Thursday, March 24, 2011

Not Good

Ezra tweeted that "Romer is very good at enemployment and excuses people give for not doing anything about it," but she's not very good if she's signing on to the ZOMG WE MUST DO SOMETHING ABOUT THE DEFICIT ESPECIALLY CUTTING GRANNY'S MEAGER PENSION crowd.

There's literally nothing that this Congress today can do to reduce the deficit 20 years from now. What you can do is sign into law legislation which reduces granny's pension 20 years from now. And, yes, given the way our system works it wouldn't necessarily be easy to reverse that decision 20 years from now depending on the politics and who is in power. But what will still be easy to do 20 years from now is cutting taxes on rich people and writing giant checks to defense contractors. Those things are always easy to do when Congress and their donors are mostly rich people. Reduce the deficit by cutting granny's pension, increase it again by cutting taxes on rich people. Rinse repeat.

It'd be one thing if there was anything out there suggesting that borrowing costs were going to spike. But there isn't.And as long as the Fed is willing to buy Treasuries, there's no need for borrowing costs to ever spike. As long as we're in a recession, they should be doing this. Anyone sending message other than "we should borrow a large amount of money basically for free and spend it on jobs and boosting aggregate demand" is sending the wrong message. Worrying about problems 10-20 years from now is worrying about things you have almost precisely zero control over.

...adding, just to remind us of history I'm sure we all remember. That Democratic Socialist Bill Clinton got rid of the deficit. Alan Greenspan, who spent years fretting about the deficit, suddenly decided the great danger we faced was not having a deficit. And Bush tax cuts, and too and such.