Clearly Obama's Achilles' heel

UNITED STATES: "The politics of debt: Seeing red; America's debt is Barack Obama's biggest weakness," The Economist, 13 June 2009.

It's the late 1980s and early 1990s all over again.

Remember when we were going to retire America's debt in X years and we debated whether or not that would be a good thing?

Still, no argument that this is once again a preeminent political issue--with good reason.

Comments

[stuart abrams]

Now is not the time for deficit hawks. The recession isn't over, and if anything, the concern is still whether or not the deficit is big enough. I compare the current economic situation to that very tense scene in "Apollo 13" where they had to time the firing of the retro rockets just right so that you re-enter at just the right angle and speed - too steep and you burn up, too shallow and you skip off the atmosphere. If we start worrying about deficits too soon, we're going to throw the economy into prolonged stagnation. When the economy starts to rebound, then we worry about the deficit in order to avoid inflation. The only solution IMO is a national consumption tax, which is what the world needs so that the US can stop being the world's consumer. However, that's a second-term project that will require every ounce of political capital that Obama can muster.

[Steven J.]

Good one by The Economist.Bush's "guns and butter" (war and prosperity) economics was flawed even if he was right on Iraq.Obama should easily be able to cut deficits by half in 4 years just because of the way the Government keeps books. The bail out and stimulis $ count as an expendature the year is drawn. The bail out money is being used to purchase assets and earns interest while none of that money goes into circulation in the economy. Sorry inflation hawks.The TARP bail out money has a 5 year expiration and majority is being paid back early because of disincentives to hold it.

However, the problem w/ TARP funds will be when the bleeding heart liberals in Congress try to keep it for some lost cause instead of taking it off the books and put it back into the Treasury.

Public Health Care/Medicare is still scary on the implications it has on the budget. But something has to be done. No matter how you slice it, no one gets turned away from the emergency room (when it should of gone to the clinic) and Grandpa always gets his hip replacement surgery. (even if he owns 400 acres of farm land free and clear in Iowa) Yep, and taxpayer has already been picking up the tab.