Jan 04 2017

The Wisdom of Dean Baker

Can’t We Kill the Deficit Hawk Industry?
by Dean Baker, Center for Economic and Policy Research
04 January 2017

Just to be clear, there is no reason to be giving more money to Donald Trump’s billionaire friends as he proposes, but the argument is not that it will “blow up” the deficit and add to the debt. The argument is that this money could be much better used educating our children, improving our infrastructure, and making health care affordable, among other things.

The debt stuff is just silliness that we really need to get over. The problem of an actually excessive debt would show itself in high interest rates and high inflation rates. Have you checked those measures lately? Long-term interest rates are still way below their levels from the late 1990s when the government was running surpluses. And inflation remains persistently below the Fed’s 2.0 percent target and in recent months has edged downward. (And, for those keeping score at home, the government’s ratio of interest payments to GDP is near a post-World War II low.)

Furthermore, the whole focus on the debt encourages sloppy thinking that has no place in serious policy discussions. The government makes obligations for us all the time that don’t take the form of explicit debt. Donald Trump wants to have private companies spend a trillion dollars building infrastructure that they will then recoup in tolls. How do these tolls differ from taxes? So we would be doing bad things to our kids if we financed infrastructure with debt, but then taxed to repay the bonds, but if private companies charge the same amount (most likely much more) in tolls, everything is cool?

To take a much more important example, grants of patent and copyright monopolies are ways in which the government finances innovation and creative work. We pay $430 billion a year for prescription drugs that would likely cost around $60 billion in a free market without patents and related protection. (Yes, you can read more in my [free] book, Rigged.) If the government imposed a tax of $370 billion a year on drugs being sold in a free market the deficit hawks would be yelling and screaming about high taxes, but when we give drug companies a legal monopoly so that they can add this amount to the price of drugs it’s no big deal?

Okay, this is just silliness. We need discussions of the economy that are serious. When people scream about debt and deficits they are not being serious. The national debt is not a real measure of anything and folks should know that even if the “experts” don’t.

With Fire? We can only hope.

The only people who care at all about deficits in D.C. are those who are worried Democrats might use them to improve the lives of the Poor, especially the Blah…s instead of giving the money to Banksters, Corporatists, and Billionaires.

And the Neo Liberal Democrats weould never do that anyway.

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