Paul Krugman is a jackass (1 Viewer)

[D_House]

Putting the wood to Paul Ryan.

The Flimflam Man

The Flimflam Man

By PAUL KRUGMAN

One depressing aspect of American politics is the susceptibility of the political and media establishment to charlatans. You might have thought, given past experience, that D.C. insiders would be on their guard against conservatives with grandiose plans. But no: as long as someone on the right claims to have bold new proposals, he’s hailed as an innovative thinker. And nobody checks his arithmetic.

Which brings me to the innovative thinker du jour: Representative Paul Ryan of Wisconsin.

Mr. Ryan has become the Republican Party’s poster child for new ideas thanks to his “Roadmap for America’s Future,” a plan for a major overhaul of federal spending and taxes. News media coverage has been overwhelmingly favorable; on Monday, The Washington Post put a glowing profile of Mr. Ryan on its front page, portraying him as the G.O.P.’s fiscal conscience. He’s often described with phrases like “intellectually audacious.”

But it’s the audacity of dopes. Mr. Ryan isn’t offering fresh food for thought; he’s serving up leftovers from the 1990s, drenched in flimflam sauce.

Mr. Ryan’s plan calls for steep cuts in both spending and taxes. He’d have you believe that the combined effect would be much lower budget deficits, and, according to that Washington Post report, he speaks about deficits “in apocalyptic terms.” And The Post also tells us that his plan would, indeed, sharply reduce the flow of red ink: “The Congressional Budget Office has estimated that Rep. Paul Ryan’s plan would cut the budget deficit in half by 2020.”

But the budget office has done no such thing. At Mr. Ryan’s request, it produced an estimate of the budget effects of his proposed spending cuts — period. It didn’t address the revenue losses from his tax cuts.

The nonpartisan Tax Policy Center has, however, stepped into the breach. Its numbers indicate that the Ryan plan would reduce revenue by almost $4 trillion over the next decade. If you add these revenue losses to the numbers The Post cites, you get a much larger deficit in 2020, roughly $1.3 trillion.

And that’s about the same as the budget office’s estimate of the 2020 deficit under the Obama administration’s plans. That is, Mr. Ryan may speak about the deficit in apocalyptic terms, but even if you believe that his proposed spending cuts are feasible — which you shouldn’t — the Roadmap wouldn’t reduce the deficit. All it would do is cut benefits for the middle class while slashing taxes on the rich.

And I do mean slash. The Tax Policy Center finds that the Ryan plan would cut taxes on the richest 1 percent of the population in half, giving them 117 percent of the plan’s total tax cuts. That’s not a misprint. Even as it slashed taxes at the top, the plan would raise taxes for 95 percent of the population.

Finally, let’s talk about those spending cuts. In its first decade, most of the alleged savings in the Ryan plan come from assuming zero dollar growth in domestic discretionary spending, which includes everything from energy policy to education to the court system. This would amount to a 25 percent cut once you adjust for inflation and population growth. How would such a severe cut be achieved? What specific programs would be slashed? Mr. Ryan doesn’t say.

After 2020, the main alleged saving would come from sharp cuts in Medicare, achieved by dismantling Medicare as we know it, and instead giving seniors vouchers and telling them to buy their own insurance. Does this sound familiar? It should. It’s the same plan Newt Gingrich tried to sell in 1995.

And we already know, from experience with the Medicare Advantage program, that a voucher system would have higher, not lower, costs than our current system. The only way the Ryan plan could save money would be by making those vouchers too small to pay for adequate coverage. Wealthy older Americans would be able to supplement their vouchers, and get the care they need; everyone else would be out in the cold.

In practice, that probably wouldn’t happen: older Americans would be outraged — and they vote. But this means that the supposed budget savings from the Ryan plan are a sham.

So why have so many in Washington, especially in the news media, been taken in by this flimflam? It’s not just inability to do the math, although that’s part of it. There’s also the unwillingness of self-styled centrists to face up to the realities of the modern Republican Party; they want to pretend, in the teeth of overwhelming evidence, that there are still people in the G.O.P. making sense. And last but not least, there’s deference to power — the G.O.P. is a resurgent political force, so one mustn’t point out that its intellectual heroes have no clothes.

But they don’t. The Ryan plan is a fraud that makes no useful contribution to the debate over America’s fiscal future.

 

[Bottomfeeder Sports]

The Flimflam ManBy PAUL KRUGMAN::But they don’t. The Ryan plan is a fraud that makes no useful contribution to the debate over America’s fiscal future.

When has that ever been a detriment for a post 15% solution GOP candidate?

 

[pantagrapher]

Fed meets to discuss concerns about deflation.

 

[GroveDiesel]

Paul Ryan answers Krugman:

http://weeklystandard.com/blogs/paul-krugman-v-paul-ryan

 

[pantagrapher]

Paul Ryan answers Krugman:

http://weeklystandard.com/blogs/paul-krugman-v-paul-ryan

Doubletalk Express

OK, here’s Ryan’s reply. As I predicted, a snow storm of words, dodging the math questions.

Notice that Ryan does not address the issue of the zero nominal growth assumption, and how that assumption — not entitlement reforms — is the key to his alleged spending cuts by 2020.

