…Suppose the Democrats can free up some money…Should they use the reclaimed revenue to reduce the deficit, or spend it on other things?
That is Paul Krugman, and the answer is that Rubinomics is dead and they should spend the money. Deficit reduction is for "the long run." Even from Krugman’s point of view, the use of "they" seems premature with a Republican President and a hard-to-elect Democratic frontrunner candidate in the wings. More economically, I am pleased that the forthcoming fiscal destruction of the United States has been averted, or at least held at bay for some time. It took a mere mid-term election; cuts in spending or tax hikes were not necessary, quite the contrary.
Brad Delong has more. Mark Thoma has more. I am sure others have more too, time to walk around Brazil.
Zing!
i agree with xmas….delong & thoma both have started to behave more like politicians than economists…..guilty of the same things that they accuse the republicans of….
Jim V – Your comment was gratuitous, confrontational and intentionally hurtful. If you posted it in order to provide “diversity of opinion,” you’ve spoken quite poorly to the benefit of that strategy.
But Xmas’s comment was just fine, Henry? I appreciated Jim V’s comment and think he made a point.
As far as the so-called zinger in this post, I think Krugman was just saying that it may not serve Democrats well to be the responsible ones and pay down the deficit. That will be unpopular and the Republicans will just come back in to power and give it all away again. They’ve learned that big government is popular, but that people don’t want to pay for it.
Fortunately, we all lose with the approach taken by both parties today.
Krugman is as always entertaining but not much on economics. I suspect if you go back to his columns in the 1990s that he was for raising spending then. Delong is actually a pretty good economist but his understanding of the effects of the Bush tax cuts seem to be a bit limited. Or has he not read that the top 1% are paying a higher percentage of the tax burden than they did under Rubinomics?
Pelosi and Reid’s embrace of pay-as-you-go orders up a $300 billion rise in annual taxes in 2010.
There are lots of conditionals(rebuild the military and Vet’s benefits?) and possibilities (good economy? Weakening dollar?) in DeLong’s 11:28, but at very best this brings the budget into balance. At best.
There is no “responsible” new spending available there.
I’m sad because the diversity of opinion in those comments is all about how the Federal Government should be spending money. No one is saying that the federal government would be better if it didn’t spend the money in the first place.
The fingerpointing is particularly annoying when everyone ignores the big hole in the ground and in our economy from September 11.
http://en.wikipedia.org/wiki/September_11,_2001_attacks#Economic_aftermath
Re: “pay-as-you-go enables liberal and populist minded politicians to play too many games with the numbers.”
My head just exploded. Now my thirteen-year-old has an enormous mess to clean up.
Thanks guys…
Quote Delong:
Re: “pay-as-you-go enables liberal and populist minded politicians to play too many games with the numbers.”
My head just exploded.
You mean that Pelosi and company won’t misguide, misconstrue, and basically lie to the American public using static numbers to say that a $1 tax cut equals $1 in lost govt revenue? That every $1 in higher taxes will translate to $1 more govt income?
Really? They won’t do claim such things using the “pay-as-you-go?”
Forget your own explanations of how and why this method may or may not work. You can honestly say that the Dems won’t abuse the notion of 1 for 1 accounting methods in projecting tax revenues and supposed shortfalls?
Interesting topic. I would have to agree with spend it on today the debt is past and really all I think all we can do is slow the growth not stop. With the way our gov blows money I see lots of ways to cut back.
Well, my faction of the Democratic Party did it in the 1990s. We’ll try as hard as we can to do it again.
Brad DeLong
To Mr. Wright: I’m happy to have dissenting opinions in my comments. I’m not happy to have trolls.
Brad: Just out of curiosity, which of my three points were trolling? -David
Ray G, from 1990 (Bush I’s tax increase) until Bush II’s tax cuts, there was continued progress on fiscal responsibility. Accompanied by howls from the GOP – at first, that these actions would drive us into catastophe; later, that the GOP was responsible.
In engineering, there’s something called an ‘ABA test’, which means that the failure can be turned on and off again, by manipulating a particular factor. At that point, that factor is judged to be causal. The USA has performed that experiment, turning massive deficits on and off with specific policy changes, from the early 80′s through now.
–there was continued progress on fiscal responsibility. –
at the expense of the military.
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