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DOES THE US DEFICIT MATTER? December 28, 2010

Posted by wmmbb in US Politics.
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Prima facie the funding of military spending, including the development of military technology, oversea’s bases and wars might be perceived to be a good thing.

What happens if the significant trading countries move away from holding US Treasury bonds and dealing in US dollars?

The trend in the US deficit over the past 70 years tells one story as does the level of the deficit in comparison to the GNP, via Wikipedia:

Wikipedia provides the following explanation:

U.S. debt from 1940 to 2009. Red lines indicate the Debt Held by the Public (public debt) and black lines indicate the gross debt, the difference being that the gross debt includes funds held by the government (e.g. the Social Security Trust Fund). The second chart shows debt as a percentage of U.S. GDP or dollar value of economic production per year. Data from U.S. Budget ‘ tables at whitehouse.gov/omb and other tables listed when you click on the figure. Note that the top panel is deflated to 2009 dollars and not in nominal year dollars.

At the Real News in an interview with Paul Jay, Professor Michael Hudson provides the analysis:

ELSEWHERE:

David Francis at The Fiscal Times reports that millions of dollars spent in Afghanistan has not being accounted for. This is AOK apparently.

Eugene Robinson at Truthdig explains the political situation in the new Congress. He observes:

“Cut wasteful spending” is a nice campaign slogan, but it’s flat-out impossible to cut enough spending to close the budget gap. And now the big goodies-for-everyone tax deal has been signed into law. Likewise, “entitlement reform” sounds good—but ignores the fact that beneficiaries of government programs feel, well, entitled.

Any comprehensive solution that sets the nation on a path toward fiscal health will mean that at least some of us pay higher taxes. I wish Boehner luck in explaining this fact of life to his tea party freshmen. He’ll have a hard enough time even persuading them to keep the government solvent by voting to increase the debt ceiling, which will soon be necessary.

It would be truly astonishing to me at least if Congress actually mattered, and more importantly acted provided the two-party system allowed enough movement to actually get something done.

ELSEWHERE:

Gary at Public Opinion quotes Jeffrey Sachs pointing out that the Democrats have been co-opted by the need to secure electoral campaign funds. So we have the era of austerity following the financial crisis, as if there was cause and effect.

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