as in absolute terms of course - it's the biggest budget deficit in the history of the world - but it's a budget deficit that as a share of GDP is right up there. It's comparable to the worst we've ever seen in this country."

But all that was then, and this is now, right?

Hat tip: The Spag Report, where this comment will be cross-posted.

bubba

We were just talking about this in a recent thread, but it seems some folks would rather keep their narrow-minded alternately clued partisan fantasies intact.

cheripickr

I am hoping one of you sharper, more pragmatically rigorous minds like WSGator or Ed (if he’s past the formative opinion stage) will explain to me the circumstances under which a 455 billion deficit is bad and a 1.5 trillion one is good cause somehow this dullard just ain’t gettin the math. This Krugman guy,…I mean exactly when did Economics fuse so unapologetically into ideology for him? Like Algore, he bastardizes what is supposed to be an impartial, objective discipline, and what does it get him? A Nobel Prize!

"Mr. Bush's officials profess to see nothing wrong with the explosion of the national debt on their watch, - it's the biggest budget deficit in the history of the world - even though they now project an astonishing $455 billion budget deficit this year and $475 billion next year. And tarnished credibility, along with a much-increased debt, is a problem that Mr. Bush will pass along to other Congresses, other presidents and other generations."

Is this the sort debt fears Bush would have passed along if Obama hadn’t come along and saved us?

There’s only one phrase of honesty in his article, as it pertains to him: “it’s the politics, stupid.”

How could anyone take seriously a word this political whore says? This is a joke thread, and I’m missing the sarcasm again, right?

Roch101

I am no expert, and people will certainly disagree about the particulars, but it isn't rocket science to understand that deficit spending that procures a better future by ameliorating some current threat or harm may be a good thing, even in gargantuan proportions and especially if it results in a more robust future economy.

Some people might consider things such as stopping a dictator hell bent on military conquest of the world, keeping the banking system solvent or improving the delivery of health care to be legitimate reasons. Other people might consider invading a country to preempt an attack with weapons they did not have or cutting taxes to grease the wheels of supply side economics to be legitimate. The size of a deficit is one consideration, the reasons for it matter too.

bubba

".. deficit spending that procures a better future by ameliorating some current threat or harm may be a good thing, even in gargantuan proportions and especially if it results in a more robust future economy."

(Sigh)

The echo chamber never fails to pick up the partisan clarion call to rationalize that which is clearly not rational.

bubba

"How could anyone take seriously a word this political whore says? This is a joke thread, and I’m missing the sarcasm again, right?"

No joke.

It's just the usual shameless hypocrisy and lack of academic and intellectual integrity for which the partisans of those that call this place home are clearly known.

Why would we expect anything else?

Kim

Bubba, you could tax every household in America at 100%, and still not pay for this shit!

Roch101

CP, I am no expert, but economics has never appeared to me to be an "impartial, objective discipline." I don't know how one can assert that without being ignorant of the political variants of economics including those of the Chicago School and its practitioners meddling in political systems throughout the world. People like economic neoclassicist Milton Friedman, like Krugman, argued for political structures for economic reason, also winning him a Noble prize.

Partisan blinders can, not surprisingly, blind.

cottonpickr

if and when a Nobel Prize winner, in economic science of all things, changes his mind to fit the whims of power holders, would it not be safe to assume that they alone have a monopoly on the irrelevance of truth? Only a evil-monger would doubt that authority. Only an evil-doer would physically oppose the current truth. Only jihadists could hate them because of their freedom do discern arbitrarily what is right and wrong. When the Christian Fascist Party accuse the liberals of being national socialists and the liberals accuse the conservatives of being jackboots, brownshirts and lynchers, the one party goal of the "third way" has been achieved. It took a while, but it was worth watching.

Mick

Dont hold your breath.

bubba

"Partisan blinders can, not surprisingly, blind."

So take them off for a change, see the facts that are clearly in front of your face.

Beelzebubba

bubba: there you go. you're evil-mongering again. When liberals adopt the Chigaco School shock doctrine method to get an ideological foothold, a different kind of blinders are used. The kind that only they can see through. The opposotion sees through the glass darkly, but they are illuminated and enlightened. If Obama is going to have his mission accomplished, he'll have to land on a hospital helicopter pad in a flight surgeon's outfit. It's the other side's turn to be silly.

cheripickr

"I am no expert, and people will certainly disagree about the particulars, but it isn't rocket science to understand that deficit spending that procures a better future by ameliorating some current threat or harm may be a good thing, even in gargantuan proportions and especially if it results in a more robust future economy. Some people might consider things such as stopping a dictator hell bent on military conquest of the world, keeping the banking system solvent or improving the delivery of health care to be legitimate reasons. Other people might consider invading a country to preempt an attack with weapons they did not have or cutting taxes to grease the wheels of supply side economics to be legitimate. The size of a deficit is one consideration, the reasons for it matter too."

