Gregory Mankiw: Tax Cuts Might Accomplish What Spending Hasn’t, NYTimes.com

IMAGINE you are a physician and a patient arrives in your office with a troubling and mysterious disease. Some of the symptoms are familiar, but others are not. You have never treated anyone with quite this set of problems.

via Economic View – Tax Cuts Might Accomplish What Spending Hasn’t – NYTimes.com.

  • USMCSniper

    The government caused recession and excessive government spending have caused the debt held by the public to grow sharply to 56 percent of the economy, topping the historical average of 36 percent. Publicly held debt must not grow faster than the economy if it is to be sustainable; otherwise the demand on capital markets would be so severe that private and foreign lenders would stop buying U.S. securities. Yet the U.S. is rapidly headed in that direction.

    Credit rating agencies have recently signaled that current and projected deficit levels threaten America's AAA credit rating.[5] But as early as a year ago, Moody's warned that Social Security, Medicare, and Medicaid expenditures posed a severe threat to ratings over the long term.

    Such warnings have not gone unnoticed by major U.S. lenders, particularly China, which holds more than $1 trillion of U.S. debt and whose citizens have even laughed at Treasury Secretary Tim Geithner for claiming that their investments in treasury securities are “safe. China is already buying up gold and is proposing dumping the dollar in favor of the yeun.

    This new $2 trillion debt ceiling this year increase will certainly capture the attention of creditors and taxpayers