Posted on 15-05-2013
Filed Under (Current Affairs) by Rashtrakut

The Great Recession exploded the budget deficit generated by the Bush tax cuts, the Iraq war and the unfunded Medicare expansion.  The last few years have seen constant alarming cries that America faced a debt crisis that would turn it to the next Greece.  This was always a silly meme, particularly since the Greek crisis was exacerbated by its participation in the quasi gold-standard of the Euro.

The alarmism has resulted in a howling frenzy for policies that would have turned the recession into a depression (like the United Kingdom about to enter into a triple dip recession) rather than addressing the  job losses that killed government revenue and blew up the deficit.  The predicted hyperinflation has not occurred.  The academics whose paper was cited by deficit peacocks as gospel were discredited by a basic Excel error.  Now comes the CBO, which projects that the medium-term national debt has stabilized and the United States is not going bankrupt anytime soon.  After a spike in 2009 from the stimulus, the budget has actually been dropping throughout the Obama presidency (contrary to Faux News reality).  The CBO now projects that the 2013 deficit will be $200 billion lower than the projection 3 months ago.

In a rational political environment in a country with essentially negative borrowing costs the government would be implementing policies to accelerate the recovery, address infrastructure, fix (rather than shred) Medicare.  But the Republican party and the establishment stenographers live in their alternate reality where we are still on a path to Greece.

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