Posted on 08/29/2009 9:43:34 PM PDT by Lorianne
So new budget projections show a cumulative deficit of $9 trillion over the next decade. According to many commentators, that's a terrifying number, requiring drastic action — in particular, of course, canceling efforts to boost the economy and calling off health care reform.
The truth is more complicated and less frightening. Right now deficits are actually helping the economy. In fact, deficits here and in other major economies saved the world from a much deeper slump. The longer-term outlook is worrying, but it's not catastrophic.
The only real reason for concern is political. The United States can deal with its debts if politicians of both parties are, in the end, willing to show at least a bit of maturity. Need I say more?
Let's start with the effects of this year's deficit. There are two main reasons for the surge in red ink. First, the recession has led both to a sharp drop in tax receipts and to increased spending on unemployment insurance and other safety-net programs. Second, there have been large outlays on financial rescues. These are counted as part of the deficit, although the government is acquiring assets in the process and will eventually get at least part of its money back. What this tells us is that right now it's good to run a deficit. Consider what would have happened if the U.S. government and its counterparts around the world had tried to balance their budgets as they did in the early 1930s. It's a scary thought. If governments had raised taxes or slashed spending in the face of the slump, if they had refused to rescue distressed financial institutions, we could all too easily have seen a full replay of the Great Depression.
As I said, deficits saved the world.
(Excerpt) Read more at chron.com ...
I guess he forgot to add the “barf alert”.
I was too stunned reading it to remember how to barf.
There's called toxic assets - the exact type of "assets" that banks can't get rid of fast enough.
How many of these liberal rags told us that the Bush deficits or the Reagan deficits were a “good thing”???
There is a reason why the MSM is going broke, and it is not just the economy!
Timothy Leary would be proud of this ditz! Yes... eating feces and drinking urine is actually good for you... blah, blah, blah...
IMHO, Krugman is in serious need of help. He needs to get help with that “tingle.”
Marxist first, wrapped in the thin veil of an economist.
It like saying, because your burning up with fever from the flu, you should sit on a block of ice too cool yourself.
Krugman refuses to consider how the financial institutions got in trouble in the first place. It's as if depressions just blow in out of a cloud every now and then.
The author fails to realize how anti-growth Mr Obama’s economic policies are. Any other time, with nearly any other president, it might work to borrow some to pull though hard times, realizing that once America is up to full stem, we could pay off that debt with our monsterous economic machine.
However, as Mr Obama is hellbent on Socializing our nation, there won’t be an economic monster ready to step up and pay down that debt. Next year, when forecasting the debt to 2020, it’ll be revised up to something like $12 trillion instead of “only” the $9 trillion forecast now until 2019. Count on it!
Would you trust this guy?!
As a Texan I’d like to apologize for Houston. They’re like Austin, only much dumber.
Deficits are not necessarily bad, and I think Krugman is right in that deficits can be used to temporarily prop up economic activity. It’s true that government might need to occasionally spend more than it receives in taxes, like during national emergencies.
It’s a matter of degree. How deep in debt can we afford to go and for how long? At some point, the deficits can start doing more damage than good. The problem is how the money is spent and what policies brought us to the point where our leaders chose massive deficits in an attempt to “save the economy.”
Does anyone seriously believe the jokers presently running our government are going to have the discipline to fix these deficits and halt out-of-control government spending in the future? I wouldn’t bet on it.
I think I saw her at a party in college, but I don’t remember.
Note the A-hat fails to consider Tax Cuts, the only way out of this mess.
Sounds like a bloody Monty Python skit.
So if I lose my job and am in debt, the best thing I should do is go out and max out my credit cards? Krugman is an idiot.
Hey... The Houston Chronicle is loaded with great Economists! Just how in the world can you disagree with them?
Anyway, when all of this falls apart - who is going to blame them for this? Not me...I will be trying to survive...
I can make the payments but I don't know if I will be able to buy fuel.
I got unemployement checks coming every week maybe Obama will get me a raise.... Maybe.............Maybe tax revenue grows on trees?...........I think I am stroking out here.
You are giving prop for a f****** socialist like Krugman who only thinks deficit is good because a socialist President is doing it and spending trillions of dollars on socialist and welfare causes. Did the asshole think that the much smaller deficit under President Bush was good? Of course not.
Yes, you are right but how about a bit of perspective... A TRILLION dollars+ ! Don’t think that the rest of us out here don’t understand what a astronautical sum that is! (Actually, it is very hard to get the mind around that much money)...
If anyone here can justify that - then they are just as nuts as the rest of the Democratic Party...
This is just accelerating the decline of America and probably intentionally as far as I’m concerned...
Chaos is required for a change of government...
In other news, Obama’s unicorns poop silver and gold coins.
Author's publicity photograph
He’s basically right. Just that we’re on the “frippery slope” and no consumer demand means no job growth and extended unemployment benefits and the deficit will really hit with medicare and ss payouts. All about the same time.
I’m betting we crash.
parsy, the pessimistic
Go Google A TRILLION seconds.
Nam Vet
Oh, that’s right...poverty is actually wealth now. Orville would be damn proud of his prediction.
