[lbo-talk] Galbraith: Entitlement cutting can't cut the deficit

Barry Brooks durable at earthlink.net
Sat Jul 17 22:15:28 PDT 2010



> The only way to reduce a deficit caused by unemployment is to reduce
> unemployment.

The only way, or the only way he will consider?

Deficits can be cut by increased revenue too. Couldn't the money borrowed by the government be taxed instead?

Who loans money to the government? People with surplus income could lose that surplus to taxation or lose it to the bursting bubbles that result when their surplus income is used to bid up prices on existing assets. Deficits are popular with those lenders, and their safe and soaring account balances will not cause inflation because they can't spend any more than they are spending now on personal consumption.

Here's a Krugman Galbraith exchange about the limits to government debt. http://krugman.blogs.nytimes.com/2010/07/17/i-would-do-anything-for-stimulus-but-i-wont-do-that-wonkish/#more-10606 http://krugman.blogs.nytimes.com/2010/07/17/more-on-deficit-limits/#more-10618

Barry



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