Dr Alan Blinder, Princeton University Professor of Economics and Public Affairs, had some thoughts on this. His piece is fundamentally optimistic, but a few of his remarks jumped out at me.
Congress and the president have managed to agree on several measures that reduce the projected 10-year deficit considerably.
Reduced the 10-year deficit. He writes of this as if it’s a good thing. He writes of this as though that continued 10-year deficit, representing as it does an enormous expansion of an already ruinous debt, is a good thing.
Meanwhile, Republicans are talking far less menacingly about either shutting the government down or precipitating a debt crisis.
For which cynical straw man he declines to provide a single quote from a Republican—or Conservative—wherein such a one ever talked about shutting down the government or precipitating a debt crisis in recent history, other than in the context of Progressives manufacturing such things so they can decry them.
That law [the Budget Control Act of 2011] created land mines like the fiscal cliff, but it also cut spending by over $1.9 trillion once you include the associated interest savings, as you should. (Here and elsewhere, I use the 10-year budget window 2014-2023 and recent estimates from the widely respected Center on Budget and Policy Priorities.) That was all spending cuts, no tax increases.
Here Blinder is simply being disingenuous. There were no spending cuts in that Act. A reduction in the rate of spending increase is still a spending increase. A Professor of Economics, even one at Princeton, knows that.
Then came the New Year’s Day agreement that averted the cliff. The headline number then was about $600 billion in tax increases. But if you add in the spending cuts and the associated decrease in debt service, it came to another $850 billion or so.
See above. And he’s exaggerating the magnitude of the spending increase reduction.
But imagine that our legislators agree instead on a smarter package of spending cuts and revenue raisers that amounts to the same amount of money [as the present sequester cuts]. After all, it’s only about 0.6% of GDP. Then we’ll have achieved the $4 trillion target. The Center on Budget and Policy Priorities estimates that doing so would be enough to stabilize the debt-to-GDP ratio at about 73%, which is a sensible goal for now.
There are a couple of things here. “Cuts and revenue raisers” that achieve the same degree of…something. Serious cuts in Federal spending would get the government out of the way of the economy, and its recovery—its enthusiastic performance—would raise plenty of revenue for the government, more so than it’s collecting now. But Blinder and his fellow Progressives, with these demands for more taxes as the only possible revenue raisers are simply demonstrating their contempt for a free market and the wisdom of the individual Americans participating in it, preferring instead an economy centrally directed by Know Better Progressives.
The other thing is that stable debt-to-GDP at 73% nonsense. This is an amazing thing even for a Princeton Professor to say. There’s nothing at all stable about such a debt level.
Some of this “cost control” [in his claimed slowing rise in the cost of health care] is due to the weak economy: Hard times lead people to postpone or cancel some medical care. But health-care inflation began to fall years before the recession began, which suggests that deeper forces are at work. If we can somehow slow health-care costs to the rate of GDP growth, our long-run budget problem is basically solved.
On the effectiveness of President Barack Obama’s poor economy in holding down cost increases, well NSS. “If we can somehow slow health-care costs…,” well the answer here is obvious—let a free market work its will in a competitive environment. But, such an answer truly is not obvious to one who disdains the free market and that wisdom.
…fixation on reducing the budget deficit, to the exclusion of all other national goals, seems strangely anachronistic. The nation has other priorities, too—such as faster growth and more jobs.
This also is an amazing thing. The nation does have as critical economic and security imperatives faster growth and more jobs. But these are not possible to achieve until the budget deficit is eliminated and the debt it drives reduced.
