The Country Thinker

Thoughts on Economics

On Tues­day I sent the fol­low­ing let­ter to the edi­tors of The Wall Street Jour­nal. I’ll let you know if it gets pub­lished.

Edi­tors of The Wall Street Journal:

Is Amer­ica shovel-​​ready?

Pro­fes­sor Alan Blinder once again beats the bro­ken Key­ne­sian stim­u­lus drum (“The Long and Short of Fis­cal Pol­icy,” op-​​ed May 22). He rec­om­mends that the fed­eral gov­ern­ment bor­row more money for stim­u­lus spend­ing because it can get 10 year loans for under 2% under cur­rent con­di­tions. He also argues that the bud­get deficit is a prob­lem we should deal with at some untold time in the future. Mr. Blinder is incor­rect on both scores.

Blinder is cor­rect to note that ris­ing med­ical expenses are a huge fis­cal prob­lem, but he is way off the mark when he con­tends that the “lion’s share of pro­jected future deficits comes from ris­ing health care expen­di­tures.” There soon will be another 800-​​pound gorilla in the room—debt ser­vice costs. con­tinue reading