The political economy of entitlement reform in two tables - Ezra Klein. Breaking News: Christina Romer is Scott Sumner in Disguise! « Modeled Behavior. He’s always taking hiatuses from blogging, and claiming to be “travelling”. Now I know that he has been leading a double life. From Romer’s interview with Ezra Klein: EK:You’ve also criticized the Federal Reserve for not doing more. What would you like to see them doing? CR:I’m teaching a course this semester on macro policy from the Depression to today. One thing I had the class read was Ben Bernanke’s 2002 paper on self-induced paralysis in Japan and all the things they should’ve been doing. All kidding aside, this is policy advice gold.
P.S. Like this: Like Loading... “See saw” « Historinhas. It´s all “up for grabs”. Who´ll win? The “hardcore” or the “softcore”. When you reason from rates of change (be it prices or real growth) forgetting the depth of the hole you fell into, you´re bound to get it wrong. And that´s the major problem with IT: It has no “memory”. There are “outsiders” (not voting) like Bullard (St Louis), Lockhart (Atlanta) and Lacker (Richmond) who would feel better if QE2 had an “early termination”. “The bubble collapse has no impact on unemployment or output, given sufficiently accommodative monetary policy,” the bank president said, referring to an economic model in the text prepared for a speech today in Marseille. But maybe he´s just talking about what should have been done.
“White knight” insiders include only New York´s Dudley (a permanent member and Vice Chairman) and Chicago´s Evans. Some of the “testimonies”: 1. March 28 (Bloomberg) — St. 2. 3. Note: The outsiders participate in the FOMC discussions and have an influence on decisions. Like this: Opinion: Why I didn't sign deficit letter - Joseph E. Stiglitz. I was asked to sign the letter from a bipartisan group of former chairmen and chairwomen of the Council of Economic Advisers that stresses the importance of deficit reduction and urges the use of the Bowles Simpson Deficit Commission’s recommendations as the basis for compromise. The letter’s signatories believed that their support would show that there was a core to scientific economics that crosses ideological boundaries.
While I agree there is a core set of principles to which all card-carrying economists would (or should) subscribe — resources are limited, incentives matter — I did not sign. Continue Reading I believe the Bowles Simpson recommendations represent, to too large an extent, a set of unprincipled political compromises that would lead to a weaker America — with slower growth and a more divided society. The ballooning of the deficit since the crisis struck has understandably moved deficit reduction to the center of the debate. Boehner Faces GOP Budget Revolt. Today’s news that conservatives in the House Republican Study Committee will draft their own alternative Fiscal Year 2012 budget to challenge the GOP leadership highlights Speaker Boehner’s problems in keeping his caucus unified.
But he’s not the only one. In the budget fight, neither President Obama, nor Speaker Boehner, nor Leader Reid can lead, because by and large their troops won’t follow. So far in the spending fight, delay may have actually helped congressional leaders. All the strum und drang has been about very tiny spending numbers and the CR. The FY12 budget (and its five- and ten-year projections) will involve very big numbers and very basic fiscal policy. And the debt ceiling will involve both. Instead of trying to make a deal on FY 11, then another on the FY12 budget, and a third on the debt ceiling, the best strategy would be to make a “grand bargain” on all three at the same time.
All of this complicated scenario-devising can’t hide the underlying problem. Stay tuned. Ryan Right to Punt on Social Security Reform. A new budget proposal from Rep. Paul Ryan will make Medicare and Medicaid changes while leaving Social Security more-or-less untouched. Ryan—whose own Social Security Plan is worse than the status quo — is right, politically and practically, to make these programs his priorities. In many ways, Medicare and Medicaid may actually be easier to modify than Social Security.
Those programs would still be able to accomplish their fundamental goals after reform. Medicare (which provides health insurance for the elderly and disabled) and Medicaid (which provides insurance for the poor) have both grown at unsustainable rates. The promise of both programs is that the government will help with medical care but won’t always do absolutely everything. Changing these programs even in ways that might seem radical such as replacing Medicare with a voucher program doesn’t fundamentally change the effort to provide a significant (but not limitless) form of medical coverage.
Good to hear… « Historinhas. Opinion: Unsustainable budget threatens nation - 10 ex-chairs of the president's Council of Economic Advisers. Repeated battles over the 2011 budget are taking attention from a more dire problem—the long-run budget deficit. Divided government is no excuse for inaction. The bipartisan National Commission on Fiscal Responsibility and Reform, under co-chairmen Erskine Bowles and Alan Simpson, issued a report on the problem in December supported by 11 Democrats and Republicans — a clear majority of the panel’s 18 members. Continue Reading As former chairmen and chairwomen of the Council of Economic Advisers, who have served in Republican and Democratic administrations, we urge that the Bowles-Simpson report, “The Moment of Truth,” be the starting point of an active legislative process that involves intense negotiations between both parties.
There are many issues on which we don’t agree. Yet we find ourselves in remarkable unanimity about the long-run federal budget deficit: It is a severe threat that calls for serious and prompt attention. The commission’s specific proposals cover a wide range. R. N. New Republic Editorial on Cutting the Deficit in a Weak Recovery, 1938 Edition. « Rortybomb. There’s a game of chicken going on with the budget and whether or not the government will shut down. I think everyone has written a lot about the need to expand the short-term deficit in terms of government spending and tax cuts, not contract the government through painful cuts that will cost GDP and risk the recovery.
So instead, I’m going to enlist the liberals of the 1930s; maybe this cool retro liberal style will give the Democrats some spine. I’ve blogged this before, but it’s one of my favorites so it gets reblogged. It’s also fun to see how similar the arguments are then and now – Brad Delong digs up a 1932 letter from Hayek that is identical (and even clearer) form of the pain caucus. Not much changes in these debates, sadly. This is the New Republic in 1938 going “I told you so about balancing the budget too early FDR.”
Listen up, because this is what the liberal econoblogosphere is going to sound like next year if the Democrats cave and try to turn it around later. Two-faced Sweden. Friedrich Hayek, Zombie.