Thanks you for the very interesting and important article. I agree with you that it would be great for either (or both) party(ies) to address these matters in an honest and realistic manner.
You’re correct that some readers will believe you give too much credit for the positive, and not enough blame for the negative, characteristics of the current economic environment. They might say, for example, that given the recent and ongoing level of fiscal stimulus it’s surprising that the economy isn’t even more buoyant; that an objective analysis of, for example, the Inflation Reduction Act would conclude that it was passed well after additional stimulus was required, was (and remains) so incredibly inefficient that only a Paul Krugman (of “even government spending to prepare for a fake alien invasion would be good” fame) would like it, and that it contributed materially to the rise in inflation; and that the level of structural (as opposed to temporary) fiscal spending now built into government programs will be politically impossible by any administration to offset.
A critic might also take issue with the general tone of the article’s deficit references. Concluding that because many countries are also running high deficits the US doesn’t look so bad, does not address the fundamental issue that the our federal debt service payments are increasing at a rate such that they will substantially constrain our ability to fund critical, let alone discretionary, programs. This is an issue even leaving aside the risk that the capital markets require higher underlying interest rates as well higher credit spreads in order to continue to fund the nation’s debt.
But as you say we now have a new candidate in the race, who has the potential to pursue new policies and strategies. I’d welcome thoughtful answers to your great questions!
Professor Tack.
Thanks you for the very interesting and important article. I agree with you that it would be great for either (or both) party(ies) to address these matters in an honest and realistic manner.
You’re correct that some readers will believe you give too much credit for the positive, and not enough blame for the negative, characteristics of the current economic environment. They might say, for example, that given the recent and ongoing level of fiscal stimulus it’s surprising that the economy isn’t even more buoyant; that an objective analysis of, for example, the Inflation Reduction Act would conclude that it was passed well after additional stimulus was required, was (and remains) so incredibly inefficient that only a Paul Krugman (of “even government spending to prepare for a fake alien invasion would be good” fame) would like it, and that it contributed materially to the rise in inflation; and that the level of structural (as opposed to temporary) fiscal spending now built into government programs will be politically impossible by any administration to offset.
A critic might also take issue with the general tone of the article’s deficit references. Concluding that because many countries are also running high deficits the US doesn’t look so bad, does not address the fundamental issue that the our federal debt service payments are increasing at a rate such that they will substantially constrain our ability to fund critical, let alone discretionary, programs. This is an issue even leaving aside the risk that the capital markets require higher underlying interest rates as well higher credit spreads in order to continue to fund the nation’s debt.
But as you say we now have a new candidate in the race, who has the potential to pursue new policies and strategies. I’d welcome thoughtful answers to your great questions!