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http://krugman.blogs.nytimes.com/2013/01/10/the-mostly-solved-deficit-problem/
The Mostly Solved Deficit Problem
Paul Krugman
The vertical axis measures the projected ratio of federal debt to GDP. The blue line at the top represents the projected path of that ratio as of early 2011 — that is, before recent agreements on spending cuts and tax increases. This projection showed a rising path for debt as far as the eye could see.
And just about all budget discussion in Washington and the news media is laid out as if that were still the case. But a lot has happened since then. The orange line shows the effects of those spending cuts and tax hikes: As long as the economy recovers, which is an assumption built into all these projections, the debt ratio will more or less stabilize soon.
CBPP goes on to advocate another $1.4 trillion in revenue and/or spending cuts, which would bring the debt ratio at the end of the decade back down to around its current level. But the larger message here is surely that for the next decade, the debt outlook actually doesn’t look all that bad.
It's nice when a winner of the Nobel Prize for economics agrees with me.
The so called crisis was really a result of the tremendous collapse of the economy due to the financial meltdown and the irresponsible tax cuts. I have always said that once the economy starts returning to normal the fantastically huge deficit projections will come way down and that even a relativey small increase in taxes will have huge results. It still leaves us with some work to do, but nothing like the doom and gloom the austerity advocates were going on about.
California is projected to have a surplus this year. Why? Some cost cutting definitely. But its the economy coming back.
So, now we know why the Republicans are going all out on the debt ceiling. They need to push their extreme agenda before the recovery invalidates their doomsday scenarios.
Now, if only the Republicans don't destroy the economy by forcing the US into default we can move ahead with a reasonable economic policy.
The Mostly Solved Deficit Problem
Paul Krugman
The vertical axis measures the projected ratio of federal debt to GDP. The blue line at the top represents the projected path of that ratio as of early 2011 — that is, before recent agreements on spending cuts and tax increases. This projection showed a rising path for debt as far as the eye could see.
And just about all budget discussion in Washington and the news media is laid out as if that were still the case. But a lot has happened since then. The orange line shows the effects of those spending cuts and tax hikes: As long as the economy recovers, which is an assumption built into all these projections, the debt ratio will more or less stabilize soon.
CBPP goes on to advocate another $1.4 trillion in revenue and/or spending cuts, which would bring the debt ratio at the end of the decade back down to around its current level. But the larger message here is surely that for the next decade, the debt outlook actually doesn’t look all that bad.
It's nice when a winner of the Nobel Prize for economics agrees with me.
The so called crisis was really a result of the tremendous collapse of the economy due to the financial meltdown and the irresponsible tax cuts. I have always said that once the economy starts returning to normal the fantastically huge deficit projections will come way down and that even a relativey small increase in taxes will have huge results. It still leaves us with some work to do, but nothing like the doom and gloom the austerity advocates were going on about.
California is projected to have a surplus this year. Why? Some cost cutting definitely. But its the economy coming back.
So, now we know why the Republicans are going all out on the debt ceiling. They need to push their extreme agenda before the recovery invalidates their doomsday scenarios.
Now, if only the Republicans don't destroy the economy by forcing the US into default we can move ahead with a reasonable economic policy.
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