Saturday, October 22, 2016

Krugman asks why we worry the debt

Krugman on worrying the debt: Still, it’s probably true that something will eventually have to be done to bring spending and revenues in line. But that brings me to the second point: why is this a crucial issue right now?
Are debt scolds demanding that we slash spending and raise taxes right away? Actually, no: the economy is still weak, interest rates still low (meaning that the Fed can’t offset fiscal tightening with easy money), and as a matter of macroeconomic prudence we should probably be running bigger, not smaller deficits in the medium term. So proposals to “deal with” the supposed debt problem always involve long-term cuts in benefits and (reluctantly) increases in taxes. That is, they don’t involve actual policy moves now, or for the next 5-10 years.
Because it is either now or eight years, according to plan.  We might do it in four, but I doubt it.  Our choices are limited to two, soon, or we crash with Hillary. But there will be a crash because our computation some 35 years ago with the Greenspan commission is getting stale,the error band getting wider. And the next problem is the root of them all, when it is time to update,we get foot draggers and whiners, like Krugman.

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