Posts Tagged ‘debt’
Tags: cartoon, debt, deficits, drones, inequality, Obama, Obamacare, recovery, Supreme Court, unemployment, United Kingdom, United States
Tags: CBO, debt, deficit, Harvard, Niall Ferguson, United States
Niall Ferguson, Harvard’s ignorant gay-bashing bloviating right-wing infotainment historian, continues to reveal his profound scholarly ignorance.
Ferguson continues to display his ignorance because he seizes on the Congressional Budget Office’s latest (September 2013) deficit and debt projections and, while noting the dramatic rise from just one year ago, fails to explain why.
True, the federal deficit has fallen to about 4% of GDP this year from its 10% peak in 2009. The bad news is that, even as discretionary expenditure has been slashed, spending on entitlements has continued to rise—and will rise inexorably in the coming years, driving the deficit back up above 6% by 2038.
A very striking feature of the latest CBO report is how much worse it is than last year’s. A year ago, the CBO’s extended baseline series for the federal debt in public hands projected a figure of 52% of GDP by 2038. That figure has very nearly doubled to 100%. A year ago the debt was supposed to glide down to zero by the 2070s. This year’s long-run projection for 2076 is above 200%.
Leave aside the silliness of taking any forecast to the 2070s seriously, it is still the case (a) that the federal deficit is currently falling and not rising and (b) that this year’s projections are much higher going forward than the CBO projected last year.*
The question is, why? As it turns out, the CBO does offer an explanation, which it buries on page 103:
The very large change between this year and last year in projected federal debt stems primarily from changes in tax law that have sharply reduced future revenues.
In other words, the CBO has (as it must, by law) incorporated the provisions of the American Taxpayer Relief Act of 2012—which made most of the lower tax rates that had been due to expire at the end of 2012 permanent—and projected them forward.
That’s what Ferguson fails to understand or explain to his readers, which is why he can blithely refer to a “debt explosion” in his version of the War of the Worlds.
*The difference is an extraordinary 48 points, from a forecast of a debt-to-GDP ratio in 2038 of 52 percent last year to a ratio of 100 percent in this year’s projection.
Tags: bankruptcy, cartoon, debt, deficit, Detroit, food stamps, Republicans
Tags: budget, cartoon, corporations, debt, Obamacare, Republicans, shutdown, taxes, Tea Party
Tags: budget, cartoon, debt, deficit, food stamps, healthcare, Obamacare, Republicans, students
Tags: crisis, debt, deficits, inequality, poor, poverty, rich, Second Great Depression, United States
The pathologies in our society are becoming more and more apparent as economic inequality continues to grow.
Mark Thoma explains, as one example, how rising inequality is responsible for the current battle over the debt ceiling.
growing inequality has allowed one strata of society to be largely free of these risks while the other is very much exposed to them. As that has happened, as one group in society has had fewer and fewer worries about paying for college education, has first-rate health insurance, ample funds for retirement, and little or no chance of losing a home and ending up on the street if a job suddenly disappears in a recession, support among the politically powerful elite for the risk sharing that makes social insurance work has declined.
Rising inequality and differential exposure to economic risk has caused one group to see themselves as the “makers” in society who provide for the rest and pay most of the bills, and the other group as “takers” who get all the benefits. The upper strata wonders, “Why should we pay for social insurance when we get little or none of the benefits?” and this leads to an attack on these programs.
Even worse, this social stratification leads those at the top to begin imposing a virtue and vice story to justify their desire to stop paying the taxes needed to support social insurance programs. Those at the top did it all by themselves. They “built that” through their own effort and sacrifice with no help from anyone else.
Those at the bottom, on the other hand, are essentially burning down their own houses just to collect the fire insurance, i.e. making poor choices and sponging off of social insurance programs. It’s their behavior that’s the problem, and taking away the incentive to live off of the rest of society by constraining their ability to collect social insurance is the only way to ensure they get jobs and provide for themselves.
What this means, of course, is those at the top want to dismantle precisely those social programs that help those at the bottom—in the name of lowering deficits and debt.
