Paul Krugman, "Time to Borrow": Living on Borrowed Time

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Just in case you were wondering, I was unable to attend Obama's 55th birthday party owing to a bout of nausea, which came on after I learned that Barry had funded Iranian terror with a planeload of $400 million in Swiss francs, euros and assorted other currencies.

Onward and upward ... not.

In his latest New York Times op-ed entitled "Time to Borrow," Paul Krugman says of Hillary:

"The campaign still has three ugly months to go, but the odds — 83 percent odds, according to the New York Times’s model — are that it will end with the election of a sane, sensible president."

Someone who thinks she came under sniper fire in Bosnia is sane and sensible? Someone perpetuating a "marital" relationship with Bill, a serial lech, is sane and sensible? A four-Pinocchio compulsive liar is sane and sensible? Yes, I know, it's all relative ...

But Paul's opinion piece is not about Hillary. Rather, he is again demanding that the US take more debt upon itself:

"[I]nvesting more in infrastructure would clearly make us richer. Meanwhile, the federal government can borrow at incredibly low interest rates: 10-year, inflation-protected bonds yielded just 0.09 percent on Friday.

Put these two facts together — big needs for public investment, and very low interest rates — and it suggests not just that we should be borrowing to invest, but that this investment might well pay for itself even in purely fiscal terms. How so? Spending more now would mean a bigger economy later, which would mean more tax revenue. This additional revenue would probably be larger than any rise in future interest payments."

Fascinating. But now consider what the nonpartisan Congressional Budget Office wrote in its July 2016 Long-Term Budget Outlook:

"If current laws governing taxes and spending did not change, the United States would face steadily increasing federal budget deficits and debt over the next 30 years, according to projections by the Congressional Budget Office. Federal debt held by the public, which was equal to 39 percent of gross domestic product (GDP) at the end of fiscal year 2008, has already risen to 75 percent of GDP in the wake of a financial crisis and a recession. In CBO’s projections, that debt rises to 86 percent of GDP in 2026 and to 141 percent in 2046—exceeding the historical peak of 106 percent that occurred just after World War II. The prospect of such large debt poses substantial risks for the nation and presents policymakers with significant challenges.

. . . .

A large and continuously growing federal debt would make a fiscal crisis in the United States more likely. Specifically, investors might become less willing to finance the government’s borrowing unless they were compensated with high interest rates. As a result, interest rates on federal debt would abruptly become higher than the rates of return on other assets, dramatically increasing the cost of future government borrowing. In addition, that increase would reduce the market value of outstanding government bonds. If that happened, investors would lose money. The potential losses for mutual funds, pension funds, insurance companies, banks, and other holders of government debt might be large enough to cause some financial institutions to fail, creating a fiscal crisis.

. . . .

If a fiscal crisis occurred in the United States, policymakers would have only limited—and unattractive—options for responding. The government would need to undertake some combination of three approaches: restructure the debt (that is, seek to modify the contractual terms of existing obligations), use monetary policy to raise inflation above expectations, and adopt large and abrupt spending cuts and tax increases."

Or stated otherwise, notwithstanding Krugman's "what me worry" attitude, the US is living on borrowed time.