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Home Publications Blogs Beat the Press Remember When Alan Greenspan was Worried That We Would Pay Off the Debt Too Quickly?

Remember When Alan Greenspan was Worried That We Would Pay Off the Debt Too Quickly?

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Tuesday, 14 February 2012 06:25

Yes, that was back in 2001 when Greenspan was arguing for the virtues of President Bush's tax cuts. That concern turned out to be somewhat misplaced. However the inaccuracy of the projections being used at the time, which did show the country paying off its debt inside of a decade, should provide some caution in assessing long-range projections.

The inaccuracy of these projections might cause some to question the wisdom of the Washington Post's decision to headline a piece on President Obama's budget:

"Obama budget: National debt will be $1 trillion higher in a decade than forecast."

An assertion like this implies a level of accuracy in these long-range projections that is not at all justified by their track record. It also would have been helpful to point out that $1 trillion is a bit more than 4.0 percent of projected GDP for 2022.

While this article includes the criticisms of people who feel that President Obama did not go far enough in reducing the deficit in this budget, a balanced piece would have included the comments of some of the many economists who criticize the administration for failing to have sufficient stimulus to bring down the unemployment rate more quickly.

Comments (5)Add Comment
Funniest sentence I've read in a while
written by Jim Caserta, February 14, 2012 6:41
"That concern turned out to be somewhat misplaced."

Of all the actual things Greenspan could have been concerned about: housing bubble, bank insolvencies, mortgage fraud, he worried about our paying off the debt too soon. How did he achieve the status he held?
In the Long Run, We Are All Dead
written by Paul, February 14, 2012 8:40
Focusing on long-term budget projections when unemployment is still near record highs nearly 3 years into the recovery is exactly what is wrong with economics and politics in the U.S. today.

We need to solve the problems in front of us, not worry about 10 or 20 years down the road. But we don't do that because the Anti-Keynesian "solutions" on the table for dealing with today's problems are self-defeating, as the EU is proving on a daily basis.

We should be taking advice from the Commie Keynesians in China on how to revive our economy. Their biggest concern is too much growth!
...
written by Bart, February 14, 2012 9:06

I remember AG's concern very well. In a rational world he would have been aptly punished for his misplaced concern of paying off a deficit that he could have predicted to rise.
...
written by Fed Up, February 14, 2012 4:23
Exactly how would the fed work if there was no gov't debt?
...
written by Fed Up, February 14, 2012 4:27
Exactly how would the fed work if there was no gov't debt?

PLEASE GET A DIFFERENT SPAM FILTER!!!!!!!!!

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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.

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