DUBLIN — Ireland has finally taken its medicine, accepting the financial rescue package European officials have been pushing for several weeks.But even as Europe moved to avert this latest debt crisis, economists and policy experts are increasingly debating whether it would be better, and fairer, for the Continent’s weakest economies to default on payments to lenders.
What do the government of China, the government of Germany and the Republican Party have in common? They’re all trying to bully the Federal Reserve into calling off its efforts to create jobs. And the motives of all three are highly suspect.It’s not as if the Fed is doing anything radical. It’s true that the Fed normally conducts monetary policy by buying short-term U.S. government debt, whereas now, under the unhelpful name of “quantitative easing,” it’s buying longer-term debt. (Buying more short-term debt is pointless because the...
In the two weeks since the election, the deficit has taken center stage in Washington, propelled by a high-profile report on how to cut it from the chairmen of the president’s deficit commission, and by a push to ban congressional earmarks from conservative activists. This is welcome news for Democratic Representative Jim Cooper of Tennessee, a renowned budgetary Cassandra who is so alarmed by the deficit that the first thing visitors to his Capitol Hill office encounter is a billboard displaying the steadily mounting US debt. Yesterday, it stood at $13,050,588,009,652, and...
Here’s a roundup of this morning’s must-read budget and economic stories:
The Wall Street Journal reports the European Union is likely to approve a multi-billion dollar loan to help Ireland dig its way out its debt crisis.
Time’s Fareed Zakaria calls fixing the debt the U.S.’s “biggest test.” Zakaria writes, “The federal budget deficit, if unattended, will reach 24% of GDP in 2040 —well beyond Greek and Irish territory. At that point, the measures it would take to close the gap are so punitive — we’re talking tax hikes of 70% or spending cuts of 50% — that it is inconceivable that we will make them. If by some chance we were to make them, they would put the economy in a death spiral.”
According to Politico, Sens. Scott Brown (R-MA) and Ron Wyden (D-OR) will introduce a bill in the Senate today to allow states to opt out of the individual mandate portion of the health care law signed earlier this year.
Two members of President Obama’s “Fiscal Commission,” Democrat Alice Rivlin and Rep. Paul Ryan (R-WI), released a plan yesterday to reform Medicare and Medicaid. The plan would cap the rate of growth for the two programs at the rate of economic growth plus one percent.
This morning, a bipartisan task force that we co-chair unveils a bold, comprehensive plan to dramatically reduce America's deficits and debt and strengthen our economy, enabling the nation to reclaim its future. We urge the nation's leaders to seriously consider it.The strong economy that has made the United States the world's leading power is gravely threatened. Federal debt will soar in the coming years under current policies, endangering our prosperity and our leadership.
Below is an excerpt; please click here to read the entire article.
European officials, increasingly concerned that the Continent’s debt crisis will spread, are warning that any new rescue plans may need to cover Portugal as well as Ireland to contain the problem they tried to resolve six months ago.
Any such plan would have to be preceded by a formal request for assistance from each country before it would be put in place. And for months now, Ireland has insisted that it has enough funds to keep it going until spring. Portugal says it, too, needs no help and emphasizes that it is in a stronger position than Ireland.
While some important details are different, the current situation feels eerily similar to what happened months ago in Greece, where the cost of borrowing rose precipitously.
While Ireland has largely impressed European officials with its commitment to austerity, Portugal has been lagging in this regard, according to European officials. One official in Europe…said that the budget recently presented by the government in Lisbon did not contain the type of far-reaching changes proposed by other countries, like Spain.
“If Ireland were to ask for aid, then you’d have to look at what’s going on in Portugal as well,” the official said, putting forward a view rescuing Ireland alone would not keep speculators from other vulnerable countries.
Throw your Euro stereotypes out the window: Last weekend, a Greek government that has cut public-sector pay and lowered pensions won a clear victory in local elections. Despite strikes and violence, despite the fact that Greece's debt is still growing and more cuts are coming, there will be a Socialist mayor of Athens for the first time in 24 years. (And, yes, in Greece, the Socialists favor budget cuts, and the conservatives oppose them.)
During the tour to promote his presidential memoir, Decision Points, George W. Bush defended his fiscal record in an interview with Matt Lauer on NBC's Today Show. In the interview, Bush said that the ratio of the deficit to gross domestic product during his time in office "was lower than Ronald Reagan's by half. Lower than my dad's. And only [worse than] Bill Clinton among modern presidents. ... My debt to GDP was the lowest or one of the lowest of modern presidents. My taxes to GDP was the lowest and my spending to GDP" was ...>> More
Not long ago, I finagled my way into a conference featuring a number of top economists discussing the future of government. These experts helpfully synthesized a bunch of intricate numbers and created PowerPoint presentations sprinkled with graphs that illustrated a pending stratospheric explosion of debt and spending -- for which the technical term, I believe, was "we're screwed." Receive news alertsAmericans might have a similar reaction to the much-heralded suggestions of the co-chairmen of the deficit commission convened by President Barack Obama. Reality is that even this...