Wednesday, December 27, 2006


Bonddad Versus Krugman

Paul Krugman recently stated that the Democrats should deal with issues besides the Republican-created deficit. Bonddad over at DailyKos disagrees. Whoever is right here, there's one thing we know for sure: This is exactly what Grover "Bathtub" Norquist wanted to see happen. So what do you think? Should the Democrats spend all their time and energy dealing with the deficit, only to stand back and see the Republicans wreck it again? I actually don't see why we can't do both, but of course that would involve making the hyper-rich actually pay something resembling their fair share in taxes, which is a popular idea among most Americans except for the hyper-rich who fund political campaigns. (Yet another reason to back the Clean Elections movement.)

For the next two years, the Democrats do not have the majorities necessary to force through tax legislation, even if Bushenomics causes a global meltdown. They can, however, decide what spending happens.

The big problem is that a lot of it is already set. Maybe $20B in pork can be cut. Maybe $20B in unnecessary weapons development. Ending the Iraq war, maybe $50B (the rest of the region will need stabilization).

But the reality is that spending on essential infrastructure like levees for NOLA, is too low, spending on veterans is too low. And if we are heading into a hard recession, we need to do countercyclical spending no matter what the bond market says. If the Dems let people lose their homes and face destitution for want of a public works program, they will lose the next election.

I think that:
1. The trade deficit is more worrisome than the governmental deficit.
2. The governmental deficit should be limited in growth, so that it does grow less than GDP, no matter what tax policy is.
3. We should not panic about the governmental debt.
4. I think we can raise about $200B per year by cracking down on tax havens. We would have to do this in concert with our allies, since the British run many of them.

So, put me down as leaning Krugman.
except for the hyper-rich who fund political campaigns

to say nothing of owning broadcast companies
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