TUESDAY, MAY 27, 2025
Pepperidge Farm remembers: Friend, should liberals care about our annual budget deficits and about the ongoing accumulation of federal debt?
This very day, in the New York Times, this assessment appears:
I Was Obama’s Budget Director. It’s Time to Worry About the National Debt.
[...]
For years it was reasonable to tune out the worrywarts carping about deficits. With very low interest rates, a lack of particularly attractive alternatives to U.S. Treasuries for investors and a muted market reaction to serial Capitol Hill dramas over raising the debt limit, those who bemoaned the unsustainability of deficit spending and debt levels seemed to cry wolf—a lot. Even as a former White House budget director, I grew skeptical of their endless warnings.
Not anymore.
Two things have changed: First, the wolf is now lurking much closer to our door. Annual federal budget deficits are running at 6 percent of G.D.P. or higher, compared with well under 3 percent a decade ago...and in the current fiscal year the government is projected to spend more on interest payments than on defense, Medicaid or Medicare. That’s right: Our borrowing now costs us more each year than each of these big, essential budget items.
Meanwhile, federal debt held by the public, excluding Federal Reserve holdings, as a share of G.D.P. has increased by about a third since 2015. The Congressional Budget Office, which I once led, projects that by 2029, our debt as a share of our economy will grow to levels unprecedented since the years after World War II...
This guest essay comes from Peter Orszag, who did indeed head the OMB during President Obama's first term. That said, some of you may still be skeptical—at one point, Orszag was director of the CBO under President George W. Bush!
For those inclined to be skeptical, Paul Krugman stated a similar view in a recent Substack essay. His essay concerned the budget bill which recently passed the House.
The budget bill passed the House by a 215-214 vote—by the type of victory margin now known as a "Fox News Landslide." Nonetheless, the budget bill did squeeze by in the House on its way to the Senate. Here's part of what Krugman said about that "Budget of Abominations:"
What a Decent Budget Would Look Like: Imagining a Congress that was neither cruel nor irresponsible
[,,,]
What I thought I’d do today is talk about what might be happening now if the party controlling Congress and the White House consisted of decent people—not saints, but at least people who genuinely cared about the welfare of their constituents and the future of the nation.
One option, of course, would have been for Congress to do nothing. That, itself, would have been a big improvement on what actually went down.
But Congress could and should do more. You don’t have to be a deficit fetishist, a fiscal scold—which I definitely am not—to realize that even before the Budget of Abominations America was on an unsustainable fiscal path. So what will it take to get back to a tolerable fiscal position?
Krugman went on to list four relatively "easy" ways we could "improve our fiscal position." For today, we're focusing only on this statement:
You don’t have to be a deficit fetishist, a fiscal scold—which I definitely am not—to realize that even before the Budget of Abominations America was on an unsustainable fiscal path.
Krugman isn't a fiscal scold, but he says we're "on an unsustainable path." Today, Orszag says much the same thing.
We're so old that we can remember when news reporting about topics like this actually came with a few basic numbers. In these latter days, the handful of numbers which may appear in such reports may even tend to obscure the situation.
Basic numbers are few and far between in these exhausting days of chasing the latest from Trump around. Tomorrow, we'll show you a few basic numbers. Pepperidge Farm remembers!
Krugman and Orszag have adjusted their views. We're not budget experts ourselves, but we're going to take a guess:
We'll guess there's a chance that they're right!
For a long time it’s been clear to many of us that we’re on an unsustainable fiscal path. Welcome to economic reality, professor Krugman.
ReplyDeleteKrugman has so much to learn from you, David.
DeleteBut you voted for Trump twice. Hilarious.
DeleteYou don't seem to understand what Krugman and Orszag are saying, David. They said the deficits were not nearly as important during the time of expanding economy and essentially zero percent interest rates. Now, the growth in deficits is outpacing the growth of the economy, constituting a much higher percentage of the GDP than...well, pretty much ever. Secondly, the interest rates are climbing and things will only get worse as the dollar is becoming less of a go-to currency.
DeleteThere's one person that this budget is sure to benefit: Trump.
