Memo to Ocean Cat

Because I’m a giver.

Pay attention: Deficits do matter.

The two parties are having a heated debate over the Republican plan to slice $61 billion off Uncle Sam’s projected $3.6 trillion budget. If the Republicans get their way, the deficit will fall from 9.5 percent of gross domestic product to 9.1 percent. If they don’t, they’ll probably shut the government for a couple of days. Then they’ll compromise on, say, a $40 billion budget cut, having proved they gave it their best shot.

Arguing over lowering our deficit by just 0.4 percent of GDP when we need to run massive surpluses to deal with the baby boomers’ impending retirement is, pick your metaphor — rearranging the Titanic’s furniture, Nero’s fiddling, Custer’s Last Stand.

Is this malign fiscal neglect, or has Congress somehow missed what its own Congressional Budget Office is indicating? CBO’s baseline budget updates suggest the date for reaching what Carmen Reinhart, Kenneth Rogoff and other prominent economists believe is a critical insolvency threshold — a 90 percent ratio of federal debt held by the public to gross domestic product — has moved four years closer, in just nine months!

In nine months, that insolvency date has moved from 2021 to 2017.

Actually, 2017 is optimistic. Uncle Sam’s creditors will soon start charging exorbitant interest rates — like those Greece, Ireland and Portugal now face. The market’s concern with those countries’ bonds is outright default, which is unlikely in the U.S. What is likely is rising inflation as the Federal Reserve continues to print vast quantities of money to help pay the Treasury’s bills.

So, to summarize, deficits do matter, no matter what Dick Cheney said 8 years ago.

Jeff asks:

The CBO knows this. Congress knows this. The President knows this.

So ask yourselves: why, if they all know this, is nothing of substance being done to stop it?

We await your answer, OC.

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2 Comments on “Memo to Ocean Cat”

  1. Squid Says:

    When the dollar collapses, taking American society with it, what really happens?

    1) The people with a lot of money see their fortunes turn worthless. The people without money have nothing to lose.

    2) The gap between rich and poor closes. When everyone is reduced to subsistence, we will finally claim victory in our fight for equality!

    3) The people who have grown up living off the labor of others will continue to do so. They’ll just do it without the need for bureaucrats and politicians and paperwork.

    This is the view of the reality-based community. Why should they worry about the system crashing down, when it will usher in a glorious age of equality for all?

  2. Car in Says:

    The funny thing,is that when the shit totally hits the fan, it will be the ABLE who survive.

    And if anyone thinks the “able” are made up of people who accept government subsidies …

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