The chatter today has been all about Lawrence Lindsey’s WSJ column about our dire financial situation Excuse me — the meaningful chatter. The meaningless chatter has been about Michele Bachmann, and whether she’s the Gaffe-O-Matic or merely gaffetastic. After watching her embarrassing campaign launch yesterday, I can’t say I much care. Honestly, it was the worst GOP presidential announcement since the last one. Bachmann and Jon Huntsman might turn out to be the Dueling Flame-outs, bookending the left and right of the party.
But I digress, and we have serious business to cover. What Lindsey says about our spending problem comes down to: We are so screwed.
Some facts and figures for you:
The president’s budget of February 2011 projects economic growth of 4% in 2012, 4.5% in 2013, and 4.2% in 2014. That budget also estimates that the 10-year budget cost of missing the growth estimate by just one point for one year is $750 billion. So, if we just grow at trend those three years, we will miss the president’s forecast by a cumulative 5.2 percentage points and—using the numbers provided in his budget—incur additional debt of $4 trillion. That is the equivalent of all of the 10-year savings in Congressman Paul Ryan’s budget, passed by the House in April, or in the Bowles-Simpson budget plan.Here’s what I got out of that: If the Ryan or Bowles-Simpson budgets were to become law, our economy would quickly right itself — and the resulting increase in interest rates would eradicate all the savings.
Did you get that? Without seriously drastic cuts — cuts that would make Paul Ryan blanch — we can’t fix this economy without wrecking the government. Or maybe it’s the other way around.