Trump keeps telling people lies when they express concern about the debt. He says that his tariffs are going to produce a boom, dramatic growth in our economy that will offset the increased debt. He says we're going to bring in so much money that the debt won't matter. This is both wishful thinking and fantasy but some number of MAGAs may believe him. There is, of course, no mechanism by which this could happen. But this is what Trump is saying to the people.
DeleteTrump is getting rich. Why wouldn't the rest of the nation be getting rich too? This is how folks with dementia reason.
DeleteWe won't tariff our way out of it.
DeleteWhen will poor DiC enter economic reality instead of the cocoon of bullshit he is molting within? Have you ever read Krugman before? What has he EVER written that was not realistic? Please let us know
DeleteListening to an Ezra Klein podcast:
ReplyDelete"This bill is grimly exact: it has $1.1 Trillion in tax cuts primarily for the people making $500K or more; and it has $1.1 Trillion in cuts for Medicaid, SNAP and ACA subsidies...".
See, it's not complicated at all!
Ilya - two questions
Delete1. Is the $1.1 trillion tax cuts the change from the current rates or the change from the rates prior to the Trump 2017 tax bill?
2. Is the $1.1 trillion a one-year figure or a ten-year figure?
The $1.1T is the decrease in the amount of revenue the government will collect versus the amount it would collect if there was no change to the law as it stands.
DeleteTrump's previous cuts are due to expire. If they are allowed to expire, marginal tax rates will increase as will revenue. If the bill passes, then the previous tax cuts will be extended and revenues will be lower than they would be otherwise.
It's a 10-year figure.
Thanks, QiB.
DeleteDiC knows this, he is just being a DiC.
DeletePerhaps it doesn't matter about the national debt because the whole financial system is about to collapse.
ReplyDeleteI wish I could share your optimism. What's more likely to happen is that there will be significant reduction -- if not outright elimination -- of the social security benefits. In other words, tax cuts for the rich will be paid by the way of severely curtailing social security.
DeleteIlya,
DeleteI can't share your pessimism, due to the 400 million guns in the country.
Remember SS does not disappear, benefits are reduced three quarters to two thirds. A disaster for poor, but middle class should mostly get by. The usual assholes including St. Ronnie of the Ray Gun always spout it goes to zero to - checks notes, advocate to destroy it. Holy shit, these fucking assholes are winning. Never mind.
DeleteA reduction in SS benefits would be a disaster for the many oldsters who depend on it. But, that's not the worst possible disaster. The worst disaster would be if some future Administration "fixes" the problem by just printing money. That would lead to hyper-inflation. It would destroy the value of the US dollar. It would wipe out savings. It would lead to the dollar no longer being the the world's reserve currency. It would destroy businesses and jobs.
DeleteThis may seem inconceivable, but it has happened over and over in various countries.
The Fed controls inflation. They will inflict higher interest rates on Trump and he will stop printing money. Did you like the way Trump increased inflation by eliminating the penny?
DeleteThe Fed controls inflation by adjusting interest rates, but there's a limit to what can be accomplished by controlling interest rates IMO. We all saw this just three years ago when spending soared and inflation raged. It still hasn't come down below the goal of 2%.
DeletePsst.
DeleteRaising taxes lowers spending, which reduces inflation.
Pass it on.
The Fed didn't raise interest rates because inflation was out of control.
DeleteThe Fed raised interest rates, because workers had more leverage over employers, and the Fed works for the employers.
I'm starting to believe the former actuary doesn't know anything about anything, and just supports things in the hope that they will hurt minorities.
The worst outcome is a DiChead pronouncement of what ifs, that really only a shithead dumbass Republican would do anyway.
Delete"Krugman and Orszag have adjusted their views."
ReplyDeleteThis is what reasonable people do when circumstances change. Biden had the economy under control. Trump does not. Of course rational people are now concerned about it.
Krugman and Orszag have adjusted their views of the deficit. Biden's economy was good in some ways, but it was a disaster in terms of the deficit.
DeleteAgreed.
DeleteBiden screwed-up not increasing the highest income tax rates.
Now describe Trump’s effect on the economy.