Roch, I may not often agree with you, but that was well articulated and at least I understand what you are trying to say (both posts), and you make some good points. I wish you would make them more often.

bubba

Heritage shows how unsustainable the current budget situation is:

"The Office of Management and Budget has released its annual mid-session review that updates the budget projections from this past May.[1] They show that this year, Washington will spend $30,958 per household, tax $17,576 per household, and borrow $13,392 per household. The federal government will increase spending 22 percent this year to a peacetime-record 26 percent of the gross domestic product (GDP). This spending is not just temporary: President Obama would permanently keep annual spending between $5,000 and $8,000 per household higher than it had been under President George W. Bush.[2]"

"While the costs of the financial bailouts and economic stimulus bills are staggering, they are only a fraction of the coming costs from Social Security, Medicare, and Medicaid. Over the next decade, the Congressional Budget Office (CBO) projects that each year Medicaid will expand by 7 percent, Medicare by 6 percent, and Social Security by 5 percent. These programs face a 75-year shortfall of $43 trillion--60 times greater than the gross cost of the $700 billion TARP financial bailout.[4]"

Remember, one of our resident "experts" here recently asked what the "younger people" thought was the bigger problem...unemployment or the deficit?

That's a narrow-minded short term attitude, and illustrates the tunnel vision constantly on display here by the so-called "experts".

Ask those same "young people" that same question in ten years.

Roch101

Indeed, beelzebubba. I chuckled at the historical ignorance of those who found it shocking that Emmanuel said never to let a good crisis go to waste. PNAC had to put it in plain language in their wish for a new Perl Harbor for liberals to finally get it.

Roch101

"I wish you would make them more often." -- CP

I do. I wish you would recognize them more often.

Roch101

"a peacetime-record 26 percent"

Um, helloooo...

cheripickr

"I wish you would recognize them more often."

If you could keep them separate from the name-calling and other personal insults regarding peoples' intellectual capacities, they might be easier to locate.

bubba

"a peacetime-record 26 percent.

Um, helloooo..."

Do you have a problem understanding OMB's methodology?

Ed Cone

It's really not that complicated: as Krugman says in the article: there are times when running deficits is better than the alternative -- in this case, a deeper and more protracted economic slump.

His argument may or may not be correct in this case, but it's not logically inconsistent with an overall concern about deficits.

Beelzebubba

The German military intelligensia tried to surrender in 1941. They knew Germany had less than 2% of the planet's natural resources. They also knew that every land acquisition would increase the deficit. They also knew that Hitler was beginning the invasion of Russia with gandydancers. Stalin had the foresight to move all industry out of German bombing range and change the tracks so German trains couldn't use them.
Deficts can't stop these democratically elected tyrants from obtaining power, but they can prop up dictators in countries in which no American would choose to live. For something that is not complicated, I wonder why there are so few experts and so many disagreements about the particulars.

Ed Cone

The particulars may be complicated, and they certainly are contested, Beez.

What is not complicated is the question, How can someone who is concerned over large deficits support large deficits?

In fact, it's so uncomplicated a question that one supposes that dwelling on it is a way of avoiding a discussion of the particulars of this situation.

cheripickr

I apologize for myself and all the rest of us who so fastidiously avoid discussion of particulars.

Ed Cone

And yet you persist in doing so.

bubba

"No."

That answer doesn't jibe with your previous comment.It's pretty clear you lack an understanding of how certain things are defined in the Federal government.

It's just the latest item on the long list of things you don't understand.

bubba

"In fact, it's so uncomplicated a question that one supposes that dwelling on it is a way of avoiding a discussion of the particulars of this situation."

Real world interpretation: Krugman gets a complete pass from people like Cone regarding his lack of credibility, and "regressives" have absolutely no shame in rationalizing hyporcrisies when there's an agenda to prop up.

It's just another example of the old proverbial "birds of a feather" thing, and standard operating procedure on this blog.

As always in cases like this, it's no big surprise.

Ed Cone

Let's try another example: I'd guess most of us disapprove of our government killing innocent people.

Yet many of us supported the invasion of Afghanistan, even though we knew that it almost inevitably would result in the death of innocents, as it has many times over.

It's hard to imagine a principal more important than this limitation on government power, but we knowingly violate it when we feel circumstances necessitate the decision.

In any case, let's agree that Krugman and I are awful hypocrites.

That does not change the question on the table: are yet larger deficits justified by the economic situation?

Roch101

"It's just the latest item on the long list of things you don't understand." -- Bubba

Bubba, if I had trouble with "a peacetime-record 26 percent" and explain to you that I understood the "26-percent" just fine, maybe it is the "peacetime-record" that I question.

With us in two wars in Iraq and Afghanistan and with the Heritage Foundation, the original source of your regurgitation, having also argued that we are in a perpetual "long war" against terrorism, it is only possible to elevate the 26 percent to a perch of "peacetime-record" with a partisan shrugging away of the FACTS. Damn, there it is again, those damn pesky facts getting in the way of your fantasy wishes. I'd point out how idiotic it was for you to attack me when it was you pushing away reality, but CP would scold me for calling you names.

bubba

Why don't you make an effort to understand OMB's methodology for reporting regarding "peacetime" as opposed to "wartime" before you run your mouth to support some sort obscure partisan talking point?