I also see that Ryan is perpetuating the runaround on revenue estimates. If you read either this article or his original response to the Tax Policy Center, you could easily get the impression that nobody would do a revenue estimate, that CBO said it was JCT’s job, and JCT balked. Even Nate Silver has fallen for this. But read the original response carefully:

The Tax Policy Center analysis covers a 10-year period, but the Roadmap is a long-term plan with spending and revenue projections covering 75 years. As such, the analysis is not consistent with the long-term horizon of the plan. Staff originally asked CBO to do a long-term analysis of both the tax and spending provisions in the Roadmap. However, CBO declined to do a revenue analysis of the tax plan, citing that it did not want to infringe on the traditional jurisdiction of the JCT. JCT, however, does not have the capability at this time to provide longer-term revenue estimates (i.e. beyond 10 years) [my emphasis]. Given these functional constraints for an official analysis, staff relied on its original work with the Treasury Department and other tax experts to formulate a reasonable expected path for long-term revenues given the tax policies in the Roadmap combined with the economic growth projections available at the time.

In other words, Ryan could have gotten JCT to do a 10-year estimate; it just wouldn’t go beyond that. And he chose not to get that 10-year estimate. So it was Ryan’s choice not to have any independent estimate of the 10-year revenue effects.

And bear in mind that the Tax Policy Center critique was five months ago. If Ryan disagreed with the center’s estimates, he could have gone back to the JCT to get a different set of estimates. He never did.

By the way, if you look at the artful way his excuses are constructed — giving the false impression that he couldn’t get a revenue score for love nor money — how is that not flimflam?

Finally, why is Ryan denying that he proposes dismantling Medicare as we know it? Replacing the system with vouchers surely fits that description.

 

[pantagrapher]

The Focal-Point FedThe FOMC has spoken. What’s my reaction? The Fed’s current policy is grossly inadequate, logically bizarre, and slightly — but only slightly — encouraging.What the FOMC announced was a slight change in policy: rather than allowing its balance sheet to shrink as the mortgage-backed securities it owns mature, it will maintain the balance sheet’s size by reinvesting the proceeds in long-term government bonds. Roughly speaking, it has gone from a completely crazy policy of monetary tightening in the face of massive unemployment and incipient deflation, to a policy of standing pat in the face of same. Whoopee.And it’s a very strange decision, if you think about it. Presumably there’s some optimal size of the Fed’s balance sheet, given the state and prospects of the economy. What are the odds that the optimal size of that balance sheet is precisely the size it’s currently at? Bear in mind that the Fed’s current balance sheet reflects the legacy of policies undertaken when both fear of a complete meltdown and the expected pace of recovery once that fear abated were very different from what they are now.So why freeze the size of the balance sheet right where it is? The answer is that it was, literally, the least the Fed could do. If it had continued to let the balance sheet shrink, the reaction both from Fed critics and from the markets would have been terrible. In effect, reinvesting the funds from expiring securities became a focal point, an essentially arbitrary location in the space of policy responses that nonetheless had come to have “salience”, because it was what everyone was watching.So why am I even slightly encouraged? Because the critics did, at least, succeed in moving the focal point. Not long ago gradual Fed tightening was the default strategy; but as I said, at this point the Fed realized that continuing on that path would have unleashed both a firestorm of criticism and a severe negative reaction in the markets.What we need to do now is keep up the pressure, so that at the next FOMC meeting the members are once again confronted by the reality that not changing course would be seen as dereliction of duty. And so on, from meeting to meeting, until the Fed actually does what it should.I know: it’s a heck of a way to make policy. In a better world, the Fed would look at the state of the economy and do what was right, not the minimum necessary. But wishing for that kind of world is like wishing that Ben Bernanke were running the place.

 

[Statorama]

Putting the wood to Paul Ryan.

Wish he'd go after Obama (or any Democrat for that matter) like thisOh wait, he has. He's been critical that Obama hasn't spent ENOUGH.

Jackass.

 

[pantagrapher]

As of right now, the 10-year bond rate is 2.71 percent. As you can see from the chart above, this puts it back where it was in the early spring of 2009 — higher than it was during the Oh-my-God-we’re-all-gonna-die period of winter 2008-2009, but lower than anything else we’ve seen for decades.

As it happens, interest rates are also now lower than they were when the big debate over fiscal policy and its interest-rate effects began. For those who don’t remember or don’t know, this started with the claim that government borrowing would send rates soaring, crowding out private investment, and that this would abort the recovery. I tried at the time to point out that this reflected a failure to understand basic macroeconomics; but as usual, made no headway with the culprits.

Said culprits then claimed that rising interest rates in the months following, rather than reflecting improved expectations about the economy, confirmed their view.

Later they changed their stance, claiming that the real problem was rising debt threatening solvency, and that America was going to be Greece any day now.

What we actually see is exactly the story those of us who knew their Hicks told from the beginning: short rates hard up against zero as long as the economy remains deeply depressed, long rates fluctuating based on changing beliefs about how long it would take for the economy to recover sufficiently for the Fed to begin tightening.

