{"id":942,"date":"2011-07-31T11:26:03","date_gmt":"2011-07-31T15:26:03","guid":{"rendered":"http:\/\/www.billdawers.com\/?p=942"},"modified":"2011-07-31T19:32:04","modified_gmt":"2011-07-31T23:32:04","slug":"missing-from-debt-discussion-and-from-the-economy-economic-growth","status":"publish","type":"post","link":"http:\/\/www.billdawers.com\/2011\/07\/31\/missing-from-debt-discussion-and-from-the-economy-economic-growth\/","title":{"rendered":"Missing from debt discussion and from the economy: economic growth"},"content":{"rendered":"<div class=\"e26b170012445c56d240655bdd03f7bf\" data-index=\"1\" style=\"float: left; margin: 10px 10px 10px 0;\">\n<script type=\"text\/javascript\"><!--\r\ngoogle_ad_client = \"ca-pub-5595881567027133\";\r\n\/* Medium Rectangle *\/\r\ngoogle_ad_slot = \"8584504377\";\r\ngoogle_ad_width = 300;\r\ngoogle_ad_height = 250;\r\n\/\/-->\r\n<\/script>\r\n<script type=\"text\/javascript\"\r\nsrc=\"http:\/\/pagead2.googlesyndication.com\/pagead\/show_ads.js\">\r\n<\/script>\n<\/div>\n<p><img loading=\"lazy\" decoding=\"async\" data-attachment-id=\"269\" data-permalink=\"http:\/\/www.billdawers.com\/2011\/03\/06\/savannah-stopover-preview-7-sanders-bohlke\/window-17\/\" data-orig-file=\"https:\/\/i0.wp.com\/www.billdawers.com\/wp-content\/uploads\/2011\/03\/window6-e1299440530555.jpg?fit=67%2C77\" data-orig-size=\"67,77\" data-comments-opened=\"1\" data-image-meta=\"{&quot;aperture&quot;:&quot;4.8&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;NIKON D40&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;1244646881&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;38&quot;,&quot;iso&quot;:&quot;200&quot;,&quot;shutter_speed&quot;:&quot;0.033333333333333&quot;,&quot;title&quot;:&quot;&quot;}\" data-image-title=\"window\" data-image-description=\"\" data-image-caption=\"\" data-medium-file=\"https:\/\/i0.wp.com\/www.billdawers.com\/wp-content\/uploads\/2011\/03\/window6-e1299440530555.jpg?fit=67%2C77\" data-large-file=\"https:\/\/i0.wp.com\/www.billdawers.com\/wp-content\/uploads\/2011\/03\/window6-e1299440530555.jpg?fit=67%2C77\" class=\"alignleft size-full wp-image-269\" title=\"window\" src=\"https:\/\/i0.wp.com\/www.billdawers.com\/wp-content\/uploads\/2011\/03\/window6-e1299440530555.jpg?resize=67%2C77\" alt=\"\" width=\"67\" height=\"77\" data-recalc-dims=\"1\" \/>I&#8217;m pretty confident one way or another the debt limit will be raised.<\/p>\n<p>Great piece from the NYT today about the role of economic growth in the current deficit problem: <a href=\"http:\/\/www.nytimes.com\/2011\/07\/31\/business\/economy\/sure-cure-for-debt-problems-is-economic-growth.html?_r=1&amp;ref=business\" target=\"_blank\">Sure Cure for the Debt Problem: Economic Growth<\/a>.<\/p>\n<p>Writer Catherine Rampell makes some pretty obvious points, but those points have largely been missing from the debt debate. A few snippets with a few key passages emphasized.<\/p>\n<blockquote><p>\u00e2\u20ac\u0153The basic issue is that the U.S. is on an unsustainable fiscal track,\u00e2\u20ac\u009d says Dean Maki, the chief United States economist at Barclays Capital. \u00e2\u20ac\u0153From that point, none of the choices are fun.\u00e2\u20ac\u009d The most obvious choices, Mr. Maki says, are to reduce spending (ouch), raise taxes (yuck), let inflation run (gasp) or default (thud).<\/p>\n<p><strong>We wouldn\u00e2\u20ac\u2122t need any of that if we could restore economic growth. If that happened, Americans would become richer and pay more taxes<\/strong>. Et voil\u00c3\u00a0! \u00e2\u20ac\u201d we\u00e2\u20ac\u2122d pay down the debt painlessly.<\/p><\/blockquote>\n<p>And:<\/p>\n<blockquote><p>After World War II, gross federal debt reached 122 percent of G.D.P., the highest ratio on record. But over the next 40 years, it fell to about 33 percent. That wasn\u00e2\u20ac\u2122t because some blue-ribbon panel prescribed austerity; it was because the American economy became much, much richer.