James Pethokoukis

Resisting the Gang of Six budget temptation

July 21, 2011

America needs to raise its debt ceiling,  cut spending and implement wide-ranging tax reform. The Gang of Six plan claims to do all those things as it reduces debt by close to $4 trillion over a decade. If I could summarize my opposition in one sentence, it would be this one from Rep. Paul Ryan: “The plan appears to increase revenues by $2.8 trillion, without addressing unsustainable health care spending that is driving our debt problems.”

The impact of U.S. credit rating downgrade

July 20, 2011

It does not appear to be as frightening as I might have assumed. Here is a bit (via Business Insider) from a Goldman Sachs conference call this morning where the impact of a AAA downgrade is discussed

How would U.S. react to a debt crisis?

July 20, 2011

If the U.S. doesn’t get a handle on federal debt, there will be a financial and economic crisis. By 2035, debt as a share of GDP could be 250 percent, though a panic would surely happen long before that point was reached. But if a crisis came, how would Washington react? What drastic measures would be taken? I think there would be a huge push for a massive tax increase, probably via a value-added tax. Here is some of what the Comeback America Initiative sees happening:

Americans still think raising debt ceiling a dodgy idea

July 20, 2011

These results from a survey by Northwestern’s Kellogg School of Management (via its Financial Trust Index site) are sure to get noticed in Washington:

Why the House GOP will deep six the Gang of Six

July 20, 2011

Will the House GOP play ball on the Gang of Six debt reduction plan? The Paul Ryan-led House Budget Committee is giving members all the ammo they need to take a pass (bold is mine):

Explaining Obama’s tax-hike obsession

July 19, 2011

It’s the great mystery of the debt ceiling debate: Why is President Barack Obama so darn adamant about raising taxes? “This may bring my presidency down, but I will not yield on this,” Obama told Republicans before dramatically exiting their budget meeting last week.

Would the GOP’s ‘Cut, Cap and Balance’ plan really cost 700,000 jobs?

July 18, 2011

This is the Democratic talking point: Cutting spending by $111 billion, as some Republicans want to do, would cost the economy 700,000 jobs.  Now I will admit that I am not sure if those are jobs somehow not created, jobs somehow not saved or what exactly.

Panic at the White House? Gloomy Goldman Sachs sees high unemployment, possible recession

July 16, 2011

Last night in a new report, Democrat-friendly Goldman Sachs dropped an economic bomb on President Obama’s chances for reelection (bold is mine):

Will coming debt ceiling deal save America’s AAA credit rating?

July 15, 2011

Keeping America’s gold-plated credit rating may take both a deal to raise the debt ceiling (which will happen) and a meaningful deficit reduction plan of around $4 trillion (which is not happening). Moody’s says it wants a  ”deficit trajectory that leads to stabilization and then decline in the ratios of federal government to GDP and debt to revenue beginning within the next few years.” And here is Standard & Poor’s in a report released last night:

The roof is on fire! A mid-day debt ceiling update

July 14, 2011

A brief rundown on what’s happened so far today in the Mother of All Budget Battles,  and what folks are saying about it: