I'm not an expert in debt financing, bond issuance, and I don't have a degree in economics, so I can't claim anything close to being expert (all of which, I find, is more than, say, Ezra Klein will admit), still, one thing I'm pretty clear on is that we do have a financial problem in this country because our government has issued a lot of bonds, and will need, at some point, to pay them off.
In all the talk about whether and how we need to address the "budget crisis", there's a growing line on the left that, in fact, the debt crisis is simply made up. Deficits aren't a problem, it is argued, America's ability to issue bonds is not a problem, and, if some are to be believed, the debt is mythical because the government can simply put more money into "the system" and there won't even be any debt.
Like I said, I can only do a layman's analysis of all of this... but I think denial, generally is a dangerous thing, and liberals would be better served taking at least some aspects of the actual budget problems we actually have more seriously. Deficits do matter. Eliminating them would be a good idea. Reducing our nation's reliance on bond issuance would help.
And you can admit all of that... and still disagree with everything coming out of Paul Ryan's mouth.
There has always been more than one way to address our debt problems in this country. We can, and should, end all of the "Bush Tax Cuts", not just on the "very rich". The artifical reductions made in 2001 have done exactly what was predicted: ruined the government's ability to match revenue and outlays, and exploded the budget deficit. I don't buy that the right has a "starve the beast" theory (because I think the right also lacks the will to make the hard choices required to drastically cut spending), but it's clear that the current conservative tagline about "we have to solve the budget crisis" is aimed only at cutting a certain kind of government spending, and that's one reason, among many, it's likely to fail.
But there's a perfectly reasonable argument to be made that taxes shoud be raised and some spending should be reduced. Defense spending needs to be cut. Some of our military operations need to be drastically cut back. And we do, clearly, need to do more to address the unreasonable, endless growth of healthcare costs, which probably means some major adjsutments to how Medicare pays for care, and probably also means an expended federal role in Medicaid. In a government system spending billions and billions of dollars... there are surely millions and millions of dollars that could be cut.
Pretending that we don't have a debt problem - that government bonds are some fantastical financial instrument that don't, basically mean the government is borrowing current funds against future receipts - is a fanciful exercise fueled by deep seated distrust of opaque institutions like the Federal Reserve. I strongly agree with the propositions that we need both greater transparency and far more oversight of the Fed and the financial system... but some of the more adventurous theories on the left about bond policy and debt planning border on conspiracy theory.
Nothing about the debt problems we have means, conclusively, that we have to stop protecting seniors from a horrible fate in their final years - not ending Social Security, or tampering with Medicare or Medicaid til they're all but useless. But if liberals plan to mount a full on defense of these crucial social policies, then we all need to work harder and take more action to actually make the case that while we do, yes, have some debt and deficit problems, they are solvable, and not on the backs of the poor and needy. It's okay to say we have a debt crisis... because we do, in fact, have one. Admitting we have it is a key step in figuring out how to fix it. Or we can pretend there's no debt problem... and watch the right eviscerate much of anyone's future.
debt theory unproven...as much as the theory of non-debt is...just another marketing ploy to get the middle class to accept the framing that has Obama forced - forced I tells ya! to compromise with the GOP on more middle class decimation
funny how the difficult decisions always seem to land there
Posted by: jinb | April 25, 2011 at 05:17 PM