<\/p>\n<p>The same happened during the prosperous 1990s, which began with deficits and ended with surpluses. Former President Bill Clinton is often credited for that turnabout, as he engineered higher tax rates. But most economists attribute the surplus years primarily to extraordinarily rapid growth.<\/p>\n<p>It would be lovely to repeat that experience today, and send our federal debt off to that farm with Skip.<\/p>\n<p><strong>But the structure of America\u00e2\u20ac\u2122s federal spending is different now than it was in, say, the immediate postwar decades. Back then, growth helped to erase the debt. But remember that in the 1950s, the United States didn\u00e2\u20ac\u2122t have Medicare. The population was younger, and Americans didn\u00e2\u20ac\u2122t live as long.<\/strong><\/p><\/blockquote>\n<p>And this:<\/p>\n<blockquote><p>While it may be difficult or impossible to grow our way out of debt, <strong>the G.D.P. figures announced on Friday suggest that we could quite possibly shrink our way into bankruptcy.<\/strong> The austerity measures that Congress is debating would almost certainly slow growth further. That, in turn, might actually worsen the debt problem \u00e2\u20ac\u201d the exact opposite of what their proponents suggest.<\/p>\n<p><strong>Economists agree that in the long run, fiscal discipline is good for growth.<\/strong> When the budget is in order, the country isn\u00e2\u20ac\u2122t weighed down by the burden of paying down burgeoning entitlements. Companies can worry less about being surprised by, say, higher taxes, and proceed to hire new workers. More manageable federal debt also helps to keep interest rates low, which is generally good for growth. And, again, what\u00e2\u20ac\u2122s good for growth is generally good for the debt.<\/p>\n<p><strong>The problem is that reducing spending or raising taxes just now would hurt the already fragile economy.<\/strong> Another recession would not only be painful for ordinary Americans but would actually worsen the debt problem by reducing tax revenue.<\/p>\n<p>Don\u00e2\u20ac\u2122t believe it? Consider this: <strong>Of the $12.7 trillion in additional federal debt that was accumulated over the last decade, about a third came from the souring economy.<\/strong><\/p><\/blockquote>\n\n<!--CusAds0-->\n<div style=\"font-size: 0px; height: 0px; line-height: 0px; margin: 0; padding: 0; clear: both;\"><\/div>","protected":false},"excerpt":{"rendered":"<p>I&#8217;m pretty confident one way or another the debt limit will be raised. Great piece from the NYT today about the role of economic growth in the current deficit problem: Sure Cure for the Debt Problem: Economic Growth. Writer Catherine&hellip;<\/p>\n<p class=\"more-link-p\"><a class=\"more-link\" href=\"http:\/\/www.billdawers.com\/2011\/07\/31\/missing-from-debt-discussion-and-from-the-economy-economic-growth\/\">Read more &rarr;<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[4],"tags":[42],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p1gN9R-fc","jetpack_sharing_enabled":true,"jetpack-related-posts":[],"_links":{"self":[{"href":"http:\/\/www.billdawers.com\/wp-json\/wp\/v2\/posts\/942"}],"collection":[{"href":"http:\/\/www.billdawers.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.billdawers.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.billdawers.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.billdawers.com\/wp-json\/wp\/v2\/comments?post=942"}],"version-history":[{"count":0,"href":"http:\/\/www.billdawers.com\/wp-json\/wp\/v2\/posts\/942\/revisions"}],"wp:attachment":[{"href":"http:\/\/www.billdawers.com\/wp-json\/wp\/v2\/media?parent=942"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.billdawers.com\/wp-json\/wp\/v2\/categories?post=942"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.billdawers.com\/wp-json\/wp\/v2\/tags?post=942"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}