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Home Publications Blogs Beat the Press CBO Projects Lower Deficits: Dana Milbank Derides Politicians for Not Having the Courage to Kick Old People in the Face

CBO Projects Lower Deficits: Dana Milbank Derides Politicians for Not Having the Courage to Kick Old People in the Face

Saturday, 30 August 2014 09:12

Folks who are not DC insiders might think it would take courage to stand up to the rich people who have done so well (and caused so much harm) over the last three decades. Or, we might think it would take courage to standup to nonsense about budget deficits to point out that we need larger deficits now to create the demand necessary to bring the economy back to full employment. (Yes, we all love the private sector, but the private sector doesn't create jobs for love.) Taking those positions might seem to require courage, but in DC insider circles real courage is demanding that we cut Social Security and Medicare; and that is independent of any of the facts.

Hence we see Dana Milbank telling us that new CBO projections, showing that deficits will be lower over the next decade than in the prior set of projections,"threw cold water on my tranquility." He went on to say the new report was "downright bone-chilling" and that the "top-line conclusions were grim enough, if not catastrophic." It's scary to think what his reaction would have been if the new projections showed a worsening picture.

But his real horror story is that the debt to GDP ratio will be over 77 percent in a decade. Wow, and this means what? Milbank was on vacation so he probably missed the collapse of the housing bubble and the worst downturn since the Great Depression. That really was (and is) bone-chilling and catastrophic, but apparently not the sort of thing that worries DC insider types.

Just for purposes of comparison, just about every country in the euro zone has debt to GDP ratios well above 77 percent and many are borrowing at lower interest rates than the United States. Japan has a debt to GDP ratio more than three times as high and borrows long-term at less than a one percent interest rate. So, these debt numbers might make good scare stories for the DC insider crowd, but they have nothing to do with real world economics.

There are of course things we should be worried about, like continued slow growth and high unemployment, but the best remedy for that would be a higher budget deficit or a lower valued dollar that would reduce the trade deficit. We should also worry about the fact that we pay twice as much for our health care per person than people in other wealthy countries with nothing to show for it in terms of outcomes. If we fixed health care that would also take care of the budget deficit, shifting the projected deficits to surpluses. 

But fixing health care would mean taking money away from drug companies, doctors, medical equipment suppliers and insurers. The Post doesn't pay people to push taking away money from those interest groups,, just seniors.  


Comments (11)Add Comment
written by TK421, August 30, 2014 10:04
Dana Milbank has a job, and health insurance, so why should he care about unemployment or gaps in health care coverage? Come on, Dean!
Small suggestion for a correction TK
written by Ben, August 30, 2014 10:20
Unfortunately, Dana Milbank has a job ...
Good post Dean.
written by Auburn Parks, August 30, 2014 10:21
You forgot the most important caveat when comparing T-bonds with Govt bonds issued by the EU nations. Greece does not issue or control the Euro, their finances are like states in the US. The US is like Japan, we issue our own currency and bonds, and we control our own interest rates.

Monetary sovereignty vs non-sovereignty

WRT health care spending. We are talking about ALOT of money. If we were able to successfully reduce our health care spending to be equal to the 2nd highest (Canada), that would be worth about 6% of GDP or just about $1 Trillion a year in lost income to the health care sector. Nobody is going to let that much money go without a fight, the problem is, theyre winning due to our system of legalized bribery masquerading as campaign finance.

health insurers
written by ethan, August 30, 2014 10:24
I'm glad you added health insurers to the list of corporations/individuals profiting from the current system. This year my Medicare Supplemental Carrier -- unilaterally -- changed the "tier" of two of the long time generics I take. So now instead of them paying $64 and me paying $12, I pay the entire $76. This doesn't change the total cost to the economy, but it takes money from my pocket and transfers it to the insurance company without any benefit to me.
Health Insurance Compliance Industry Would Benefit From Creative Destruction
written by Robert Salzberg, August 30, 2014 10:36
The WaPo frequently advocates for the Free Market and creative destruction but I've yet to read any thoughtful editorials from WaPo about how standardization of health insurance billing and payment procedures would make life easier for all patients and health care providers. It would also eliminate hundreds of thousands if not millions of jobs in the insurance industry and the insurance compliance industry.

Since most of those workers are generally educated, it would also increase the pool of educated workers for the sketchy 'skills gap'.

The added health benefits for all of us that would be garnered with a hassle free insurance industry would be priceless.
Milbank Wins Support of Fascists in Prediction of Economic Catastrophe
written by Last Mover, August 30, 2014 2:17

Read the comments. As economically ignorant as Milbank is in predicting yet another catastrophe driven by debt that never happens and never will under conditions that apply since 2008, he is still attacked for blaming "both sides" for the coming "catastrophe".

They are little more than wanna be fascists, still making predictions like the collapse of SS because Dubya was beat down by liberals to prevent its "rescue" with privatization.

They want a catastrophe so bad they are more than happy to create one any way possible. That includes bashing Milbank not for predicting a catastrophe on a scale of sock puppet lies equivalent to Dubyas weapons of mass destruction - but for Milbank to dare blame it on Republicans as well as Democrats.

Milbank has unwittingly won support of wanna be fascists for getting the coming "catastrophe" right, despite enduring their vile hatred at the same time for including them in the blame for it.

They not only want to have old people kicked in the face by politicians to humiliate them as the undeserving recipients of socialist spending they are. They want you to know it was the liberals - not them - who brought on this tough love absolutely essential to avoid ...

... well you know, that crushing debt of mass destruction that will kill us all absent a preventative war by the fascists on the communists who caused it - the old people.
interest rate
written by Joe, August 30, 2014 9:31
The Fed sets interests rates. It has exactly zero to do with debt-to-GDP ratio. And yes, if the Fed wants to, it can control the entire rate curve.
that helpless feeling
written by djb, August 30, 2014 10:40
Yes there is nothing that can be done

Cuts for middle class and poor its the ONLY WAY

(if we are not going to make the rich share)
A bad fad
written by Dave, August 31, 2014 9:29
When did this fad begin? It seems like it started under Reagan. George Bush I was a good president, and he actually raised taxes. Clinton was a return to Reagan's policies, which is why I don't like Bill Clinton. I would have preferred Bush to Clinton.

The Democratic party cowers to monied interests. As long as that is true, this country will flounder.

deflation danger
written by djb, September 01, 2014 5:21
written by Benjamin, September 01, 2014 9:26
Yes, at certain times deficits are necessary, but in general, they are not good.

Every economist knows that.


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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.