Prarie Weather: You think the Republican party is a disaster? Wait till you meet the drought.: "Those of us who live in the central plains are well aware of the damage. Cracking soil, dead trees, sagging fence posts, cattle going to market years early, feed prices rising -- we thought we'd left all that behind us when some rain fell earlier in the year. Now it's been months since we've had more than a drifting drizzle. Here the low water in the river is mostly a symptom. Up along the Mississippi it's a full-blown disaster."
Dean Baker: Fareed Zakaria is Unhappy That "The American Left" Chooses Arithmetic Over Peter Peterson: "Zakaria tells readers: 'The American left has trained its sights on a new enemy: Pete Peterson. The banker and private-equity billionaire is, at first glance, an obvious target…. The facts are hard to dispute. In 1900, 1 in 25 Americans was over the age of 65. In 2030, just 18 years from now, 1 in 5 Americans will be over 65. We will be a nation that looks like Florida. Because we have a large array of programs that provide guaranteed benefits to the elderly, this has huge budgetary implications.'… Yes, the facts are hard to dispute. That is why those of us on 'the American Left' try to use them wherever possible. As Zakaria points out, apparently without noticing, we have already seen most of this aging disaster story. As he says, in 1960 there were about five working Americans for every retiree. Currently the number is less than three. It is projected to fall to around 2 workers per retiree by 2030…. Apparently Zakaria missed it, but this sharp decline in the ratio of workers to retirees did not prevent us on average from enjoying a substantial rise in living standards over this period. Of course the gains were not evenly distributed because of policies that redistributed income to people like Peter Peterson and his friends in the Campaign to Fix the debt (e.g. trade policy, anti-union policies, deregulation of the financial sector -- the fuller story is available here). However per capita after-tax income is more than twice as high today as it was in 1960, in spite of the scourge of a growing elderly population."
ProGrowthLiberal: EconoSpeak: Paul Krugman Puzzles Greg Mankiw: "[Mankiw] is emphasizing the fact that the debt/GDP ratio is higher than it was 9 years ago and the deficit is also quite high. But let me protest by arguing that the long-run fiscal situation depends more on what markets expect future fiscal policy will be. Paul [Krugman in 2003] was likely worried that the Grover Norquist pledge imposed on most Republicans never to raise taxes combined with their willingness to load up defense spending (after all Paul wrote on the eve of the Iraq invasion) would tell financial markets that our fiscal folly was doomed to continue forever. Note, however, that the Obama Administration is much more willing to both raise taxes and cut spending than the Administration that Greg served in."
Bill McBride: Calculated Risk: Fiscal Agreement Update: "A few obvious points on the "fiscal cliff": 1) It is about the deficit shrinking too quickly next year, 2) there is no "drop dead" date and an agreement in early January still seems likely (the sites and TV stations with countdown times are embarrassing themselves), and 3) entitlements are not part of the "cliff" (although it was possible some changes might be part of an agreement). Clearly there is going to be more austerity in the US at the Federal level next year. How much is unclear…. That's not a very good deal for the short-term health of the economy…. [The] shift in the Republican party (to no taxes ever) is why I think an early January agreement is likely. In my first post on the fiscal agreement, I wrote: "Given that the top marginal tax rate will increase - and that certain politicians can't vote for any bill with a tax increase - the agreement will probably be voted on in January after the Bush tax cuts expire." That may seem weird, but it is the current state of politics."
Ezra Klein: The GOP’s worst ‘cliff’ myth: Perhaps the oddest of the conservative rationalizations for refusing any kind of budget compromise is the insistence that budget deals are pointless--and maybe even counterproductive--because Democrats rig them such that taxes happen and spending cuts disappear. It’s a trick so dastardly that today’s conservatives think even Ronald Reagan got snookered!… It’s an odd argument because it would seem, on its face, to invalidate everything the GOP wants and has been working toward. If no spending cut agreed to today can be counted on tomorrow, then what’s the point of the Ryan budget, which includes $897 billion in unidentified spending cuts that future congresses would have to decide? Or of the 2011 Budget Control Act, which included more than a trillion dollars of spending cuts, and that Republicans were sufficiently confident in to agree to raise the debt ceiling? It’s also an odd argument because it’s manifestly, provably untrue."
Evan Soltas: Follow-Up: Deficit Cyclicality