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Thoughts on the deficit crisis
Apr. 26th, 2011 12:49 pmMuch of official Washington is screaming about the "out-of-control" deficit. Well, Paul Krugman provides useful facts as usual. Two specific facts:
1) During the recession of 2008, GDP slowed from 5.1% annually to 1.7% annually. This slowdown artificially made the deficit appear twice as big as it would have barring a recession.
2) The massive growth of government spending is entirely due to things like Medicaid and unemployment payments. In other words, the government's normal response to recession increased spending. Spending on everything else (including military) is down over the period 2007-2010.
Yes, we need to get a handle on deficits. But that means:
1) Growing the economy
2) Raising taxes
3) Cutting spending
1) During the recession of 2008, GDP slowed from 5.1% annually to 1.7% annually. This slowdown artificially made the deficit appear twice as big as it would have barring a recession.
2) The massive growth of government spending is entirely due to things like Medicaid and unemployment payments. In other words, the government's normal response to recession increased spending. Spending on everything else (including military) is down over the period 2007-2010.
Yes, we need to get a handle on deficits. But that means:
1) Growing the economy
2) Raising taxes
3) Cutting spending
