The Economist: U.S. Debt Is "Perfectly Affordable" … Except When it's Neither "Healthy" nor "Pretty"
The self-described "newspaper" goes high dudgeon against Republican debt-ceiling negotiators, in a July 7 piece headlined "Shame on them":
In three weeks, if there is no political deal, the American government will go into default. Not, one must pray, on its sovereign debt. But the country will have to stop paying someone: perhaps pensioners, or government suppliers, or soldiers. That would be damaging enough at a time of economic fragility. And the longer such a default went on, the greater the risk of provoking a genuine bond crisis would become.
There is no good economic reason why this should be happening. America's net indebtedness is a perfectly affordable 65% of GDP, and throughout the past three years of recession and tepid recovery investors have been more than happy to go on lending to the federal government. The current problems, rather, are political. […]
The sticking-point is not on the spending side. It is because the vast majority of Republicans, driven on by the wilder-eyed members of their party and the cacophony of conservative media, are clinging to the position that not a single cent of deficit reduction must come from a higher tax take. This is economically illiterate and disgracefully cynical. […]
This newspaper has a strong dislike of big government; we have long argued that the main way to right America's finances is through spending cuts. But you cannot get there without any tax rises.
Bold bit mine, to take your attention away from that "one must pray"-style drama queenery, and also to focus your attention on an altogether different-sounding Economist piece from just nine days prior:
Many other rich countries have big debt burdens and are facing similar problems [to Greece]. The chart below shows OECD calculations of what it would take governments to reduce gross debt to 60% of GDP by 2026. This is around the level considered healthy and is also the ratio set by the widely ignored Maastricht agreement, which is meant to govern debt in the European Union. It is not pretty.
Shall we see who's the second-worst looking OECD country in this nifty Economist debt/death chart?
Thanks to Scott Ross for the second link.
