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Biotech / Medical : 2012 Biotech Charity Contest -- Ignore unavailable to you. Want to Upgrade?

To: Steve Lokness who wrote (318)6/26/2012 11:38:50 PM
From: Biomaven6 Recommendations  Read Replies (2) | Respond to of 513
 
I think there are two very different issues here - what the best thing to do in the short term is, and what needs to be done in the longer term.

First the long term, because that's perhaps less controversial. Given the demographics, it's pretty clear to me that both entitlements need to be modestly cut and taxes need to be modestly raised. This doesn't have to be done quickly - it can be phased in over say two decades. I'm not saying this will be politically easy to do, but that doesn't make it any less necessary. We also need state and local pension reform.

The short term is trickier. The UK is an example of country which has gone the "cut deficits now" route, and the results have not been particularly pretty. The hard fact is that the easiest way to raise revenue is to grow the economy, and it's hard to grow the economy while simultaneously cutting spending.

The US right now has the ability to borrow for virtually nothing. So to my mind the short-term deficit is not of particular concern. Inflation is not an issue either - indeed we are flirting with deflation. So my prescription would be increased spending on infrastructure - for example subsidies for the development of natural gas infrastructure for transportation and home heating in the Eastern US where many homes still heat with oil. The Fed also needs to be a bit more expansionary given that Europe will be a drag and there is little prospect of anything but legislative deadlock in the US.

Peter



To: Steve Lokness who wrote (318)6/27/2012 10:44:16 AM
From: Chris08  Read Replies (1) | Respond to of 513
 
I think it is quite clear that more stimulus would have produced a better recovery from the slump. China had a stimulus program at the same time that was [re GDP] almost three times more than that of the US and it sailed through the slump far better than we did. No need to be so mystified, in my view.


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