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Obama debt arithmetic

Economist Michael Boskin carries out arithmetic on the planned Obama budgets. He forecasts huge budget deficits towards the end of Obama’s presidency and an extra $6.5 trillion in national debt that taxpayers will bear – and this is before proposed increased Medicare and social security costs.

Boskin’s estimate deduces $6.5trillion of extra debt not a $2trillion reduction as Obama promises. Distributing this debt as taxes leaves the rich predictably slaughtered but also leaves tax bills of well over $100,000 for those on incomes of $150,000 which is far below Obama’s  tax-hike cut off of $250,000,  According to Boskin, “That’s a recipe for a permanent drag on growth and serious pressure on the Federal Reserve to inflate, not the new era of rising prosperity…’. The banana republic is with us… I’ll eagerly wait to read responses to Boskin’s arguments and will post them. Let us hope his arithmetic is out. Greg Mankiw cites Boskin without even a critical murmur.

6 comments to Obama debt arithmetic

  • whoops

    One on the thinktanks that looks at budgets found Obama actually has a lower deficit than if his policies were not in use!!

  • Harry, not on topic but…
    here at your new blog, which generally looks good, your posts’ fonts are a bit mixed up. I don’t know if this matters to you, or if you are just experimenting, but it comes from typing things up first in Word or some such and pasting it in. If you do that, it’s better to paste it in as unformatted text and make sure it’s formatted to ‘Paragraph’ or whatever the default style is for this wordpress template. If you type things up in Notepad or other text editor it will obviate the need to paste it as unformatted text.

  • hc

    I noticed the font issue and will follow your advice. You are exactly right – I type posts in Word asnd copy then across. Thanks for that.

  • derrida derider

    Yes, this level of debt will be some drag on growth over time and leave future GDP lower than we would have expected in 2007. But that’s the wrong counterfactual – we need a comparisons starting in 2009.

    The correct comparison then is with a world of no co-ordinated fiscal stimulus over the next few years. The great depression that this would entail would leave future GDP considerably lower than it will now be, even taking that long-run drag on growth into account.

    There is a time and place to say “in the long run we are all dead” and avert immediate catastrophe by borrowing from our children. Especially as our children would be harmed by a depression today, and don’t forget the little buggers will be richer than us anyway.

  • hc

    Derrida, I don’t think you are disagreeing with the Boskin analysis. You are just saying things would be worse without the stimulus package. If that is true then things are grim -they look pretty bad too with the package.

  • derrida derider

    Harry, I suspect we’re in violent agreement.

    Mind you, things would look a bit better for the US if they hadn’t pissed all that money up against the wall during the good times. I think it’s just more of GWB’s wonderful legacy.