November 9, 2012

The false promise of a "grand bargain"

Richard Pearlstein, Salon  -The goal [of a 'grand bargain']would be to “correct” a supposed structural budget crisis that liberal economists like Paul Krugman and Dean Baker convincingly point out doesn’t actually exist. In fact, the increase in the deficit was caused directly by the financial crisis and the housing bubble, and had nothing to do with the middle-class entitlement programs a grand bargain would cut. What’s more, the deficit is perfectly sustainable in any event. As for the record national debt, the rest of the world’s eagerness to lend to America at next to no cost is in fact a glorious opportunity to increase American well-being, something not to be feared but welcomed. (America’s debt to GDP ratio is about 70 percent. Japan’s is over 225 percent — and that island, with the world’s third-largest economy, has not sunk into the sea. In fact, from 2001 to 2010 its economic growth has generally surpassed ours.)

America’s government is not too big. It is not “out of control.” Measured by the number of public sector employees compared to the overall population, in fact, it is at its smallest size since 1968. The Democratic compulsion to take the lead in making it smaller, to “control” it, is in itself a serious historic problem —and a perverse one at that. For it doesn’t work. Bill Clinton tried it in the 1990s, working with Republicans in Congress both to obliterate the deficit caused by Republican budgetary mismanagement, and “end welfare as we know it.”....


1 comment:

Strelnikov said...

The fiscal cliff is just a stick to beat Democrats' heads with.

I will sound the monster, but the GOP has to be disbanded for the good of the nation. We can no longer tolerate their incompetence, blind lust for power, and sniveling when they don't get what they want.