Many independent sources are moderately more pessimistic; they think that on current policies we’d be looking at a deficit of 5-6 percent of GDP. So that makes it more like a 3 or 4 percent of GDP adjustment.Samuelson is correct to complain that the Independent Payment Advisory Board that will examine Medicare costs is artificially constrained, but could it possibly be true that he never stopped to think why topics such as "rationing" care or changing benefits are explicitly off the table? And has he considered that when it comes to more sensible tax policy or cutting a "footnote's worth" of spending out of the military budget, he personifies the problem?
That’s not, in economic terms, a huge number. We could raise taxes that much and still be one of the lowest-tax nations in the advanced world. Or we could save a significant share of that total by not being totally prepared for the day when Soviet tanks sweep across the North German plain.
The only reason to doubt our ability to get things under control a decade from now is politics: if we’re still deadlocked, if sane Republicans are cowed by the Tea Party, then sure, we can have a fiscal crisis. And longer term, we’ll be in a mess unless we get health care costs under control — which is exactly what we’re trying to do, in the face of cries about death panels.
The numbers aren’t that bad; if we go wrong, the fault will lie not in our debt, but in ourselves.
Were Samuelson to talk to his editorial page boss, he might get the sense that President Obama understands the financial problems facing our nation.
Last summer I asked the president how he could overcome such inertia, given the almost impossible politics of deficit control. He suggested that events might jump-start the politics, when lenders start to fret about the creditworthiness even of the United States.What I find most interesting about that passage is that it points no partisan figures. It appears that President Obama and Fred Hiatt both recognize the unsustainable status quo to be a problem created and perpetuated by both parties, or... dare I say, a "victory" of bipartisan politics.
"I actually think that, sadly, decisions are going to be forced upon us," he said. "I mean, I think that if we don't show that we're serious in some fashion, then I think you're going to see a reluctance on the part of people who've been snapping up Treasurys to keep doing so. . . . And that, in some sense, will -- certainly compels me, if I'm being responsible in my office, to push hard on this."