Monday, December 6, 2010

Tracking the blogosphere on the Tea Party deficit expansion

Capital Gains and Games is in an uproar.
David Leonhardt of the NTY says it is OK to cut progressive taxes if the Dems get some goodies.
Calculated Risk: This is expected to increase the budget deficit by $900 billion over two years.

But here is the problem.  What is the real cost of that borrowing?  Thje bond market says about 1/2 point across the board, or an additional $75 billion over the whole $15 trillion dollar debt if the new spending is not taken away before long run equilibrium of the curve.   Thus, the real long run cost of the new debt is closer to 5%.  We are getting closer to end game.

Which political movement gets the blame when the shit hits the fan? The Tea party, they we elected to prevent default, not cause it.

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