And anyone who believed the stuff about invisible bond vigilantes, and acted on it, has lost a lot of money.

link w/graph

 

[Gigantomachia]

i guess u can count me among those that see more than just a bit of hypocrisy in the fact that ### is blocked but jackass is not?? not to mention krugman has a mother ya know!!

weird.

 

[Iraqi Information Minister]

i guess u can count me among those that see more than just a bit of hypocrisy in the fact that ### is blocked but jackass is not?? not to mention krugman has a mother ya know!!weird.

Ya, jackwagon!

 

[Statorama]

i guess u can count me among those that see more than just a bit of hypocrisy in the fact that ### is blocked but jackass is not?? not to mention krugman has a mother ya know!!weird.

There's a difference between pricking your finger and...well, you know the rest.

 

[Iraqi Information Minister]

Flimflam indeed...

By James C. Capretta

Megan McArdle did everyone a favor this past week by very carefully pointing out that Paul Krugman’s over-the-top attack on Congressman Paul Ryan and his “Roadmap” was based primarily on bad information that could have been easily checked and corrected with some minimal effort.

You’d think Krugman might take a look at her critique; listen to his likeminded friends (see here), who clearly think his piece went over the line; and change the subject. But you would be wrong. As McArdle notes, instead of admitting his error and moving on, Krugman plows ahead and concocts, in a follow-on to his original column, a second, alternative theory of supposed tax-estimating deception on the part of Ryan — which McArdle also points out is not true. Strike two. Of course, perhaps anticipating that his latest seat-of-the-pants explanation of why Ryan should be criticized for evading accountability won’t hold up either, Krugman also throws into his broadside that, whatever else might be said, Ryan is a good-for-nothing just for failing to admit that his proposal will “dismantle Medicare as we know it.”

Never mind that Ryan’s Medicare proposal most closely resembles the recommendations of the last Medicare Commission from the late 1990s, chaired by Democratic senator John Breaux. And never mind that a variant of it was proposed by Henry Aaron and Robert Reischauer in 1995. Neither has ever been accused of conspiring with the Right. And they weren’t accused of wanting to “dismantle” Medicare.

Let’s face it. Krugman wrote his original column in a botched attempt to take Ryan down a peg or two. He saw the New York Times and the Washington Post publish relatively balanced pieces on Ryan in recent days, as well as friendly commentary from others on the left, and he felt it was his duty as the conscience of the liberal elite to make it clear that what the moment requires is a concerted Ryan-vilification campaign, not pieces in the mainstream press that, in so many words, say Ryan is good guy with typically awful Republican ideas.

But perhaps some good can come from Krugman’s rant despite the little problem of its inaccuracy. Indeed, if a byproduct of the Krugman barrage is a broad public awakening to the very real dangers of unguarded consumption of public-policy flimflammery, then it will have served a useful purpose. Because, in truth, allowing large amounts of flimflammery to go unchallenged can cause real damage to informed discussion of the important matters of the day.

Which brings us back to Paul Krugman and his blog. Just before launching into his anti-Ryan tirade, he posted the real deal: flimflam of the highest order.

On the day the Medicare trustees issued their annual report, Krugman rushed out a post highlighting the apparent good news. The new health-care law had bent the curve after all. Medicare spending in the 2010 report would grow at a much slower pace than was projected a little more than a year ago, thanks to the effective cost-cutting measures in the new law. This, Krugman said, was the finding of the “Medicare actuaries.”

But, as it turns out, the chief actuary for Medicare, in the back of the annual report, advised the public to essentially ignore the findings of the trustees because they were based on utterly unreliable data. He pointed readers instead to an alternative projection that shows Medicare spending rising to 10.7 percent of GDP in 2080, just a hair below the 11.2 percent of GDP projected for 2080 in last year’s report. In other words, no, the curve hasn’t been bent.

Moreover, the supposed savings in Medicare that will never materialize facilitated the creation of another runaway entitlement program. It isn’t counted in the Medicare trust fund projections, but spending from it will be very real indeed, in 2080 and every other year. Altogether, it’s absolutely clear that Obamacare raised federal entitlement spending on health care well above what it would have been under prior law.

Krugman and others argue that Paul Ryan’s Medicare plan is flawed because it is a formulaic cut that would shift costs onto the nation’s seniors. But, as it turns out, that’s exactly what the actuaries say is wrong with the Obama-Krugman plan. The enlightened cost-cutting that Krugman finds so attractive in the new law turns out to be nothing more than simplistic and formulaic across-the-board payment-rate reductions for institutional providers of care. Under the new health law, these payments rates would get cut every year below the rise in the cost of doing business by a formula that the actuaries say is completely disconnected from reality. By the end of this decade, Medicare’s payment rates would fall below those of the Medicaid program, which has rates that are so low today that the network of providers willing to see Medicaid patients is very, very constrained. In time, Medicare payments would cover just one-third of the cost of care that private insurers would be paying.

But let’s give Paul Krugman credit. He was right to suggest that there was flimflam in the air. He just misidentified its source.

Dude's being taken to the woodshed by just about everyone for his anti-Ryan tirades.

 

[IvanKaramazov]

Yeah, Krugman's anti-Ryan jermiad wasn't his finest moment.

