Latest From the Official Overseas Journal of Rubinomics
I have a new name for a certain pink, foreign newspaper. Henceforth on these pages it will be known as the Official Overseas Journal of Rubinomics. Today the OOJR offers another treat...
Recently I wondered if the current administration wasn't finally getting our fiscal act together (relatively speaking) just in time for a President Hillary Rodham Clinton to use the perception of fiscal health to launch an LBJ-style Great Society spending binge. Her partisans are clearly signalling her to do just that. Well, today in the pages of a pink, foreign newspaper, some guy who is either smoking crack or is an academic (there are no other possible explanations) seems to think that the Democrats are saving the day only to tee up a honey-pot for Republicans to ravage:
"Privately, though, many are starting to question why a 2008 Democratic president should bother improving the government’s balance sheet if the end result is just a bigger pot for a future Republican president to lavish on his or her friends. "
The article does make some decent points but there are too many howlers to really take it seriously. Here's another: "in the case of the US, it is hard to tell how the Bush tax cuts will play out." Hard to tell, huh? The Treasury is right now collecting more tax revenue than it has ever collected, with receipts growing in each year since 2004. The forward looking stock market is setting new highs. The federal fiscal deficit is lower than a decades-long average as a percentage of GDP. The tax cuts, which are bringing in record revenue from dividends and capital gains, are the only thing that are helping us keep pace with out of control spending.
Finally, Rogoff makes the critical error of equating the current account deficit with debt. He states we're borrowing $800 billion a year. Not true. Foreigners are investing $800 billion in the US. Some of that is invested in US government debt obligations but much of it is pure investment like Toyota factories, sushi restaurants, and New York skyscrapers and West Virginian warehouses. (And alot of it is capital simply returning to safer shores, seeking to avoid things like coups in Thailand, nationalizations in Venezuela, political uncertainty in Turkey, etc.) I'm sure Don Boudreaux would happily explain the distinction to Rogoff.
And of course there is the usual IMF worship when Rogoff cites the IMF's doom and gloom predictions for the US which are consistently proved wrong.
In the end though I can't argue with Rogoff's bottom line, that deficits to do matter. Indeed they are hardly meaningless, but his motivation is not to cure the deficit but to raise taxes. I wonder if Rogoff would be as concerned over the deficit if the most likely political remedy were to abolish the Departments of Energy, Education, Housing and Urban Development, and slash other cabinet department budgets by 20%.
Past editions of the OOJR here, here, here, here, here and here.
Recently I wondered if the current administration wasn't finally getting our fiscal act together (relatively speaking) just in time for a President Hillary Rodham Clinton to use the perception of fiscal health to launch an LBJ-style Great Society spending binge. Her partisans are clearly signalling her to do just that. Well, today in the pages of a pink, foreign newspaper, some guy who is either smoking crack or is an academic (there are no other possible explanations) seems to think that the Democrats are saving the day only to tee up a honey-pot for Republicans to ravage:
"Privately, though, many are starting to question why a 2008 Democratic president should bother improving the government’s balance sheet if the end result is just a bigger pot for a future Republican president to lavish on his or her friends. "
The article does make some decent points but there are too many howlers to really take it seriously. Here's another: "in the case of the US, it is hard to tell how the Bush tax cuts will play out." Hard to tell, huh? The Treasury is right now collecting more tax revenue than it has ever collected, with receipts growing in each year since 2004. The forward looking stock market is setting new highs. The federal fiscal deficit is lower than a decades-long average as a percentage of GDP. The tax cuts, which are bringing in record revenue from dividends and capital gains, are the only thing that are helping us keep pace with out of control spending.
Finally, Rogoff makes the critical error of equating the current account deficit with debt. He states we're borrowing $800 billion a year. Not true. Foreigners are investing $800 billion in the US. Some of that is invested in US government debt obligations but much of it is pure investment like Toyota factories, sushi restaurants, and New York skyscrapers and West Virginian warehouses. (And alot of it is capital simply returning to safer shores, seeking to avoid things like coups in Thailand, nationalizations in Venezuela, political uncertainty in Turkey, etc.) I'm sure Don Boudreaux would happily explain the distinction to Rogoff.
And of course there is the usual IMF worship when Rogoff cites the IMF's doom and gloom predictions for the US which are consistently proved wrong.
In the end though I can't argue with Rogoff's bottom line, that deficits to do matter. Indeed they are hardly meaningless, but his motivation is not to cure the deficit but to raise taxes. I wonder if Rogoff would be as concerned over the deficit if the most likely political remedy were to abolish the Departments of Energy, Education, Housing and Urban Development, and slash other cabinet department budgets by 20%.
Past editions of the OOJR here, here, here, here, here and here.
posted by Donny Baseball at 10:45 AM
1 Comments:
But the Nixon example is also a warning. His presidency -- from wage and price controls to the nomination of Justice Harry Blackmun-- could hardly be called a conservative success story. As president, Nixon was a talented man without an ideological compass, mainly concerned with the accumulation of power. Giuliani's 1994 endorsement of New York Gov. Mario Cuomo -- the modern hero of Democratic liberalism -- also indicates some loose ideological moorings. And, as with Nixon, Giuliani's combativeness, on occasion, blurs into pettiness. - WaPo
A talented man without an ideological compass, mainly concerned with the accumulation of power. I would not be surprised if it turns out that this is the real Giuliani... We can't afford another Nixon.
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