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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: IQBAL LATIF who wrote (44822)	10/18/2003 8:32:37 PM
From: IQBAL LATIF	Read Replies (1) \| Respond to of 50167

Bad Week for Krugman The economy is recovering and he's discovered the Bush tax cuts really do benefit the middle class. Oh yeah, there's this too. As he puts it: "Almost every expert not on the administration's payroll now sees budget deficits equal to about a quarter of government spending for the next decade, and getting worse after that." (Don't you especially like that "almost?" It makes everything feel like grade school, no?) Anyway, here's a printout of budget deficits as a percentage of federal spending from 1952 thru 2006 as forecast by the Yale Model (which is not on the administration's payroll as far as I know). There are two things to notice here. First, "about a quarter" isn't really "almost" a quarter, as it turns out. It's more like 17% (which I think is almost 15%). And if we project downward in a straight line we don't get to 20% even within this decade. Second, we've been here before and we've done worse! The deficit was a larger percentage of total spending during the early 80's and 90's! What was Paul Krugman saying then? UPDATE: I can answer the question. Check page 77 of Paul Krugman's The Age of Diminished Expectations (1990, MIT Press): "While there are possibilities of disaster, they don't have to materialize. It is not only possible but probable that budget deficits at more or less the current level will continue for the rest of the century. There will be costs to these deficits, but they may never reach the crisis stage." UPDATE II: How is it Robert Samuelson can go over the same material and even reach similar conclusions without misrepresenting the numbers, calling people names, or leaving you with that sour feeling of intellectual violation? Is it that Samuelson is smarter than Krugman? A better economist? Willing to articulate both sides of an issue? More of a human being? UPDATE III: Here's the same data smoothed, to better illustrate Samuelson's (and my own) point that the current deficit brings us nowhere near terra incognita. Link posted by Steve Antler : 7:09 PM