Several times in the last few weeks, I have said that I would rather suffer the spending cuts in the sequester than a ‘grand bargain’ that reduces benefits, that present and future Social Security and/or Medicare recipients have earned with their life-long payroll deductions. On that, I have not changed. However, I have also strongly opposed kicking the can down the road, and on that issue, Paul Krugman has made some arguments that are leading me to defer to his wisdom on that point.
John Boehner, the speaker of the House, claims to be exasperated. “At some point, Washington has to deal with its spending problem,” he said Wednesday. “I’ve watched them kick this can down the road for 22 years since I’ve been here. I’ve had enough of it. It’s time to act.”
Actually, Mr. Boehner needs to refresh his memory. During the first decade of his time in Congress, the U.S. government was doing just fine on the fiscal front. In particular, the ratio of federal debt to G.D.P. was a third lower when Bill Clinton left office than it was when he came in. It was only when George W. Bush arrived and squandered the Clinton surplus on tax cuts and unfunded wars that the budget outlook began deteriorating again.
But that’s a secondary issue. The key point is this: While it’s true that we will eventually need some combination of revenue increases and spending cuts to rein in the growth of U.S. government debt, now is very much not the time to act. Given the state we’re in, it would be irresponsible and destructive not to kick that can down the road.
Start with a basic point: Slashing government spending destroys jobs and causes the economy to shrink.
This really isn’t a debatable proposition at this point. The contractionary effects of fiscal austerity have been demonstrated by study after study and overwhelmingly confirmed by recent experience — for example, by the severe and continuing slump in Ireland, which was for a while touted as a shining example of responsible policy, or by the way the Cameron government’s turn to austerity derailed recovery in Britain… [emphasis added]
Inserted from <NY Times>
Photo credit: Washington Post
I think he is right. I’m all for increasing revenue, because, as a percentage of the GDP, it is at a record low, but if we can’t come to a deal that leaves the big three alone, I’d rather put off the decision until another time. I know that is a change, but when I have been wrong, I say so.