Thursday, July 08, 2010

The smart set

On yesterday's, Brad DeLong argued for more federal stimulus because it is affordable because the long-term budget picture is OK over the next 75 years because of the new health care regime -- if Congress sticks to pay-go for 75 years.

In today's NY Times, Christopher Edley argues for Federal government advances of matching funds to the states when a state runs into fiscal trouble. Here is the punch-line:
What would this cost the federal government? Nothing. There would be zero risk of default, and a guarantee of full repayment plus interest equal to what Treasury pays in the bond markets to borrow. Congress would need only to appropriate the administrative costs of this program, which would be minimal.
Both opinions bank on credible commitments from politicians. If there is an anti-Washington tug among the voters of both parties it is because such credibility is now very low.

I do not believe that either of these gentlemen is a tea party plant. But they do provide fodder for those who wonder about the programs and policies being suggested by the smart set.


It appears that the Massacusetts health care reform is costing much more than proponents had promised.