The Washington Post, for all its faults, has been something of a voice of reason on fiscal policy. I offer this bit from a recent editorial:
WHEN THE Great Recession hit in December 2007, the United States' publicly held debt amounted to less than 40 percent of gross domestic product — well within the normal range since World War II, when the figure temporarily, and necessarily, soared above 100 percent. Consequently, the federal government was well-positioned to fight the plunging growth rate by spending more and taxing less; it had ample "fiscal space."
If a similar emergency — war, recession or some combination — struck now or in the next decade, the United States would begin its response burdened with a debt-to-GDP ratio above 70 percent, roughly twice the postwar average, according to the most recent Congressional Budget Office projections. "Fiscal space" would be correspondingly narrower.
Yes, that would be the problem. We can glide along for a while with this level of debt. Our shoulders are broad. They aren't all that broad. If something unfortunate happens, we are in big trouble. That is to say that we are in a state of fiscal weakness that is unprecedented and that would leave us ill-equipped to deal with a crisis.
We do not suggest that such a situation is likely or that the U.S. economy would collapse if it occurred. Nor do the debt projections prove that the Obama administration's fiscal response to the Great Recession was too large; much of it, in fact, consisted of long-established "automatic stabilizers," such as unemployment benefits that rise (as they should) during a downturn. Our purpose is simply to take note of one reason, among many, that it is far too soon to declare victory over the nation's budget problems.
Yet that is pretty much what a growing chorus of policy experts close to the Democratic Party are urging President Obama and Congress to do.
Of course. I know from years of comments on this blog that my readers to the left are all in favor of fiscal responsibility in the abstract and resolutely opposed to anything that looks like it in the particular.
Our long term fiscal trajectory is disastrous. Our great social programs are unsustainable. The Democratic Party is uniformly dedicated to making sure that nothing is done about this.
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