Sunday, May 29, 2005

Reality Based Community, Out to Lunch

[Update: 'I'm backpeddling as fast as I can']

Berserkely blogging: has been next to impossible for an economist serious about boosting national savings to avoid saying "balance the budget". Balancing the budget--indeed, moving it into surplus--is almost certainly very close to a magic bullet....

It is very difficult for a real economist to talk about boosting national savings without saying "balance the budget." Greg Mankiw manages [it]....

Followed by a link to the recent Fortune interview with Mankiw. An interview that Professor DeLong apparently didn't bother to read, because, in it, Mankiw says in plain English:

...the president came in inheriting an economy that was sliding into recession. He cut taxes in part to stimulate the economy, and I think that did have a positive impact on the growth of the past few years. He also, in the aftermath of 9/11, had to increase spending on defense and homeland security. But over time everyone agrees we have to reduce the budget deficit and move toward budget balance.

[emphasis; the FLUBA Committee on Reading Comprehension]

Professor DeLong (in responding to a commenter) violates the First Law of Holes:

Nope. In Washington-speak, there's a *big* difference between "balance the budget" and "move toward budget balance." There's also a big difference between "the administration's plan is to..." and "everyone agrees we have to..."--especially when it's not true: in the White House, at least, there are a lot of people who agree that they have to *say* that they want to reduce the budget deficit, but few who believe they should *do* anything to reduce the budget deficit.

In fact Greg Mankiw followed his above quoted reference to balancing the budget with:

"... over the long term, the key fiscal challenge is not the short-run deficit, it’s the long-run budgetary pressures coming from entitlements, which is why Social Security reform is such an important priority."

All he forgot was to add Medicare/Medicaid reform.

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