Glenn Hubbard tries to tell the Republican members of congress: STOP FRACKING AROUND AND RAISE THE DEBT CEILING!!
Unfortunately, he buries his message in a mass of verbiage so that I don't think his intended audience--the Republican legislators--will even understand it.
Glenn Hubbard in the Financial Times:
Forget the debt ceiling and focus on debt: On May 15, the US hit its “debt ceiling” of $14,300bn, covering publicly owned debt held by the Federal Reserve and government trust funds, and Washington is in a furore.... [T]he problem is not the debt ceiling per se. My wife and I don’t vote on whether we will pay our bills. Rather, we discuss whether our spending or income needs adjustment. So too must it be for our national “family”....
A good beginning. It should have been followed by a couple of paragraphs talking about how ludicrous it would be for a household to decide to spend in excess of its income and not to borrow. But Glenn then drops his opening paragraph theme and goes in a different direction:
Since 2008, the ratio of federal debt held by the public to GDP has risen from 40 per cent on its way to over 90 per cent by 2020, an alarming increase outside of major wartime experience. Today’s problem is not a past war, but ever-rising future debt burdens unless we take action.... Spending is set to increase dramatically, reflecting many causes. The discretionary spending binge of the past decade, wars in Iraq and Afghanistan, and spending related to the aftermath of the 2007-09 financial crisis are factors. But the bulk of growth occurs in the Social Security, Medicare and Medicaid programmes....
If this is the direction that Glenn is going to go, then "George W. Bush," "unfunded Medicare Part D," and "2001 and 2003 tax cuts" all belong in this second paragraph. I don't expect Glenn Hubbard to say: "I was a budget arsonist in government over 2001-2003 and now here I am wearing a fire chief hat" (although I would be very impressed were he to do so--that would definitely be a sign that he had a pair). But I would like something indicating that the "discretionary spending binge of the past decade" did not just grow up out of the ground like a mushroom. The omission of these makes it impossible to give him better than a C.
Glenn goes on:
the bulk of growth occurs in the Social Security, Medicare and Medicaid programmes, which together are set to consume 10 percentage points of GDP more by 2040 than they do today...
And we mark him down to a C-. The problem is not--at least not for the next 75 years--Social Security. The problem is Medicare and Medicaid.Hubbard continues:
Careful analysis by Alberto Alesina and Silvia Ardagna reveals that successful debt stabilisations focused on reducing spending rather than raising taxes and that fiscal adjustments associated with higher GDP growth are those dominated by spending cuts...
Now we are down to a D+: the Alesina and Ardagna "fiscal adjustments associated with higher GDP growth" are overwhelmingly those dominated by easier monetary policy and lower currency values.
Using the bully pulpit to provide information for the public has given way to misleading claims about solutions (Barack Obama’s budget, for example) or to carefully crafted but not well explained approaches to budget reform (as in Congressman Paul Ryan’s budget, for example).
Now we are down to a D: Ryan's budget is many things--but it is not "carefully crafted." It gives technocrats hives.
Then he recovers:
Restoring sustainable fiscal policy requires broad-based changes in government spending and/or revenue...
Back up to a D+ for daring to say the word "revenue." Note that this is the soft bigotry of low expectations here. To say that you can reduce the deficit by cutting spending or raising taxes is so obvious that you shouldn't get points for it--unless, that is, expectations are really low.
And in his last paragraph Hubbard returns to his opening theme: INCREASE THE FRACKING DEBT CEILING ALREADY!!
Memo to Washington: we need to seal our growing debt, not debate the debt ceiling.
But I don't think his intended audience will hear it.