If Republicans (And Democrats) Were Really Serious About The National Debt…

April 21st, 2011at 09:01am Posted by Eli

Maybe they might want to think about some actual real financial reform, or doing something about runaway healthcare costs:

[T]he financial crisis will end up causing government debt to increase by more than 50 percentage points of G.D.P. over a decade. This is the major fiscal crisis of today and the likely one tomorrow. (I wrote more on this in a column this week for Bloomberg.)

(…)

A future financial crisis, given the nature of our economy, could well cause a debt increase of more than 34 percent of G.D.P. — just look at what happened this time in the United States or the way in which Ireland was ruined by big banks and reaction by the politicians there. There is no way that the S.&P.’s stress situation is sufficiently negative.

(…)

There is, of course, a longer-run budget issue — beyond 2020 –- that is mostly about health care costs. S.&P. follows the current consensus by flagging the Medicare component of this, and the C.B.O.’s projections on this front are undoubtedly scary (see this C.B.O. Web page or jump directly to the document and study the image on its front page).

But the real threat to the economy is health-care costs seen broadly, not just the Medicare component. For more on this, see the analysis by my co-author on the Baseline Scenario blog, James Kwak, writing about an important letter from Douglas W. Elmendorf (the head of the C.B.O.) to Representative Paul D. Ryan, Republican of Wisconsin and chairman of the House Budget Committee, on Mr. Ryan’s budget proposal.

(…)

The real danger to the United States economy –- and to its federal budget –- is that we will somehow derail growth, either by letting too-big-to-fail banks become irresponsible again or by allowing health-care costs to continue to rise on their current trajectory or in some other way.

…Or we could just kill Medicare, slash Social Security, and keep cutting taxes for rich people and corporations until the trickledown fairy works her magic.

Entry Filed under: Corruption/Cronyism,Democrats,Economy,Healthcare,Obama,Politics,Republicans,Social Security,Wankers


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