Grasping Reality on TypePad, by Brad DeLong

Lawrence Summers: The battle over the US budget is the wrong fight:

There is a chance future historians will see today’s crisis as the turning point when American democracy was to shown to be dysfunctional…. The substance being debated in the current crisis is only tangentially relevant to the main challenges and opportunities…. More fundamental is this: budget deficits are now a second-order problem…. Policies that indirectly address deficit issues by focusing on growth are sounder economically and more plausible politically than the long-term budget deals with which much of the policy community is obsessed…. In most areas policy makers avoid taking strong actions unless there is statistically compelling evidence to support them. Few would favor action to curb greenhouse gas emissions without evidence establishing that substantial climate change is overwhelmingly likely. Yet it is conventional wisdom that urgent action must be taken to cut the deficit, even as prevailing short-run deficit forecasts suggest no problems and long-run forecasts are within margins of error…. If even half the energy that has been devoted over the past five years to “budget deals” were devoted instead to “growth strategies” we could enjoy sounder government finances and a restoration of the power of the American example. At a time when the majority of the US thinks that it is moving in the wrong direction, and family incomes have been stagnant, a reduction in political fighting is not enough--we have to start focusing on the issues that are actually most important.