 

[pantagrapher]

Dude's being taken to the woodshed by just about everyone for his anti-Ryan tirades.

No.

 

[Iraqi Information Minister]

Dude's being taken to the woodshed by just about everyone for his anti-Ryan tirades.

No.

Well. Not you of course.

 

[pantagrapher]

The Persecution Of Paul RyanJonathan Chait August 12, 2010The Wall Street Journal has an editorial today whose headline, "Washington vs. Paul Ryan," captures its basic contention that the the poor right-wing congressman is being ganged up on and maligned by the establishment. It's a fairly odd premise. Ryan has been riding months of slobbering praise from the conservative press. I realize that doesn't count, because "Washington" in conservative-speak is an epithet that by definition excludes conservatives.So, working within the conservative movement's definition of "Washington," let us tally up the litany of Ryan's persecution:He was the subject of a flattering Washington Post profile about the boldness of his plan that featured no policy analysts pointing out that the Ryan plan would increase the deficit over the next decade even if its wildly implausible spending caps were implemented.The same day he was the subject of a flattering New York Times profile that expounded the same theme and suffered from the same crippling flaw.Then Paul Krugman wrote an opinion column pointing out some of the massively misleading or unrealistic aspects of Ryan's alleged plan to balance the budget.Next my friend Ted Gayer, who runs the economic department at Brookings, wrote an item defending Ryan on the grounds that he means well and deserves to be granted an extreme benefit of the doubt when judging the massive flaws in his plan.Then Washington Post blogger Ezra Klein wrote a blog item also vouching for Ryan's character and good faith.Then today, the Times wrote another story about Ryan, saying he'd be the perfect person to negotiate a balanced budget with, regardless whether his plan really would balance the budget or massively increase it.Is this really a picture of Washington ganging up on Ryan? It seems just the opposite. He is being embraced and defended by the establishment and credited with good intentions that are not at all manifest in his record or in his proposal, with one opinion columnist being the sole dissenting voice.Now, maybe those defenses are right. I don't think they are -- even if you accept Ryan's crazily optimistic assumptions about everything, his plan would increase the deficit over the next decade. Getting a free pass time and time again because everybody knows your heart is in the right place is the sign of a man who has been fully embraced by the establishment.

 

[Iraqi Information Minister]

The Persecution Of Paul RyanJonathan Chait August 12, 2010...Now, maybe those defenses are right. I don't think they are -- even if you accept Ryan's crazily optimistic assumptions about everything, his plan would increase the deficit over the next decade. Getting a free pass time and time again because everybody knows your heart is in the right place is the sign of a man who has been fully embraced by the establishment.

What does that have to do with Krugman being a jackass?

 

[IvanKaramazov]

The Persecution Of Paul Ryan

Jonathan Chait

Then Paul Krugman wrote an opinion column pointing out some of the massively misleading or unrealistic aspects of Ryan's alleged plan to balance the budget.

This part is false, in the sense that Krugman's column itself turned out to be miselading and unfair, and that's the part that's relevant for this thread.

 

[IvanKaramazov]

Here's McArdle's first write-up regarding Krugman's anti-Ryan column:

Krugman Is Wrong on Ryan and the CBOBy Megan McArdle

Last night, a few of us were discussing Paul Krugman's apparent erroneous belief that Paul Ryan should have gotten the CBO to score the revenue side of his plan, but didn't because he was attempting to put one over on the American people. As far as I know, scoring tax bills is still the job of the Joint Committee on Taxation, not the CBO--but no one bothered to blog it because, as far as I can tell, we all assumed that we must be misreading Paul Krugman.

But no, I didn't misread; Krugman has two follow-up posts on the topic. It seems as if he's really not aware that the JCT, not the CBO, typically handles the official scoring of tax legislation; "CBO" is not, in any of the policy circles I've run in, some sort of shorthand for the JCT (especially since there's--ahem!--some rivalry there). It's also pretty clear that he hasn't asked Paul Ryan's office for the answer to any of these questions:

In other words, we think the tax part of the plan would leave revenue unchanged. But in that case, why not ask CBO to score the revenue, to see if it agrees? The answer given is that CBO refused to do an analysis beyond 10 years; OK, but why not at least have the 10-year analysis?

Oh, and about "adjustments can be easily made" -- when, exactly? Based on a careful look at the numbers? In that case, why tell the CBO not to do that careful look? After the tax cuts are enacted? On my planet, Republicans never consider it advisable to undo tax cuts once they're law. And notice the weasel phrase "to hit the revenue targets and maximize economic growth." In practice, this would surely mean no increase in rates, ever.

Then yesterday evening:

And so I don't care how Paul Ryan comes across. I look at how he has gone about selling his ideas, and I see an unscrupulous flimflammer.

Think about that CBO report: getting the CBO to score only the spending cuts, not the tax proposals, then taking credit for being a big deficit reducer, is simply sleazy. Not acknowledging that the zero nominal growth assumption, not the entitlement changes, is driving that 2020 score is also sleazy. And the whole pose of stern deficit hawk, when you know that there are real questions about whether your plan actually increases the deficit, is phoniness of a high order.

