The following is from an article on the US government deficit by Jeffrey
Sparshott. It was in the August 12 Wall Street Journal:
"WASHINGTONThe U.S. goovernment is posting the strongest revenue since
before the recession, buoyed by higher tax rates and a slowly improving
economy, leaving the federal budget on track for its narrowest deficit in
five years.
Revenue from October to July, the first 10 months of the government's
fiscal year, totaled $2.287 trillion, the Treasury Department said Monday.
That is up about 14% from a year earlier and about 8.1% from the first 10
months of 2007, the next highest year for revenue. Meanwhile, government
spending is down slightly, largely due to across-the-board cuts called the
sequester that went into effect March 1.
Overall, the government is still spending well more than it collects,
albeit at a slower pace. The budget deficit for the 10 months reached
$607.42 billion, 38% narrower than a year earlier.
For the fiscal year ending Sept. 30, the Congressional Budget Office
estimates a deficit of $642 billion, compared with $1.087 trillion a year
earlier and the smallest gap since 2008's $458.55 billion shortfall."
What is at issue in the above is the revenue the government currently
takes in versus the money it currently spends. If spending exceeds
revenue, it must of borrow. And, of course, if spending continues to rise
faster than revenue, the government debt keeps growing. Much of this debt
is held by foreigners. According to Wikipedia:
"As of January 2011, foreigners owned $4.45 trillion of U.S. debt, or
approximately 47% of the debt held by the public of $9.49 trillion and 32%
of the total debt of $14.1
trillion.<http://en.wikipedia.org/wiki/National_debt_of_the_United_States#cite_note-70>[70]
The largest holders were the central banks of China, Japan, Brazil,
Taiwan, United Kingdom, Switzerland and
Russia.<http://en.wikipedia.org/wiki/National_debt_of_the_United_States#cite_note-72>[72]
The share held by foreign governments has grown over time, rising from 13%
of the public debt in
1988<http://en.wikipedia.org/wiki/National_debt_of_the_United_States#cite_note-73>[73]
to 25% in 2007."
Much has been written about the potential problems arising out of American
indebtedness to major foreign powers, especially China. But perhaps the
problems are exaggerated. Wikipedia again:
"According to <http://en.wikipedia.org/wiki/Paul_Krugman>Paul Krugman,
"Itâs true that foreigners now hold large claims on the United States,
including a fair amount of government debt. But every dollarâs worth of
foreign claims on America is matched by 89 centsâ worth of U.S. claims
on foreigners. And because foreigners tend to put their U.S. investments
into safe, low-yield assets, America actually earns more from its assets
abroad than it pays to foreign investors. If your image is of a nation
thatâs already deep in hock to the Chinese, youâve been misinformed.
Nor are we heading rapidly in that direction."
Which gets me to a point I wanted to make in the first place. Keith refers
to Krugman as "the master of rhetorical tricks". Others on lists I access
have occasionally referred to him in disparaging terms. Why? In my opinion
he is a valid social thinker. I've got a couple of his books on my
shelves, which means they may be lost forever. But I was impressed with
"Conscience of a Liberal" and "Return to Depression Economics" and
continue to be impressed with his thoughtful columns. I would suggest that
we give him a little more chance than we've tended to.
Ed
________________________________
From: Keith Hudson <keithhudso...@googlemail.com>
To: "RE-DESIGNING WORK, INCOME DISTRIBUTION, EDUCATION"
<futurework@lists.uwaterloo.ca>
Sent: Friday, August 16, 2013 11:36:16 AM
Subject: [Futurework] Moment of Truthiness
As I've remarked several times before, Paul Krugman is a master of
rhetorical tricks. In today's NYT offering he takes disingenuousness deep
into deceit territory. One example is where he writes: "Thus Eric
Cantor, the third-ranking Republican in the House, declared on Fox News
that we have a âgrowing deficit,â while Senator Rand Paul told Bloomberg
Businessweek that weâre running âa trillion-dollar deficit every year.â
"
Strictly speaking, a "deficit" refers to a negative balance in
a country's annual budget. In that sense, Krugman is correct because, in
January of this year (at the time of the 'fiscal cliff'), the foundations
of a typical Bush budget had been automatically re-imposed on Obama
(previously largely inherited from Clinton's budgets) and that had been
in surplus. Bush's budgets were actually not ever in surplus but would
have been if he and Cheney had not decided to invade Iraq and spending at
least a trillion dollars on that.