Orwell...cripes! LOL
LOL, are you hungry for popcorn? :)
Paul Krugman is, first and foremost, a political hack who is always eager to prostitute his professional credentials and tell the most outrageous economic lies to advance his Socialist agenda.
I was only trying to make the point that deficits are not necessarily a bad thing. Whether or not our current deficit is manageable, I don’t know. I hope it is, because I really don’t want to see our economic system go into Zimbabwe mode.
A trillion in extra spending works out to about $3500 per person. That’s a lot of money to be sure, but it’s not hopeless.
As other posters have noted, Krugman doesn’t appear to be interested in how we got to this point, nor does he seem to understand it’s highly unlikely our current leadership is going to take the necessary steps to cut spending in the future.
They are taking on an amazing amount of debt, but all they seem to want to do is spend more.
I am the grasshopper, you are the ants, fetch me thy seed corn or I shall eat you all instead.
Krugman was pushing the absolutely opposite propaganda line during the Bush Administration.
Krugman is a notorious lying sack of (expletive deleted).
This economic logic is so terribly flawed that its hard to put into words. So adding more debt onto what is already 12 trillion dollar is debt is a good thing? The way its going, most of the US budget will just be going to pay the interest on the debt. Sheer economic ignorance.
Is Krugman counting on hyper-inflation (the silent tax) to trim the expanding deficits? Good luck to us if that’s what he has in mind.
Yes, I understood your point. The problem is that the politicians do not! Spending will never cease willingly - after all, they have to buy their votes.
Unfortunately, it has become such a race to buy those votes - by both parties - that is causing the crisis. It is time for the actual employers of these idiots to get together and bring about Constitutional changes. We really do need a balanced budget (with few exceptional changes) and it needs to be enacted pronto before the politicians drive us off the cliff...
Actually, the easiest way is for the States to decide that a Constitutional Convention is needed but unfortunately, the States are just as guilty as the Federal Government. They are also spending for their benefactors to remain in office.
What to do... Unfortunately, this situation is just about out of hand... The more that the politicians spend for their lobbyists, the more they demand. We are at a cross-roads and it may require more than voting (which seems to be futile these days - the lesser of two evils thing)...
I can only hope that the spirit of the founding fathers prevails. Unfortunately, that kind of idealism is no longer taught in schools... Seems to be a downward spiral...
Did they pull the story, or is it a bad link?
Of course huge deficits "help" the economy, just like my standard of living would increase were I to go out and max out my credit cards and personal line of credit. Everything would be just peachy until at some point, my creditors decide to no longer advance me money. Then, all of a sudden, I'll need to change my style of living. And of course, they're going to want to be paid back, which will reduce my standard of living even more.
But for the time being, deficit spending will make thing wonderful. It really makes me wonder if Krugman and the rest of the governmental left aren't really shills trying to bring about a "Cloward-Pivin" event, where the masses of Americans become dependent on government services, which will eventually collapse (due to deficit spending), and cause a revolution, overthrowing the current form of government. How they plan to avoid a result similar to that of the French Revolution is beyond me, but it would have to start with disarming the public, something that's quickly becoming less and less likely.
Mark
I got “error” at both links. The posting is marked excerpt.
LOL, are you hungry for popcorn? :)
LOL! That’s what I thought too!
Now Krugman is saying deficits ‘saved the world’. Wasn’t this vile hypocrite blaming Reagan not so long ago for the great evil of creating Federal deficits? Does this Leftist buffoon have a conscience? I doubt it.
Deagle
how about a bit of perspective... A TRILLION dollars+ !”
Stepping back for a wider perspective, our deficit is (nearly) an order of magnitude more - 9 trillion dollars. That’s close to our GDP, which is about 14 trillion. Then there are tens of trillions of dollars of unfunded spending commitments by our government, but forget I even brought it up.
What will happen to The US Treasury’s credit rating down the road, after this sinks in with our creditors? Interest rates will soar, making loan payments still more difficult, which will cause our creditors to demand still higher interest rates.
With a government whose idea of “rebuilding our economy” is “investments” in a National Security Service, climate control, Americor, govt health care, etc, we’ll have no chance except to inflate the money supply in order to pay our our off with increasingly worthless dollars.
Yes...Major inflation on the way! Not only that but since we will have to pay about half to two/thirds of our output in interest for the deficit, we can never recover. Just another benefit brought to you by our politicians. Forget about Medicare and Social Security - long gone... Old people die by the thousands (hmmm, is that the plan?).
Don’t you know though that they know what is best for us so vote for them again and they will eventually fix the problem...heh.
Where there is change there is hope, in the form of the African Economic Model. Don’t tell anyone, but the Chinese are addicted to natural resources. Those poor suckers will jump at the sight of all those coal, natural gas and oil shale deposits, and don’t forget those oil fields off our continental shelf. Of course, in our post industrial society we have no use for this grimy stuff, but in return for letting them have at it, why shouldn’t that uncouth rabble at least give us back enough of those dollar things so that we can keep up with the interest payments?
Elsewhere I saw a claim that 2% (two percent) of what the Treasury owes, it owes to China. OK, who holds the other 98% in their bags?
LMAO!!!
In other news, if you smoke enough cigarettes you can actually kill your lung cancer.
I’m sure this rag was saying the same thing whenever Bush put the deficit over even a nickel more.(/S)
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