Discredited? Thoroughly! As if the factual wrongness of Reinhart and Rogoff (equally bought and paid for by that very same Pete Peterson who has so far invested $500 Million in his vendetta against Social Security) and the earlier discrediting of Alesina and Ardagna, there is now empirical (that means proven reality as opposed to faith based fantasy for my sado-austerity perverted readers) evidence from none less than Goldman Sachs economist Alec Phillips via Bill McBride at Calculated Risk–
The federal deficit continues to shrink. Through the first six months of the fiscal year, revenues have come in higher than expected, while spending has come in lower than expected. As a result we are lowering our deficit forecast for the current and next two fiscal years.
Earlier this year we lowered our FY2013 deficit forecast from $900bn (5.6% of GDP) to $850bn (5.3%). In light of recent trends, we are lowering it again to $775bn (4.8%). Spending in the fiscal year to date is lower than a year ago and the nominal growth rate is lower than it has been in decades. Revenues have also exceeded expectations, with a 12% gain fiscal year to date. What is more notable is that the strength in revenues preceded the payroll tax hike at the start of the year, and the spending decline does not seem to reflect sequestration, which has just started to take effect.
We expect the improvement to continue for the next few years. Although we had already expected additional cyclical improvement and residual fiscal policy tightening to reduce the deficit further in 2014 and 2015, we have reduced our estimates a bit further, to $600bn (3.5% of GDP) and $475bn (2.7%).
What kind of snake oil are these B-S artists peddling?
Simpson-Bowles Prod Congress Again to Anti-Deficit Fervor
By Richard Rubin, Bloomberg News
Apr 19, 2013 10:33 AM ET
The updated plan, released today in Washington, includes $740 billion in increased revenue over the next decade that Republicans have deemed unacceptable and a higher eligibility age for Medicare that President Barack Obama has rejected.
Their plan would reduce debt as a share of GDP below 70 percent by 2023, compared with 73 percent by that year in Obama’s budget released this month and 55 percent in House Republicans’ budget.
Over the past few days, a study by Carmen Reinhart and Ken Rogoff that warned of the dangers of government debt has been criticized for errors.
“What it doesn’t change is the common sense and my own personal experience in both the public and private sector that when any organization has too much debt, that that is an enormous risk factor,” Bowles said today.
See? They know what they’re talking bullshit and they do it anyway. To continue.
(T)he Medicare eligibility age of 65 would be gradually raised to 67.
Bowles and Simpson would cut $585 billion from health-care spending, including expanded means-testing of Medicare benefits. They would also cut $265 billion from other programs, such as agricultural subsidies and higher education.
Their plan adopts the chained consumer price index, a typically slower measure of inflation for benefits and tax brackets that Obama included in his budget.
Part of the plan is a rewrite of the U.S. tax code that would lower tax rates, remove breaks and impose lighter levies on multinational companies’ overseas income.
There you go.
The next potential point for action is the need for an increase in the debt limit, which will occur in the next several months.
Bowles said Congress has “one last good chance” to get a deal done between now and Aug. 1.
Instead of a so-called grand bargain, U.S. lawmakers have imposed about $2.7 trillion in deficit reduction through a series of deadline-driven agreements. That total doesn’t include the sequestration cuts.
“That’s not nothing,” Bowles said. “That’s a good step in the right direction. It doesn’t get us to the promised land.”