In reality, the deficit refers to a mammoth shortage of those funds that
will be needed for state health, welfare and pensions benefits that will
be needed in a few years' time. This is what Obama will have in his mind
(together with most of the American population) in contrast to Krugman's
use of "deficit". The essay below should have been entitled
"Moment of Relative Truthiness"
Keith
Moment of Truthiness
Paul KrugmanWe all know how democracy is
supposed to work. Politicians are supposed to campaign on the issues, and
an informed public is supposed to cast its votes based on those issues,
with some allowance for the politiciansâ perceived character and
competence.
We also all know that the reality falls far short of the ideal. Voters
are often misinformed, and politicians arenât reliably truthful. Still,
we like to imagine that voters generally get it right in the end, and
that politicians are eventually held accountable for what they do.
But is even this modified, more realistic vision of democracy in action
still relevant? Or has our political system been so degraded by
misinformation and disinformation that it can no longer function?
Well, consider the case of the budget deficit -Â an issue that dominated
Washington discussion for almost three years, although it has recently
receded.
You probably wonât be surprised to hear that voters are poorly informed
about the deficit. But you may be surprised by just how misinformed.
In a well-known paper with the discouraging title, âIt Feels Like Weâre
Thinking,â the political scientists Christopher Achen and Larry Bartels
reported on a 1996 survey that asked voters whether the budget deficit
had increased or decreased under President Clinton. In fact, the deficit
was down sharply, but a plurality of voters Â- and a majority of
Republicans -Â believed that it had gone up.
I was wondering on my blog what a similar survey would show today, with
the deficit falling even faster than it did in the 1990s. Ask and ye
shall receive: Hal Varian, the chief economist of Google, offered to run
a Google Consumer Survey -Â a service the company normally sells to
market researchers -Â on the question. So we asked whether the deficit
has gone up or down since January 2010. And the results were even worse
than in 1996: A majority of those who replied said the deficit has gone
up, with more than 40 percent saying that it has gone up a lot. Only 12
percent answered correctly that it has gone down a lot.
Am I saying that voters are stupid? Not at all. People have lives, jobs,
children to raise. Theyâre not going to sit down with Congressional
Budget Office reports. Instead, they rely on what they hear from
authority figures. The problem is that much of what they hear is
misleading if not outright false.
The outright falsehoods, you wonât be surprised to learn, tend to be
politically motivated. In those 1996 data, Republicans were much more
likely than Democrats to hold false views about the deficit, and the same
must surely be true today. After all, Republicans made a lot of political
hay over a supposedly runaway deficit early in the Obama administration,
and they have maintained the same rhetoric even as the deficit has
plunged. Thus Eric Cantor, the third-ranking Republican in the House,
declared on Fox News that we have a âgrowing deficit,â while Senator Rand
Paul told Bloomberg Businessweek that weâre running âa trillion-dollar
deficit every year.â
Do people like Mr. Cantor or Mr. Paul know that what theyâre saying isnât
true? Do they care? Probably not. In Stephen Colbertâs famous
formulation, claims about runaway deficits may not be true, but they have
truthiness, and thatâs all that matters.
Still, arenât there umpires for this sort of thing  trusted, nonpartisan
authorities who can and will call out purveyors of falsehood? Once upon a
time, I think, there were. But these days the partisan divide runs very
deep, and even those who try to play umpire seem afraid to call out
falsehood. Incredibly, the fact-checking site PolitiFact rated Mr.
Cantor's flatly false statement as âhalf true.â
Now, Washington still does have some âwise men,â people who are treated
with special deference by the news media. But when it comes to the issue
of the deficit, the supposed wise men turn out to be part of the problem.
People like Alan Simpson and Erskine Bowles, the co-chairmen of President
Obamaâs deficit commission, did a lot to feed public anxiety about the
deficit when it was high. Their report was ominously titled âThe
Moment of Truth.â So have they changed their tune as the deficit has come
down? No  so itâs no surprise that the narrative of runaway deficits
remains even though the budget reality has completely changed.
Put it all together, and itâs a discouraging picture. We have an
ill-informed or misinformed electorate, politicians who gleefully add to
the misinformation and watchdogs who are afraid to bark. And to the
extent that there are widely respected, not-too-partisan players, they
seem to be fostering, not fixing, the publicâs false impressions.
So what should we be doing? Keep pounding away at the truth, I guess, and
hope it breaks through. But itâs hard not to wonder how this system is
supposed to work.
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