Losses endogenous to government, counted

My post was about expressing skepticism. We always hear big promises from rightward-leaning economists about the growth-enhancing powers of tax cuts and deregulation, but these policies often fail to deliver.

Noah Smith takes this line, Cochrane says no. How do we calculate the lost GDP from government activities?

The best estimate is calculate the generational write off of government debt during our regularly scheduled Nixon Shocks.  The roughest, back of the envelope numbers I read are about 1/3 of principle is written off over one generation. That comes to about 200 billion in interest charges or 1% gain to surplus. Add that to the nominal 2.3% growth we have now, get 3.3%.

Huge error in my method, but it is  good first order number, and the actual number will be what the elders think, and the elders read my blog. The elders have the problem of calculating what the millennials are willing to pay, and I guess giving them a 1/3 break on federal interest charges would seal the deal.

For the current Nixon Shock, we need to restructure government agencies a bit so they prepare for the successive Nixon Shocks to come. Basically the New Fed forces government agencies to schedule their Nixon Shocks on a 15 year basis. They have to keep twice the accuracy on balances, work but not a disaster.  Millennials would do well, much better than the WW2 generation, and twice as good as Boomers. We are writing off about /3 of the ice that John McCain and Diane Feinstein melted, calling is higher ocean levels.