Earlier this week the absurd and totally unnecessary debate in Washington over raising the national debt-ceiling came to an agreement, both houses of Congress passed it, and the President signed it. Earlier this week I gave this metaphor for the deal, wondering why we need enemies with "friends" like our representatives in Washington. Now that … Continue reading We Have A Debt-Ceiling Deal. The Economy Loses.
In the whole crazy, unnecessary debate over raising the debt-ceiling law, politicians, reporters, and commentators all spoke as if there were only two ways to reduce the government deficits. Nearly everyone took it as an article of "serious thinking" that to reduce a deficit requires either reducing spending or increasing taxes. But rather than being … Continue reading There Is An Efffective Way to Reduce Government Deficit: Employment. But They Won’t Take That Route.
Ok, we have a "deal" in Washington to raise the debt ceiling. Big whoop. With friends like these, we don't need enemies. I don't much time today (end of semester, grading, and all), but I'll comment tomorrow in more depth. Meanwhile, I'll leave you with this metaphor for how I see the debt-ceiling deal and … Continue reading So We Have a Debt-Ceiling Deal. Whoppee. With “Friends” Like These…
Any higher education students out there who think the whole Washington debate about raising the debt ceiling is just some hypothetical exercise that doesn't affect you, think again. If the debt ceiling isn't raised, then we don't know what the government will pay and what it won't pay in August and September. And Treasury isn't … Continue reading Students Have A Stake in The Debt-Ceiling Crisis
In the comments to my post on the extraordinarily weak 2nd qtr 2011 GDP numbers a reader asks for my thoughts about debt-to-GDP ratio and "how can we afford more stimulus"? Since my response will be a little long and others might be interested, I'll post it here. Reader AZLeader asks: Here are some other GDP … Continue reading But What About National Debt-to-GDP Ratio? Not a Problem, Really
Yesterday I took a stab at describing what the consequences of a government default might be and I added to it here. There's basically three lessons to take away from those questions. One, nobody knows now exactly what happens, especially in financial markets. Two, it all depends on the specifics of a deal or no deal … Continue reading What Happens If Debt Ceiling Is or Isn’t Raised – How It Plays Out (updated)
I'm with Brad Delong and a host of others in wondering just why President Obama doesn't simply do away with this whole silly, unnecessary debate about the debt ceiling. Too much is at risk to continue this charade and silly theatrics. Brad summarizes for us: Does anybody have any doubt that any Republican President--Bush II … Continue reading What Is Obama Waiting For?
Anybody who tells you they know exactly what's going to happen if Congress doesn't raise the government debt ceiling before next week is just making it up. Reality is we don't know for sure. As Brad Delong notes (and Krugman and Nick Rowe), economists don't even have nicely worked-out theoretical models of what happens if … Continue reading What Happens If Government Debt Ceiling Isn’t Raised? 2 Things That Might, 1 That Will, and 1 That Won’t