Why We Have a Debt Problem, Part 23

So, we have eleven aircraft carrier groups. No other country in the world has more than one. Everyone who has looked at the issue has agreed that we could do with fewer than eleven while still achieving our national security goals: Bush/Obama Defense Secretary Robert Gates, Obama Defense Secretary Chuck Hagel, and think tanks on […]

The Government Spending-to-GDP Ratio: Down, Down, Down

Assessing the importance of direct government expenditures on goods and services [Edits to clear up ambiguity in terminology for readers Salim and Jeff — MDC 12/18]. One way to approach this issue is to examine the ratio of government spending on goods and services, [otherwise known as government consumption and investment], to GDP in nominal terms. [Hence, this measure excludes transfers] Figure 1: Ratio […]

U.S. Budget Deal: A Needed Step

I recently returned to the gym after a long hiatus. It was a nightmare to behold, and I ached for days. It’s easy to be critical for what I haven’t been doing, but it was good that I went. Something to build on. So too with last night’s fiscal package announced by Patty Murray and […]

Shadow of the Sequester

The news shows this weekend were filled with optimism from across the political spectrum that the congressional budget conference, which begins Wednesday, will produce a deal. I am skeptical. The aim of the conference will be to find agreement on spending for the remainder of FY14 at levels of spending above those that resulted from the […]

Is It Time to Reform America’s Fiscal Institutions?

The United States government spends billions of dollars to protect against attacks by foreign military forces, terrorists, and natural disasters. However, earlier this month it was not prepared for a costly attack on the US economy by domestic forces in Washington: the Senate, the House, and the President. The government was shut down for 16 […]

American Debt, Chinese Anxiety, Elaborated

Or, how the Tea Party is working hard to sabotage the dollar’s role in global finance. Figure 1: Share of publicly held Treasury debt held by foreign residents (blue squares), and held by China (red triangles). Solid squares/triangles denote data from annual benchmark surveys; open squares/triangles from monthly series. Source: TIC, and St. Louis Fed FRED.From my […]

Assessing QE: Why Counterfactual Thinking Is Important

I recently made the case that many observers are not thinking properly about the Fed’s Quantitative Easing (QE) programs. Using the analogy of George Bailey’s life in the film It’s a Wonderful Life, I argued that the critics who question the efficacy of the QE programs are doing the wrong counterfactual. Today, Barry Ritholtz makes the same point: One of […]

Fiscal Impasse, Weak Jobs Data to Delay Tapering Until at Least March

I drew back from blogging for the past couple of weeks to clear my desk, a task that will not be complete until next week.  Seemed like an opportune time, as the focus had shifted away from the Federal Reserve to the fiscal train wreck, in the process putting monetary policy on indefinite hold.  Federal […]

The Triumph of the Right

Conservative Republicans have lost their fight over the shutdown and debt ceiling, and they probably won’t get major spending cuts in upcoming negotiations over the budget. But they’re winning the big one: How the nation understands our biggest domestic problem. They say the biggest problem is the size of government and the budget deficit. In […]

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