DeleteKrugman and Orszag never changed their views. Trump's revenue recklessness, combined with the pressure of higher interest rates are factors that changed resulting in factoring these changes into their view. Moran.
Delete"TUESDAY: Should liberals care about deficits / debt?"
ReplyDeleteThis question is a strawman. What makes Somerby think that liberals don't care about deficits/debt? Krugman is a liberal and also an economist -- you can be both at once.
Just read Krugman's column. His "four easy ways" are not easy and they would not solve the problem. In fairness to Krugman, he didn't claim that they would solve the problem. But, Krugman doesn't tell how to actually solve the problem.
ReplyDeleteEvery President says he'll get better tax Enforcement, but they never seem to make any big improvements. There's no reason that a current Administration will get that much revenue from better enforcement.
Medicare Advantage does have the problem Krugman mentions. We probably could save some money there.
Corporate tax adjustment cannot do much. The tax rules are incredibly complex. Fixing those rules is virtually impossible.
Going back to the pre-Trump tax rates would produce more revenue, but not nearly enough to solve the problem.
1. DOGE fired the tax enforcement.
Delete2. Cutting Medicare is not the solution to deficits.
3. There is no evidence fixing rules is impossible and loopholes are how corporations avoid taxes.
4. Just because going back to previous rates wouldn't solve the entire problem doesn't mean we shouldn't do it. Every bit helps.
Even with the DOGE cuts, Trump is spending way more money than Biden did in his presidency. I suggest limiting Trump from flying his entourage to various golf courses every few days. And why did Kristy Noem go to Israel? It has nothing to do with her job. And why were Musk and his helpers paid such large salaries for doing nothing useful, and doing it so badly? I don't believe Trump's govt is serious about cutting their own costs, just hurting people and destroying things.
They seem to think that if they cut enough other people's jobs, there will be a surplus they can use to spend without limit -- look at the costs of Trump's birthday parade for example. These are not cost-conscious people. So how do they have the gall to expect the rest of us to sacrifice?
Trump doesn't understand what a budget is, he routinely overspends (which is why his businesses go bankrupt), he expects foreign oligarchs to bail him out, so he may start selling bits of America to Putin when money gets tight.
Is this what you want, David? Is this your idea of fiscal responsibility? You shrug and say "If you can't cut everything, there is no point in cutting anything." but that is not how people budget. You start by identifying what is essential, necessary to the enterprise, then elimate the unnecessary. For me, that is Trump's golf junkets and his loot acquisition trip to the Middle East, all at taxpayer expense. Trump has no concept of how to be frugal. And you give him carte blanche by refusing to consider cuts on billionaires -- the very people with too much money. Your concerns are a joke, David.
"Do or do not, there is no try" is famously attributed to Yoda. I want a full solution to our looming fiscal disaster.
DeleteSome people are calling David in Cal a "full of shit asshole", because he whines about the deficit, after voting for Republican politicians who hugely increase the deficit through tax breaks for the rich and corporations.
DeleteThat's totally unfair. David only votes for Republicans because David is a white supremacist, and the Republican Party is the White Supremacist
Party. Obviously.
The deficit is nothing getting rid of border security and our military can't solve.
DeleteAnyone who isn't a bigot, or isn't perfectly fine with bigotry, left the Republican Party over a quarter of a century ago.
DeleteWhat kind of sheep stands and respects the National Anthem of a shit hole country?
DeleteI demand Krugman solve the problem but I will only vote for the assholes who created and exacerbated the problem. Definition of a Moran
DeletePeter Theil accrued 5.4 billion dollars in wealth, tax-free, by harboring his investments in a Roth IRA. The Theil example may be an outlier, but one thing is certain: US tax structure has been very successful at insulating the uber wealthy from the inconvenience of paying their fair share in taxes. Drastic cuts in IRS enforcement is a big FU to the agency , it not being enough that Trump is extending tax cuts to the elites. The government is bloated as are those for whom it does its bidding. We need more public discourse by economists and less bullshit from politicians about solutions. As with our military and the country's health, this our economy is being driven into the ground by incompetents without credentials, wedded to an agenda.
ReplyDeleteKeep Draining the Swamp, Sir!
