We Don’t Have A Long-Term Deficit Problem | The New Republic

But there isn’t, in fact, a “long-term deficit problem.” So long as interest rates stay below the growth rate, as they are, debt-to-GDP levels eventually stabilize and even decline. The notion that there is a big problem is pure propaganda based on a pseudo-debate, pitting two viewpoints that nevertheless converge on the practical issue.

via We Don’t Have A Long-Term Deficit Problem | The New Republic.

Debt deal darkens fragile US economic outlook – FT.com

Nothing to add here.

The writer is a major international finance operator who knows more than any economically illiterate US politician that our radical right have shot the US  in the foot.

It is discouraging that several months of disruptive political bickering and posturing failed to deliver a well-defined medium-term fiscal reform effort. Instead, the legislation signed into law by president Obama on Tuesday is terribly unbalanced in design, lacks proper operational details, and leaves key issues to at least one more round of political brinkmanship.

This incomplete endeavour could be dismissed as business as usual in Washington except for one important consideration: it materially darkens an already fragile outlook for economic growth and job creation.

Business and household confidence has been hit at a time when recent data releases – including weak gross domestic product growth, virtually flat manufacturing activity, and declining consumption – all confirm that the US economy is struggling after last year’s stimulus-induced growth spurt.

via Debt deal darkens fragile US economic outlook – FT.com.

Summers on Post-Deal Budget Policy

Local and State governments will need help in the coming months to keep them from adding too much to unemployment.

 

…the single largest and easiest method of deficit reduction is the non-extension of the Bush high-income tax cuts. The president should make clear that he will not accept their extension on any terms. That, along with modest entitlement reform, will be sufficient to hit current deficit reduction targets. Second, it is essential the payroll tax cut be extended and further measures, such as infrastructure maintenance and unemployment insurance extension, be taken to spur demand. If so, there is still time to confirm Churchill’s maxim that the US always does the right thing after exhausting all the alternatives.

via Relief at an agreement will give way to alarm – FT.com.

Follow the Unemployment

Another  not-so-good jobs report today shows that unemployment is still rising.  The debt ceiling deal just adds to job destruction in the coming months.

More From Krugman–Macroeconomic Folly – NYTimes.com

You may not favor his progressive politics, but he is a first rate economist who reflects very basic and accepted economic analysis.

All of a sudden, people seem to have noticed that policy is moving in exactly the wrong direction. We’re getting headlines like this: Debt Deal Puts U.S. on Austerity Path as Economy Falters.

via Macroeconomic Folly – NYTimes.com.

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