4 thoughts on “S&P’s Warning”

1. It’s the american people that should pay attention. They should pay attention to the dereliction of the media in reporting these facts. They should understand why this affects every individual in this country. Then they should all become mad enough to throw the bums out.

   I’m living in fantasy land obviously.

2. 1) reduce the debt by about $4 trillion;
   2) agree to a credible plan within three months; and
   3) guarantee this new-found fiscal discipline will actually stick.

   Barack Obama: That’s crazy talk!

3. Pingback: The Biggest Democrat Whoppers During All These Debt Talks « Tai-Chi Policy

4. There’s an interesting tidbit at the bottom of the story:

   Take the work of Harvard’s Alberto Alesina and Silvia Ardagna. The economists look at 107 efforts to reduce debt in 21 OECD nations over the 1970–2007 period. Their results suggest that tax cuts are more expansionary than spending increases in the cases of a fiscal stimulus. Also, they find that spending cuts are a more effective way to reduce the debt/GDP ratio:

   For fiscal adjustments we show that spending cuts are much more effective than tax increases in stabilizing the debt and avoiding economic downturns. In fact, we uncover several episodes in which spending cuts adopted to reduce deficits have been associated with economic expansions rather than recessions. We also investigate which components of taxes and spending affect the economy more in these large episodes and we try uncover channels running through private consumption and/or investment.

   Not everyone buys that government spending increase is better as an economic stimulus than tax cuts and government spending decrease.

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