On a related subject, if you ask real nicely, I'll bet CP will be able extract your head from where it's currently stuck. And he won't even treat it like a polyp.

cheripickr

"That does not change the question on the table: are yet larger deficits justified by the economic situation?"

I thought you just told us to quit dwelling on that question and get down to particulars. Why don't you lead the way for a change?

winstongator

CP - the difference is the general economic context. Compare budget deficits with fed interest rates. Few argue that today low rates are needed, but we also had low rates in 2004 (scroll down to the image for a quick look) and that served to fuel the housing bubble. Policies that were bad ideas in 04 may be good ideas today, because the economic climate is different.

The current deficits are obviously unsustainable forever, but they were never intended to be sustained from the point of view of the deficit staying this high forever. From my limited understanding of Keynes, he was advocating for gov't to be counter-cyclical to lessen the extremes of business cycles - which also includes restraining the exuberance.

Take the $43T 'projected shortfall' over 75 years. That should not be compared to a one-off TARP $700B, some of which has already been paid back, but should be compared to the $1050T GDP (neglecting inflation) we can expect over those 75 years.

Roch101

"Why don't you make an effort to understand OMB's methodology for reporting regarding "peacetime" as opposed to "wartime" before you run your mouth to support some sort obscure partisan talking point?" -- Bubba

And now we will demonstrate that you not only get your facts wrong, but that you are incapable of acquiescing to reality and prefer to employ intellectual dishonesty instead of admitting an error.

We will do that by asking a straight forward question that you will not answer:

What is the OMB's "methodology for reporting 'peacetime'"?

bubba

"What is the OMB's 'methodology for reporting 'peacetime'"?

Go find out for yourself, Ace. You're the one who doesn't know, but still ran your mouth anyway.

bubba

"Policies that were bad ideas in 04 may be good ideas today, because the economic climate is different.

The current deficits are obviously unsustainable forever, but they were never intended to be sustained from the point of view of the deficit staying this high forever."

So where's the plan to fix it?

In addition, what's the plan to make Medicare and Social Security solvent without cranking up Treasury's printing presses further?

bubba

and yet to be contemplated is the evidence that says the actual deficit level will approach $14 trillion, not the $9 trillion revision level discovered last week:

"$9 trillion ($9.051 trillion) is the Obama Administration’s 10-year deficit projection based on their own economic forecast and their own estimate of the costs of their policy proposals (as proposed in their FY2010 budget). $7 trillion ($7.137 trillion) is the Congressional Budget Office’s 10-year deficit projection based on their economic forecast and policies already in place in current law.

If you start with CBO’s more pessimistic baseline budget outlook of $7 trillion in deficits (by the way, the equivalent pre-policy baseline estimated by the Administration is $6.259 trillion), then add in the CBO-estimated cost of policies that have a good chance of coming true in the future (but aren’t yet written into law), you can come up with a projection that is perhaps more “plausible” than both the Administration’s (optimistic) $9 trillion and CBO’s (naive baseline-constrained) $7 trillion.

That’s what we at Concord try to do when we come up with our “Concord Plausible Baseline,” which based on today’s CBO report shows that current policy would lead to $14.4 trillion in deficits over the next 10 years."

Ah, but it's the "general economic context" that really matters, right?

Let's use an accurate description for "general economic context": Partisan political agenda smoke and mirrors.

Roch101

Clown.

Ged

"That does not change the question on the table: are yet larger deficits justified by the economic situation?"

Reminds me of the "Do the ends justify the means when it comes to torture?" question that we bandy about every now and then. For some reason I think the conservatives on this thread would say "Yes" to the torture one and "No" to the deficit one.

My feeling is that yes, sometimes higher deficits are justified in the short term, if in the long term they can be brought under control. The government has yet to prove that they will be able to do that, which is why so many people are upset I suspect. I firmly believe however that the "stuff money in the mattress instead of spending it" method that so many conservatives wanted when Obama took office (note, *not* when Bush started the whole notion of bailing out banks) would have been an epic stratergery for economic failure.

Signs are pointing to improvement across the board except for unemployment. Granted many of the same root problems (poisoned home loans, unregulated banks) are still in place, so this could all happen again. Which, unfortunately, isn't the change the majority of American's voted for this past November.

Beelzebubba

guys: this just in. bernanke has called an end to the worst and we are all out of recovery now. we can go back to our homes, shelters or under the bridge, wherever, and back to the liquor cabinets and meth dealers as long as...get this...we inject it into a vein in our neck. This is all it will take. All future production has been spent and taxed. An indulgence of larger deficits has been granted and aren't you the lucky ones. The change is starting to happen. All over.

No jobs? No worry. Every future profit on all future human energy has been spent on this increased deficit. Everything is justified. Nothing is left out except GDP projections in 2019 based on WTF? the last 70 years? 7 years? 7 weeks? and what is a relatively weak government? how is that different from a terminally ill government? or superhero strength government. Are the White House projections coming from the same guy who made the projections for the Harvard fund?

I don't bother with this foolish inquiry anymore because the majority voted for change and BHO'bama became Dick Cheney. My faith in the mob is restored. To Gahenna with you naysayers and evil-mongers.

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