09 Apr

NYTimes.com – “Serious”

James Fallows has a very good take on this; my version would be this: I don’t think a budget plan is “serious” unless it has numbers that remotely add up, says something specific about how it will cut spending and/or raise revenue, and puts forward proposals that have at least some chance of actually going into effect.

So, we have a plan that proposes to cut spending to Calving Coolidge levels, without explaining how it will do that; that includes $2.9 trillion in tax cuts, but asserts that it will make that up by broadening the base — yet says literally nothing about what that means; and has as its centerpiece a Medicare plan that will collapse as soon as seniors start getting their grossly inadequate vouchers.

There’s nothing serious about this plan. And the way our pundit class swooned over this fantasy document suggests that all those people lecturing the American people about our unwillingness to face up to reality and make hard choices should spend some time looking in the mirror.

via NYTimes.com – “Serious”. Serious is making stuff up apparently.

06 Jun

Paul Krugman Blog – Lost Decade, Here We Come

But don’t we need to worry about government debt? Yes — but slashing spending while the economy is still deeply depressed is both an extremely costly and quite ineffective way to reduce future debt. Costly, because it depresses the economy further; ineffective, because by depressing the economy, fiscal contraction now reduces tax receipts. A rough estimate right now is that cutting spending by 1 percent of GDP raises the unemployment rate by .75 percent compared with what it would otherwise be, yet reduces future debt by less than 0.5 percent of GDP.

via Paul Krugman Blog – Lost Decade, Here We Come. Krugman on why you don’t cut government spending in a weak economy.