And about that Tax Policy Center report: it has been five months since that came out. Has Ryan tried, at all, to address the concerns the center raised? As far as I can tell, he's offered nothing but vague assurances of good intentions. Why should we believe him? Because he comes across as a nice guy? So did Bush.

Flimflamming is as flimflamming does. And Paul Ryan shows all the signs.

As a matter of fact, Paul Ryan is willing to work on the revenue side. And he has explained this--on his web site, in February, when these complaints were first aired. The short version:

1. He asked the CBO to do a revenue analysis, and they declined on the grounds that it was the jurisdiction of the JCT.

2. The JCT couldn't do analysis longer than ten years; period, so they asked for help from Treasury and some outside tax experts.

My recollection is also that Paul Ryan couldn't get the JCT committee staff time anyway because they were a wee bit busy doing all the forecasts for health care reform, and the Roadmap is not going to pass barring some miracle. But I was a wee bit busy with health care reform as well, so I could be wrong about that.

At any rate, the answer to Paul Krugman's question "Why didn't he ask" is that "He did, and they said no."

While I remain skeptical that anything like the Roadmap is politically possible, Paul Ryan is doing exactly what any sensible congressional sponsor with limited access to CBO time does; he's saying "Well, when this is getting close to being an actual bill, we'll work with the CBO and the JCT to tweak the tax rates in order to provide the amount of revenue we need." This is entirely normal, and was, incidentally, how the health care bill that Krugman so loves got its excellent CBO score; as I recall, the nascent plans were deficit busters and cost a lot more money. That's why the Tax Policy Center blog is defending Ryan.

Though I've only met him once, everything I've heard about Ryan indicates that he genuinely loves this stuff--if he could have more time with the CBO and JCT staff, he'd be in heaven. I think it's absolutely fair to point out that his Roadmap would be a heroic political sell, and would probably be watered down in ways that would seriously weaken it. I also think it is absolutely fair to point out that the tax rates needed to raise the necessary revenue would probably--not definitely; the TPC is not omniscient--be considerably less popular than what is outlined in the Roadmap.

 

[pantagrapher]

The Persecution Of Paul Ryan

Jonathan Chait

Then Paul Krugman wrote an opinion column pointing out some of the massively misleading or unrealistic aspects of Ryan's alleged plan to balance the budget.

This part is false, in the sense that Krugman's column itself turned out to be miselading and unfair, and that's the part that's relevant for this thread.

Keeping it specific, what did he write that was misleading or unfair?ETA: OK, I see it in the subsequent post: "the answer to Paul Krugman's question "Why didn't he ask" is that "He did, and they said no." I'll need to look into that.

ETAII: "2. The JCT couldn't do analysis longer than ten years; period"

Krugman was very clear and specifically points out that Ryan should have at least gotten this 10-year analysis. The assertion that they couldn't even do that is heavily qualified here:

My recollection is also that Paul Ryan couldn't get the JCT committee staff time anyway because they were a wee bit busy doing all the forecasts for health care reform, and the Roadmap is not going to pass barring some miracle. But I was a wee bit busy with health care reform as well, so I could be wrong about that.

 

[IvanKaramazov]

Keeping it specific, what did he write that was misleading or unfair?

See above. McArdle has follow-ups here and here in response to Krugman's double-down. The Tax Policy Center explains why Krugman is off-base here.

 

[pantagrapher]

Keeping it specific, what did he write that was misleading or unfair?

See above. McArdle has follow-ups here and here in response to Krugman's double-down. The Tax Policy Center explains why Krugman is off-base here.

Do you think Ryan should obtain and publicize the 10-year analysis of his tax cuts?

 

[GroveDiesel]

Keeping it specific, what did he write that was misleading or unfair?

See above. McArdle has follow-ups here and here in response to Krugman's double-down. The Tax Policy Center explains why Krugman is off-base here.

Do you think Ryan should obtain and publicize the 10-year analysis of his tax cuts?

Did you even bother to read the followup articles? I'm guessing that you didn't since that's already answered. Ryan DID request that JCT do the 10-year analysis and they declined, saying that they were too busy currently and wouldn't be able to do it. So Krugman is found to be guilty yet again of outright lies.

 

[IvanKaramazov]

Keeping it specific, what did he write that was misleading or unfair?

See above. McArdle has follow-ups here and here in response to Krugman's double-down. The Tax Policy Center explains why Krugman is off-base here.

Do you think Ryan should obtain and publicize the 10-year analysis of his tax cuts?

If he could get them, sure. And until he can, I think everybody should take his tax policies with a big grain of salt. But Krugman is flatly wrong in accusing Ryan of being dishonest on this score, and he could have cleared up the confusion if he wasn't too lazy to make a simple phone call to Ryan's office.I'm not interested in defending Ryan's plan or defending Ryan personally. The story, to me at least, is Krugman being hoist on his own petard. Rather than being content to raise totally legitimate issues with Ryan's roadmap (like the fact that it has approximately zero chance of ever be enacted or that zero nominal growth in spending would entail painful cuts in all sorts of programs), he went straight to character assassination, and he did so based on considerations that ended up being wrong.

