Thursday, May 16, 2013

Intellectual Honesty

I have been waiting to see how Paul Krugman would respond to the CBO report on the future of the national debt, the one that says it will shrink in the future, and that this year’s deficit estimate has been reduced to a trivial $642 billion. That’s for those of you who think that anything below $1 trillion is trivial.

The report does not, of course, say that the debt will shrink. What it says is that the debt will become smaller as a ratio of GDP, because it assumes that the GDP will increase by leaps and bounds since we will not have another recession and the economy will soon resume a nice healthy 5% growth rate. There are people who think that. They also think that unicorns live on the other side of every rainbow.

It also mentions, just casually in passing, that this year’s deficit reduction is due to “higher-than-expected revenues and an increase in payments to the Treasury by Fannie Mae and Freddie Mac,” due in no small part to the resumption of trading in mortgage backed securities. Related to that is that home values in San Diego just increased a whopping 20% in just one year. All of this is not actually good news, or won’t be when 2008 happens again.

Paul Krugman exhibits his usual degree of intellectual honesty by mentioning none of this, and merely says gleefully that everyone predicting gloom and doom about the national debt were wrong. He breezily admits that, “Yes, there are longer-term issues of health costs and demographics,” but dismisses them as irrelevant to what we should be doing now “in the face of economic crisis,” even while everyone including him is saying that the recession is over and that the recovery is proceeding nicely.

And certainly now is not the time to address long term problems. If a bridge is burning, it is certainly stupid to think about putting the fire out before it is time to cross the bridge. It would be silly to worry about the bridge being gone when you get there.

Now, how’s that for mixing some metaphors?

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