“We are not Greece”
Both nations have lately been running large budget deficits, roughly comparable as a percentage of G.D.P. Markets, however, treat them very differently: The interest rate on Greek government bonds is more than twice the rate on U.S. bonds, because investors see a high risk that Greece will eventually default on its debt, while seeing virtually no risk that America will do the same. Why?
One answer is that we have a much lower level of debt — the amount we already owe, as opposed to new borrowing — relative to G.D.P. True, our debt should have been even lower. We’d be better positioned to deal with the current emergency if so much money hadn’t been squandered on tax cuts for the rich and an unfunded war. But we still entered the crisis in much better shape than the Greeks.
Even more important, however, is the fact that we have a clear path to economic recovery, while Greece doesn’t.
I don’t know that I believe that we have a clear path to recovery, but being an optimist this is one time I hope Krugman is right. Here is where Krugman loses me –
Meanwhile, when you look under the hood of those troubling long-run budget projections, you discover that they’re not driven by some generalized problem of overspending. Instead, they largely reflect just one thing: the assumption that health care costs will rise in the future as they have in the past. This tells us that the key to our fiscal future is improving the efficiency of our health care system — which is, you may recall, something the Obama administration has been trying to do, even as many of the same people now warning about the evils of deficits cried “Death panels!”
So here’s the reality: America’s fiscal outlook over the next few years isn’t bad. We do have a serious long-run budget problem, which will have to be resolved with a combination of health care reform and other measures, probably including a moderate rise in taxes. But we should ignore those who pretend to be concerned with fiscal responsibility, but whose real goal is to dismantle the welfare state — and are trying to use crises elsewhere to frighten us into giving them what they want.
I am willing to believe taxes may be too low, I don’t but I accept that it is possible, taxation is not an exact science. What I can’t accept is this pie in the sky assumption that health care costs will come down. I heard on NPR months ago (and it being NPR I double checked and they were right) that the only time since the 1930s that health care costs have stooped rising, much less decreased, was in the 1990s under the dreaded reign of the HMOs. How did they achieve those savings? By screening and denying procedures and care. In other words “Death Panels”. Remember when that was portrayed as the ultimate by people like John Grisham. This is why virtually everyone agrees that we have a better chance of Osama bin Laden converting to Catholicism and becoming the next Pope than this current health care reform act does of actually containing costs.
Bryan Dorgan (D-SD) is threatening to filibuster financial reform legislation unless his amendment banning Naked Credit Default Swaps is considered.
“I just told the leader and the committee chairman that I wouldn’t be voting for cloture–I’d be voting against cloture–unless my amendment is considered,” a frustrated Dorgan told me and one other reporter on his way out of the chamber.
He also publicly called into question the efficacy of the overall bill, which he says may not be up to the task of reining in financial industry excess. “I understand everybody thinks their amendment’s important, but the question of the unbelievable speculation in credit default swaps that have no insurable interest–if we can’t vote on something like that, given what we’ve seen in recent years, then it’s not really financial reform,” Dorgan said.
On it’s face I like the idea of banning these derivatives. Maybe there is a reason for them to exist other than banks being stupid but I don’t see it.
OK GOP how stupid can you be? Searching and removing things from a classroom during a political caucus – are you insane? If you didn’t like what you saw take a picture and complain but stealing stuff and searching through the teachers belongings is unacceptable.
Euro breaking up? Megan McCardle reports France was threatening to pull out if Germany didn’t support Greece.