James Pethokoukis

US debt approaches danger zone

March 9, 2010

The CBO analysis of the Obama budget finds that America’s debt-to-GDP ratio will hit 90 percent in 2020. Uh-oh. Research by Ken Rogoff and Carmen Reinhart finds that level to be problematic:

Balancing the budget

March 3, 2010

Blue Dog Democrats have introduced an amendment to balance the federal budget by 2020. How that might happen, they don’t say. To get an idea just how tough that would be, look at Republican U.S.Representative Paul Ryan’s Roadmap for America’s Future. It gets the budget in balance without raising taxes by huge entitlement spending cuts. In 2020, his plan would produce deficits of close to 4 percent of GDP — and rising. His first balanced budget doesn’t arrive until 2063.

The 20 Percent Solution

March 3, 2010

House Republicans Jeb Hensarling and Mike Pence want a constitutional amendment to limit government spending to 20 percent of GDP, its rough historical average. In their Wall Street Journal op-ed, H&P admit, significantly, that America cannot grow its way out of its debt problem:

Obama deficit commission is a path to crisis

February 19, 2010

First, here is a bit from my Reuters Breakingviews column:

President Barack Obama might have stumbled upon a three-step path to financial crisis: 1) admit nation is dangerously in debt; 2) create high-profile deficit commission to find solution; 3) have commission fail. Subsequent market tumult could, of course, force a sudden, dramatic and harsh fix to America’s fiscal ills. But a rush job would be a poor way to solve the country’s long-term financial problems.

Where Obama’s deficit commission is headed

February 18, 2010

So, like, this thing isn’t going to work. You all know that, right? Rs pretty much have zero interest in higher taxes. Zero. And Ds pretty much have zero interest in cutting spending anywhere unless the money is shifted to some new program, as with healthcare. I read Greg Mankiw’s list of what Rs should get into turn for higher taxes

Paul Ryan’s Long (Deficit) Goodbye

February 10, 2010

Why should Tim Geithner be so confident that America will “never” lose its AAA credit rating? The White House doesn’t currently have a long-term plan to stanch America’s fiscal hemorrhaging. Hoping and wishing for a successful deficit commission does not make a plan. The Treasury secretary’s statement sounds like one of those perfunctory defenses of the dollar.

The real message of the Scott Brown victory

January 29, 2010

Via John Ellis:

The answer, I think, is that whatever pivot is made will be irrelevant. The fact is President Obama doesn’t have the luxury of proposing an agenda. Agendas (or at least, agendas as we have come to think of them) are for people who have money. The United States is broke. And the debt gets worse by the day.

Just how bad is the US debt problem

January 27, 2010

Some interesting factoids over at Capital Gains and Games:

Point One:  We often hear that the US government debt load is  lower as a share of GDP than those of many other large, wealthy nations, including Japan, Germany, the UK and France. But a more apples-to-apples comparison, which combines federal, state and local government borrowing, suggests that the US is in worse shape than most other AAA-rated countries.

Yup, spending is the problem

January 27, 2010

Great point made by the Heritage Foundaiton:

After building a true budget baseline, the sobering result shows ten-year deficits of $13 trillion. The annual budget deficit never falls below $1 trillion. By 2019, the debt is projected at $22 trillion, or 98 percent of GDP.

The Obama Freeze

January 26, 2010

A few thoughts on the Big Budget Freeze:

1) Estimated annual savings of $25 billion over the next decade aren’t much when annual budget deficits will likely average a trillion dollars.