Jared vs the CBO

There is more sideline debate going on about the secstags. In this case, Jared discusses Ruin's theory which ralates taxes to expected government deficits in DC. Rubin wants taxes to cover interest costs, basically. So how much are we going to be taxed to pay for all that debt?

Jared says the CBO projections are worthless:

The message here is twofold. First, it’s essential to update one’s fiscal outlook to account for both recent and future improvements in that outlook. I see no reason to be impenetrable to that evidence. Second, given how much they’ve changed in just a few years, these long-term budget forecasts are clearly far from etched in stone. As you see, they’ve recently moved in very favorable ways but that too could change.

The point is that the previous 2010 debt to gdp ratio was impossible under any scenario involving growth. For all the reasons I have stated, under conditions of growth with debt to gdp doubled, the Senate is going to need  1.5% of extra liquidity in the economy that it can borrow. Catch up growth is 4%. So above and beyond nominal growth, the economy needs to produce an extra 30%, to cover Obama's extra interest expense. Given the Senate, discretionary spending, and the ability to self tax; we have an impossibility with the 2010 projections.

For example, go back to the delusional governor of Oregon. This guy discovers that is delusions of liberal utopia are going to cost him 1.5% of the Oregon economy. He is going to have hysteria, he is going to call his two yokel Senators, he is pushing for reductions in spending in DC. Or else he will push to tax Texas oil wealth and cause a host of problems.