AEI Scholar: Forget about the debt, it’s no big deal

Seriously, I think hell just froze over. An American Enterprise Institute “stink tanker” publicly breaking with the party line and telling conservatives the debt is no big deal — based on actual facts n’ stuff? The AEI, home to Lynne Cheney, Paul Wolfowitz, Newt Gingrich and John Bolton?

There’s always the possibility this is merely a public relations move in reaction to the sound drubbing conservatives took in the November election, but even if it is, it’s going to make our job of stopping austerity a lot easier:

You know the deficit argument is all but over when one conservative tells other conservatives to shut up about it, already.

American Enterprise Institute’s John H. Makin has a long new argument today, in which he said that worrying about national debt is a nonsensical idea because Japan’s national debt isn’t hurting them any, and really, the U.S. has other stuff to worry about. Like fixing the tax code, or reforming entitlement programs.

The debt-to-GDP ratio, which is what many conservatives tout as a metric of how “unsustainable” U.S. debt is, means absolutely nothing, he said. Japan, for instance, has a debt-to-GDP ration of 140, which is way above the U.S. number, and it really hasn’t had any effect whatsoever on their economy. In fact, the interest rate for 10-year Japanese bonds are half that of the American equivalent, in part because of Japanese deflation.

From his notes:

Congress, take note. Although American deficits do need to be reduced and debt accumulation does need to be slowed and eventually reversed, cries of imminent disaster from “unsustainable” deficits and a supposed bond market collapse will not accomplish this goal. Persistently rising bond prices in Japan and the United States have undercut the “sky-is-falling” rationale for deficit reduction.

In fact, austerity could just about be the silliest thing to do, if Congress wants the debt-to-GDP ratio to fall:

If fiscal austerity is applied too rapidly, US growth will drop and the debt-to-GDP ratio will rise, boosting the nation’s debt burden. If the Fed tries to stem the rise with too much money printing, inflation could rise and drive up interest rates, exacerbating the US debt burden.Congress and the president need to avoid excessive austerity with respect to changes in fiscal policy this year. Over the past four years, on average, the fiscal boost applied to the American economy has been worth about 3 percent of GDP. This year, with tax increases and sequestration, fiscal drag will be about 1.5 percent of GDP.

According to Makin, instead of yelling about how the world is going end and whatnot, which would only serve to sap the momentum to sound fiscal policy, Congress should be cutting deficits gradually, through tax reform and by rethinking how entitlement programs work.

When an AEI scholar and Paul Krugman are telling you the same thing, these are strange days indeed!


On incestuous amplification:

We saw that in the run-up to Iraq, where perfectly obvious propositions – the case for invading is very weak, the occupation may well be a nightmare – weren’t so much rejected as ruled out of discussion altogether; if you even considered those possibilities, you weren’t a serious person, no matter what your credentials.

Which brings me to the fiscal debate, characterized by the particular form of incestuous amplification Greg Sargent calls the Beltway Deficit Feedback Loop. I’ve already blogged about my Morning Joe appearance and Scarborough’s reaction, which was to insist that almost no mainstream economists share my view that deficit fear is vastly overblown. As Joe Weisenthal points out, the reality is that among those who have expressed views very similar to mine are the chief economist of Goldman Sachs; the former Treasury secretary and head of the National Economic Council; the former deputy chairman of the Federal Reserve; and the economics editor of the Financial Times. The point isn’t that these people are necessarily right (although they are), it is that Scarborough’s attempt at argument through authority is easily refuted by even a casual stroll through recent economic punditry.

But these people aren’t part of the in-group, and if they do make it into the in-group’s conversation at all, it’s only by blurring their message sufficiently that the in-group doesn’t understand it.

And at this point, of course, all the Very Serious People have committed their reputations so thoroughly to the official doctrine that they almost literally can’t hear any contrary evidence.

Also, what Digby said.

The most transparent administration ever

Remember, the only person sent to prison over torture was the guy who blew the whistle on it:

At the The Freedom of the Press Foundation blog, Trevor Timm digs deeper into disturbing news (covered here in Saturday’s Washington Post) of an FBI investigation of a large number of government officials suspected of leaking classified information to the press, which “engulfs an unknown group of reporters,” along the way. Trevor writes, “The investigation includes data-mining officials’ personal and professional communications to find any contact with journalists. Just to be clear: It seems officials are being targeted for just talking to the press.”


We can’t go after the banksters who crashed the economy with rigged ratings and phony mortgage securities, but we can go after a Democratic senator who allegedly frequented prostitutes — in a country where it’s legal? Because a wingnut-funded conservative rag like the Daily Caller claims they were underage?

This president just doesn’t understand the basics.


I am hopeful this means Pennsylvanians are willing to reject Gov. Corbett’s wingnut agenda:

Pennsylvania voters support stricter gun-control laws, including a national ban on sales of assault weapons and high capacity magazines, as well as universal background checks, a new poll found.

Voters said they approved (60-37 percent) of a national ban on the sale of assault weapons and supported (59-39 percent) a ban on high capacity magazines, according to a Quinnipiac University poll taken one month after the massacre of 20 children and six adults at a school in Newtown, Conn.

By an overwhelming (95-5 percent) margin, voters supported requiring background checks for all gun buyers.

Fifty-seven percent of Pennsylvania voters agreed that gun-control laws should be stricter, while 4 percent say less strict and 35 percent say keep state laws as they are. National gun-control laws should be stricter, 60 percent of statewide voters said.

A growing number of PA voters are also willing to support same-sex marriage.

When I go

This was the song my ex-husband requested for his funeral. Tracy Grammar and the late Dave Carter:

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