Wednesday, April 6, 2011

Andrew Sullivan is frustrating me

He writes:

"Many readers insist that the CBO has found that Ryan's plan would make the debt and deficit worse. That's not accurate [quoting the CBO]:

"Under the extended-baseline scenario [meaning the law as currently written], debt held by the public is projected to rise from about 62 percent of GDP in 2010 to about 90 percent of GDP in 2050. Under the alternative fiscal scenario [meaning a scenario the CBO sees as likely], the ratio of debt to GDP is projected to rise to more than 300 percent in 2050 ... Under the proposal, the ratio of debt to GDP would be significantly smaller over the long term--falling to 48 percent in 2040 and 10 percent in 2050."

How would the Democrats bring the ration of debt to GDP to 10 percent in 2050? When I hear that, we can work out a compromise. So far: crickets or demagoguery."

Why on Earth would an advanced industrial power even WANT a debt to GDP ratio of 10 percent? Why is Andrew pointing to that as something to applaud, rather than as an example of a deep confusion about public finance on Paul Ryan's part? Andrew Sullivan used to be the guy that could cut through the bullshit of the Republicans and separate the conservative wheat from the conservative chaff. Where is that guy? Where did the real Andrew Sullivan go?


  1. While I think getting the deficit down to that level is great (I am not holding my breath that it will happen), I stopped paying attention to Sullivan when he was a full on supporter of the war in Iraq.

  2. And here I thought we were an "advance post-industrial power." Of course, things like calling a place a "power" make me cringe because they are so mercantilist in viewpoint.

  3. Well yeah, Japan manages to do well enough with a national debt to GDP ratio much higher than the States's (I think?), and non-institutional Japanese people are glad to keep buying their government's bonds. Who are we to tell them where to park their money?

    If Japanese people trust in the Japanese region's stability enough to buy their own government's bonds (despite North Korea and China looming over them), surely Americans would be even more certain about their own region.

    PS: But I am not sure how many individuals and households in America buy bonds. After all, financial institutions are *compelled* by the government to hold a certain number of government bonds.

  4. Prateek,

    Didn't Japan recently experience a "Lost Decade?" Indeed, many Japanese are now starting to refer to the period of 2001-2009 as a "Lost Decade" as well.

  5. And of course, much of that was predicated on the banks/state pumping money into zombie firms engaging in a "too big to fail" policy that did not allow for the sort of creative destruction and reordering that is the lifeblood of a market system. Japan is a classic case of private profits and socialized costs.


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