Balance the budget!

[catsittingstill]

The New York Times has an interactive puzzle where you try to balance the budget. The web page is here.

My choices are here (if I've figured out how this works.)

You know, you can do almost all of it simply by restoring taxes to their Clinton-era levels? I remember the Clinton years. The economy was quite healthy. I would like to see taxes indexed to inflation but that wasn't an option.

I did also reduce Social Security payouts for the very rich (but didn't make poor people, with their lower life expectancy, work longer) and institute a carbon tax (the latter not so much for the money but for the inevitable emphasis on conservation and switching to sustainable energy. I don't like that it hits the poor harder, but I hope we can find ways to fix that.)

Anyway, you are free to disagree with me. Go to the link and try your hand.

Comments

[catsittingstill.livejournal.com]

I have fixed the link.

There's a details page for the interactive puzzle that contains links to the models and assumptions they were using. I didn't check it out, but feel free to look at it if you like.

It's here." (http://economix.blogs.nytimes.com/2010/11/13/behind-the-timess-deficit-project/)

[randwolf.livejournal.com]

Ah. I missed it. Auerbach and Gale did their model, who are respected sources. Their model is real, though I think they use some rather politicized data sources--it's an awful situation when the Social Security and Medicare actuaries slant their data but, after all, they are subject to political pressure.

However, I think the bottom line on this comes from Auerbach and Gale's own papers:

The current U.S. fiscal deficit is enormous, but its enormity is temporary--or at least is expected to be. The real concerns lie in the ten-year projection and long-term outlook. The medium-term and long-term budget shortfalls will create growing burdens on the economy.

However, if we don't address employment (and through employment, aggregate demand) in the short term, the medium and long-term problems become much worse, because tax revenues will fall and transfer payments will rise. I fear we may end up with the worst of both worlds: harsh austerity in the short term, and medium and long-term debt.

Why we are talking about balancing the budget in the short term when the short-term issue so clearly is jobs is a source of wonder and horror to most economists I respect.