 

[Arsenal of Doom]

Keeping it specific, what did he write that was misleading or unfair?

See above. McArdle has follow-ups here and here in response to Krugman's double-down. The Tax Policy Center explains why Krugman is off-base here.

Do you think Ryan should obtain and publicize the 10-year analysis of his tax cuts?

If he could get them, sure. And until he can, I think everybody should take his tax policies with a big grain of salt. But Krugman is flatly wrong in accusing Ryan of being dishonest on this score, and he could have cleared up the confusion if he wasn't too lazy to make a simple phone call to Ryan's office.I'm not interested in defending Ryan's plan or defending Ryan personally. The story, to me at least, is Krugman being hoist on his own petard.

The tax side of Ryan plan was never the important part anyway. I understand where Krugman was going pointing out that slashing spending wouldn't solve the long-term budget outlook if taxes/revenue are slashed along with it, but he went a little overboard in this case and is making it worse by thrashing around in the water and not simply grabbing the life preserver.

 

[pantagrapher]

Keeping it specific, what did he write that was misleading or unfair?

See above. McArdle has follow-ups here and here in response to Krugman's double-down. The Tax Policy Center explains why Krugman is off-base here.

Do you think Ryan should obtain and publicize the 10-year analysis of his tax cuts?

Did you even bother to read the followup articles? I'm guessing that you didn't since that's already answered. Ryan DID request that JCT do the 10-year analysis and they declined, saying that they were too busy currently and wouldn't be able to do it. So Krugman is found to be guilty yet again of outright lies.

So they are forever unable to analyze the most prominent republican tax proposal out there? I just can't believe that's the case.

 

[pantagrapher]

Keeping it specific, what did he write that was misleading or unfair?

See above. McArdle has follow-ups here and here in response to Krugman's double-down. The Tax Policy Center explains why Krugman is off-base here.

Do you think Ryan should obtain and publicize the 10-year analysis of his tax cuts?

If he could get them, sure. And until he can, I think everybody should take his tax policies with a big grain of salt. But Krugman is flatly wrong in accusing Ryan of being dishonest on this score, and he could have cleared up the confusion if he wasn't too lazy to make a simple phone call to Ryan's office.I'm not interested in defending Ryan's plan or defending Ryan personally. The story, to me at least, is Krugman being hoist on his own petard.

The tax side of Ryan plan was never the important part anyway. I understand where Krugman was going pointing out that slashing spending wouldn't solve the long-term budget outlook if taxes/revenue are slashed along with it, but he went a little overboard in this case and is making it worse by thrashing around in the water and not simply grabbing the life preserver.

That's a weird thing to say. Why isn't it important?

 

[pantagrapher]

Keeping it specific, what did he write that was misleading or unfair?

See above. McArdle has follow-ups here and here in response to Krugman's double-down. The Tax Policy Center explains why Krugman is off-base here.

Do you think Ryan should obtain and publicize the 10-year analysis of his tax cuts?

If he could get them, sure. And until he can, I think everybody should take his tax policies with a big grain of salt. But Krugman is flatly wrong in accusing Ryan of being dishonest on this score, and he could have cleared up the confusion if he wasn't too lazy to make a simple phone call to Ryan's office.I'm not interested in defending Ryan's plan or defending Ryan personally. The story, to me at least, is Krugman being hoist on his own petard. Rather than being content to raise totally legitimate issues with Ryan's roadmap (like the fact that it has approximately zero chance of ever be enacted or that zero nominal growth in spending would entail painful cuts in all sorts of programs), he went straight to character assassination, and he did so based on considerations that ended up being wrong.

If Ryan did indeed go to the JCT and they refused to do the 10-year analysis, then Krugman should apologize and address that fact in his next column.

 

[Statorama]

Latest Krugman jackassery: Social Security is fine

Attacking Social Security

By PAUL KRUGMAN

Social Security turned 75 last week. It should have been a joyous occasion, a time to celebrate a program that has brought dignity and decency to the lives of older Americans.

But the program is under attack, with some Democrats as well as nearly all Republicans joining the assault. Rumor has it that President Obama’s deficit commission may call for deep benefit cuts, in particular a sharp rise in the retirement age.

Social Security’s attackers claim that they’re concerned about the program’s financial future. But their math doesn’t add up, and their hostility isn’t really about dollars and cents. Instead, it’s about ideology and posturing. And underneath it all is ignorance of or indifference to the realities of life for many Americans.

About that math: Legally, Social Security has its own, dedicated funding, via the payroll tax (“FICA” on your pay statement). But it’s also part of the broader federal budget. This dual accounting means that there are two ways Social Security could face financial problems. First, that dedicated funding could prove inadequate, forcing the program either to cut benefits or to turn to Congress for aid. Second, Social Security costs could prove unsupportable for the federal budget as a whole.

But neither of these potential problems is a clear and present danger. Social Security has been running surpluses for the last quarter-century, banking those surpluses in a special account, the so-called trust fund. The program won’t have to turn to Congress for help or cut benefits until or unless the trust fund is exhausted, which the program’s actuaries don’t expect to happen until 2037 — and there’s a significant chance, according to their estimates, that that day will never come.

