Via Mark Thoma, Dean Baker catches Erskine Bowles vastly overstating future federal interest payments. This reminded me of Dan Senor’s similar blooper regarding Japanese interest payments. And I think they have a common cause.
Both Bowles and Senor want to scare us about the short-run deficit (as opposed to longer-run budget concerns). And both are turning to an argument that sounds compelling: debt dynamics. The story goes like this: the more the government borrows, the more interest it has to pay, which requires even more borrowing, and before you know it the debt explodes.
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