Then, as a second example, there’s the ongoing spectacle of focusing on the “self-destructive habits” of poor people compared to everyone else. As Tina Rosenberg reports, behavioral economists are finding that people on the bottom “are less future-oriented than those with more money.”
According to these authors, one explanation for bad decisions is scarcity — not of money, but of what the authors call bandwidth: the portion of our mental capacity that we can employ to make decisions.
Worrying about money when it is tight captures our brains. It reduces our cognitive capacity — especially our abstract intelligence, which we use for problem-solving. It also reduces our executive control, which governs planning, impulses and willpower. The bad decisions of the poor, say the authors, are not a product of bad character or low native intelligence. They are a product of poverty itself. Your natural capability doesn’t decrease when you experience scarcity. But less of that capacity is available for use. If you put a middle-class person into a situation of scarcity, she will behave like a poor person.
Really? The explanation of growing poverty is based on the bad, “tunnel-vision” decision-making of poor people, which can be fixed by forcing people to save and providing better financial counseling?
Why not, instead, focus on the real problem—the tunnel-vision decisions of those at the top, to take as much as they could as quickly as they could, which created the conditions for the Second Great Depression in the first place—and then explore the kind of changes that would eliminate the obscene levels of inequality and the resulting poverty that exist today?
Not doing so is perhaps the real pathology of the existence of persistent and growing inequality in our society.
Tags: banks, Bernanke, budget, cartoon, debt, economy, Federal Reserve, JPMorganChase, Republicans, SEC
Tags: Clinton, debt, economy, incomes, Left, politics, Reagan, unemployment, youth
The other day I presenting a chart indicating that young people today—facing declining incomes, soaring debt, and higher rates of unemployment than any other group—represent a lost generation.
Then along comes Peter Beinart [sm: db] to argue that young people may also be finding a new politics, a set of political ideas beyond both Reaganism and Clintonism.
America’s youngest adults are called “Millennials” because the 21st century was dawning as they entered their plastic years. Coming of age in the 21st century is of no inherent political significance. But this calendric shift has coincided with a genuine historical disruption. Compared to their Reagan-Clinton generation elders, Millennials are entering adulthood in an America where government provides much less economic security. And their economic experience in this newly deregulated America has been horrendous. This experience has not produced a common generational outlook. No such thing ever exists. But it is producing a distinct intragenerational argument, one that does not respect the ideological boundaries to which Americans have become accustomed. The Millennials are unlikely to play out their political conflicts between the yard lines Reagan and Clinton set out.
Beinart does recognize that economic hardship does not always push people to the Left. But he does provide some evidence that Millenials may be charting a new political path:
It is these two factors-their economic hardship in an age of limited government protection and their resistance to right-wing cultural populism-that best explain why on economic issues, Millennials lean so far left. In 2010, Pew found that two-thirds of Millennials favored a bigger government with more services over a cheaper one with fewer services, a margin 25 points above the rest of the population. While large majorities of older and middle-aged Americans favored repealing Obamacare in late 2012, Millennials favored expanding it, by 17 points. Millennials are substantially more pro-labor union than the population at large.
The only economic issue on which Millennials show much libertarian instinct is the privatization of Social Security, which they disproportionately favor. But this may be less significant than it first appears. Historically, younger voters have long been more pro-Social Security privatization than older ones, with support dropping as they near retirement age. In fact, when asked if the government should spend more money on Social Security, Millennials are significantly more likely than past cohorts of young people to say yes.
Most striking of all, Millennials are more willing than their elders to challenge cherished American myths about capitalism and class. According to a 2011 Pew study, Americans under 30 are the only segment of the population to describe themselves as “have nots” rather than “haves.” They are far more likely than older Americans to say that business enjoys more control over their lives than government. And unlike older Americans, who favor capitalism over socialism by roughly 25 points, Millennials, narrowly, favor socialism.
Maybe, then, there is something to cheer as the lost generation is allowed to find its own political bearings.