Meanwhile, an aging population will eventually (over the course of the next 20 years) cause the cost of paying Social Security benefits to rise from its current 4.8 percent of G.D.P. to about 6 percent of G.D.P. To give you some perspective, that’s a significantly smaller increase than the rise in defense spending since 2001, which Washington certainly didn’t consider a crisis, or even a reason to rethink some of the Bush tax cuts.

So where do claims of crisis come from? To a large extent they rely on bad-faith accounting. In particular, they rely on an exercise in three-card monte in which the surpluses Social Security has been running for a quarter-century don’t count — because hey, the program doesn’t have any independent existence; it’s just part of the general federal budget — while future Social Security deficits are unacceptable — because hey, the program has to stand on its own.

It would be easy to dismiss this bait-and-switch as obvious nonsense, except for one thing: many influential people — including Alan Simpson, co-chairman of the president’s deficit commission — are peddling this nonsense.

And having invented a crisis, what do Social Security’s attackers want to do? They don’t propose cutting benefits to current retirees; invariably the plan is, instead, to cut benefits many years in the future. So think about it this way: In order to avoid the possibility of future benefit cuts, we must cut future benefits. O.K.

What’s really going on here? Conservatives hate Social Security for ideological reasons: its success undermines their claim that government is always the problem, never the solution. But they receive crucial support from Washington insiders, for whom a declared willingness to cut Social Security has long served as a badge of fiscal seriousness, never mind the arithmetic.

And neither wing of the anti-Social-Security coalition seems to know or care about the hardship its favorite proposals would cause.

The currently fashionable idea of raising the retirement age even more than it will rise under existing law — it has already gone from 65 to 66, it’s scheduled to rise to 67, but now some are proposing that it go to 70 — is usually justified with assertions that life expectancy has risen, so people can easily work later into life. But that’s only true for affluent, white-collar workers — the people who need Social Security least.

I’m not just talking about the fact that it’s a lot easier to imagine working until you’re 70 if you have a comfortable office job than if you’re engaged in manual labor. America is becoming an increasingly unequal society — and the growing disparities extend to matters of life and death. Life expectancy at age 65 has risen a lot at the top of the income distribution, but much less for lower-income workers. And remember, the retirement age is already scheduled to rise under current law.

So let’s beat back this unnecessary, unfair and — let’s not mince words — cruel attack on working Americans. Big cuts in Social Security should not be on the table.

 

[Bottomfeeder Sports]

Latest Krugman jackassery: Social Security is fine

Social Security isn't 100% fine, but it is not the real concern for this nation's long term fiscal problems.

 

[Arsenal of Doom]

Latest Krugman jackassery: Social Security is fine

Social Security isn't 100% fine, but it is not the real concern for this nation's long term fiscal problems.

Correct. Minor adjustments are all that are needed on Social Security, beyond what is aready on the books. The current law is actually 100% self regulating, i.e., once the SSTF has been emptied benefits would be paid would all be cut to match the amount being taken in. The long term outlook can made healthier, however, with some minor tweaks to the benefits schedule and payroll taxes. Medicare (really healthcare in general) is the problem, not Social Security.

 

[IvanKaramazov]

Meanwhile, an aging population will eventually (over the course of the next 20 years) cause the cost of paying Social Security benefits to rise from its current 4.8 percent of G.D.P. to about 6 percent of G.D.P.

Interesting that he uses figures showing a 25% increase in projected Social Security spending as a percentage of GDP to argue that Social Security doesn't face any significant problems.

 

[pantagrapher]