ReplyDelete"President Trump has moved to pardon many who are considered to be loyal to him, from local Republican officials convicted of fraud to Jan. 6 rioters.
The NY Times reported Trump pardoned a Florida businessman convicted of tax evasion after his mother attended a million dollar per-plate fundraising dinner at Mar-a-Lago."
As far as this kind of activity is concerned, it's crickets from DiC and his fellow maggots. How many bitcoin did it take to get Ross Ulbricht off the hook?
DeleteThe orange jesus just pardoned the reality stars, the Christy’s, who were sentenced during his first administration for defrauding banks of 30 million dollars. There will be lines spanning the beltway of solicitors with bags of money for these transactions as they have been ongoing since the day of his inauguration. This is quite sick.
DeleteChrisleys
DeleteWASHINGTON – President Donald Trump pardoned a former Virginia sheriff convicted of bribery in what prosecutors called a “cash-for-badges scheme,” preventing him from starting his 10-year prison sentence on May 27.
DeleteFormer Culpeper County Sheriff Scott Jenkins was convicted in December of accepting at least $75,000 in bribes in exchange for appointing Northern Virginia business executives as auxiliary deputies.
https://www.usatoday.com/story/news/politics/2025/05/27/trump-pardons-scott-jenkins-virginia-sheriff-bribery-conviction/83873359007/
Ain't that some shit.
Hamas is working to prevent Israel from providing food to Gazans.
ReplyDeleteIsraeli Military Sets Up Aid Distribution Centers In Gaza Despite Threats From Hamas
Hamas threatens aid workers, vows to prevent Gazans from receiving aid.
https://legalinsurrection.com/2025/05/israeli-military-sets-up-aid-distribution-centers-in-gaza-despite-threats-from-hamas/
The best thing that could happen for the Gazan people would be for Hamas to be utterly destroyed.
No, the best thing for the Gazans would be for the state of Israel, whose soldiers have blockaded aid for months and whose bombs have killed over 60,000 women and children, as well as aid volunteers, to be destroyed.
Delete
Delete"It’s Time to Worry About the National Debt."
Ha-ha. But of course now is the time!
Now is the time for idiot-Democrats to squeal and squirm. Thanks for the laughs, Bob.
I love it.
DeleteFunding ICE completely through tax cuts, is what I voted for.
Squeal white supremacists. Your cries are music to my ears.
That does not absolve Israel if war crimes. It also does not explain Israel blocking everything for a month. You are one sick cookie bro.
Delete
ReplyDelete"It’s Time to Worry About the National Debt."
Ha-ha. But of course, now is the time!
Now is the time for idiot-Democrats to squeal and squirm. Thanks for the laughs, Bob.
Anyone who isn't a bigot, or isn't perfectly fine with bigotry, left the Republican Party over a quarter of a century ago.
DeleteApparently republicans don’t care about the deficit, except when there’s a Democrat in the White House. Then they’re very concerned.
ReplyDeleteRepublicans want white supremacy. If they have to lie about the economy to get it, that's the deal with the devil they are willing to make.
DeleteBob Somerby,
ReplyDeleteWhat's the matter with the following statement, and why do you keep disappearing it?
"Raising taxes when you're running a deficit makes as much sense as getting a second job when your kids are going to bed hungry."
Bob Somerby stopped asking us to listen to what Republican voters had to say, once we reported back that it's all bigotry, from stem to stern.
ReplyDeleteDept. of Ironic Heartbreak
ReplyDelete“I was, like, disappointed to see the massive spending bill, frankly, which increases the budget deficit… and it undermines the work that the DOGE team is doing,” Musk said.
Dems also should be blamed for a bill that increases the deficit. Implicit in Hector’s comment seems to be the idea that only Reps should be tasked with this responsibility. Shouldn’t Dems also be working to reduce the deficit?
DeleteSeriously, get help.
DeleteNews flash: the republicans control the senate and house. The dems would let the tax cuts for the elites expire. Do you spend any time off your right wing outlets? Remarkable ignorance, the kind we would expect from a Fox viewer. As long as Republicans reject tax reform to increase revenue they should not be taken seriously, yourself included.
Delete