Appeasing the Bond GodsBy PAUL KRUGMAN As I look at what passes for responsible economic policy these days, there’s an analogy that keeps passing through my mind. I know it’s over the top, but here it is anyway: the policy elite — central bankers, finance ministers, politicians who pose as defenders of fiscal virtue — are acting like the priests of some ancient cult, demanding that we engage in human sacrifices to appease the anger of invisible gods.Late last year the conventional wisdom on economic policy took a hard right turn. Even though the world’s major economies had barely begun to recover, even though unemployment remained disastrously high across much of America and Europe, creating jobs was no longer on the agenda. Instead, we were told, governments had to turn all their attention to reducing budget deficits.Skeptics pointed out that slashing spending in a depressed economy does little to improve long-run budget prospects, and may actually make them worse by depressing economic growth. But the apostles of austerity — sometimes referred to as “austerians” — brushed aside all attempts to do the math. Never mind the numbers, they declared: immediate spending cuts were needed to ward off the “bond vigilantes,” investors who would pull the plug on spendthrift governments, driving up their borrowing costs and precipitating a crisis. Look at Greece, they said.The skeptics countered that Greece is a special case, trapped by its use of the euro, which condemns it to years of deflation and stagnation whatever it does. The interest rates paid by major nations with their own currencies — not just the United States, but also Britain and Japan — showed no sign that the bond vigilantes were about to attack, or even that they existed.Just you wait, said the austerians: the bond vigilantes may be invisible, but they must be feared all the same.This was a strange argument even a few months ago, when the U.S. government could borrow for 10 years at less than 4 percent interest. We were being told that it was necessary to give up on job creation, to inflict suffering on millions of workers, in order to satisfy demands that investors were not, in fact, actually making, but which austerians claimed they would make in the future.But the argument has become even stranger recently, as it has become clear that investors aren’t worried about deficits; they’re worried about stagnation and deflation. And they’ve been signaling that concern by driving interest rates on the debt of major economies lower, not higher. On Thursday, the rate on 10-year U.S. bonds was only 2.58 percent.So how do austerians deal with the reality of interest rates that are plunging, not soaring? The latest fashion is to declare that there’s a bubble in the bond market: investors aren’t really concerned about economic weakness; they’re just getting carried away. It’s hard to convey the sheer audacity of this argument: first we were told that we must ignore economic fundamentals and instead obey the dictates of financial markets; now we’re being told to ignore what those markets are actually saying because they’re confused.You see, then, why I find myself thinking in terms of strange and savage cults, demanding human sacrifices to appease unseen forces.And, yes, we are talking about sacrifices. Anyone who doubts the suffering caused by slashing spending in a weak economy should look at the catastrophic effects of austerity programs in Greece and Ireland.Maybe those countries had no choice in the matter — although it’s worth noting that all the suffering being imposed on their populations doesn’t seem to have done anything to improve investor confidence in their governments.But, in America, we do have a choice. The markets aren’t demanding that we give up on job creation. On the contrary, they seem worried about the lack of action — about the fact that, as Bill Gross of the giant bond fund Pimco put it earlier this week, we’re “approaching a cul-de-sac of stimulus,” which he warns “will slow to a snail’s pace, incapable of providing sufficient job growth going forward.”It seems almost superfluous, given all that, to mention the final insult: many of the most vocal austerians are, of course, hypocrites. Notice, in particular, how suddenly Republicans lost interest in the budget deficit when they were challenged about the cost of retaining tax cuts for the wealthy. But that won’t stop them from continuing to pose as deficit hawks whenever anyone proposes doing something to help the unemployed.So here’s the question I find myself asking: What will it take to break the hold of this cruel cult on the minds of the policy elite? When, if ever, will we get back to the job of rebuilding the economy?

 

[dickey moe]

So let’s beat back this unnecessary, unfair and — let’s not mince words — cruel attack on working Americans. Big cuts in Social Security should not be on the table.

Big cuts in all entitlements should be on the table, Paul.

 

[Go DC Yourself]

Meanwhile, an aging population will eventually (over the course of the next 20 years) cause the cost of paying Social Security benefits to rise from its current 4.8 percent of G.D.P. to about 6 percent of G.D.P.

Interesting that he uses figures showing a 25% increase in projected Social Security spending as a percentage of GDP to argue that Social Security doesn't face any significant problems.

Given that we went from 2.9 percent to 4.7 percent for defense as a percentage of GDP in less than ten years (62 percent increase), and no self-proclaimed budget hawks are urging deep cuts in defense, I think he is on solid ground characterizing a 25 percent over 20 years as modest.

 

[RCon]

Paul Krugman: Master of the strawman and mischaracterizing the opposition's arguments.

 

[Desert_Power]

Krugman is dead on about this issue. People have been claiming that inflation and deficits are the concern, and the bond market(and CPI numbers) have crushed this fallacy over the last year and a half.

 

[RCon]

Krugman is dead on about this issue. People have been claiming that inflation and deficits are the concern, and the bond market(and CPI numbers) have crushed this fallacy over the last year and a half.

So now you're claiming that deficits don't matter at all? In that case, why don't we just borrow 100 Trillion dollars and distribute them equally to all US citizens? No one will ever have to work again, right?

 

[pantagrapher]

Krugman is dead on about this issue. People have been claiming that inflation and deficits are the concern, and the bond market(and CPI numbers) have crushed this fallacy over the last year and a half.

So now you're claiming that deficits don't matter at all? In that case, why don't we just borrow 100 Trillion dollars and distribute them equally to all US citizens? No one will ever have to work again, right?

And you're the one who just complained about Krugman mischaracterizing people's arguments.

 

[Desert_Power]

Krugman is dead on about this issue. People have been claiming that inflation and deficits are the concern, and the bond market(and CPI numbers) have crushed this fallacy over the last year and a half.

So now you're claiming that deficits don't matter at all? In that case, why don't we just borrow 100 Trillion dollars and distribute them equally to all US citizens? No one will ever have to work again, right?

Paul Krugman: Master of the strawman and mischaracterizing the opposition's arguments.

 

[RCon]

Krugman is dead on about this issue. People have been claiming that inflation and deficits are the concern, and the bond market(and CPI numbers) have crushed this fallacy over the last year and a half.

So now you're claiming that deficits don't matter at all? In that case, why don't we just borrow 100 Trillion dollars and distribute them equally to all US citizens? No one will ever have to work again, right?

And you're the one who just complained about Krugman mischaracterizing people's arguments.

Krugman didn't use question marks, he made a statement. I used question marks, as in, I was asking a question in order to have him (Desert_Power) clarify his position. Big difference.

 

[RCon]

Krugman is dead on about this issue. People have been claiming that inflation and deficits are the concern, and the bond market(and CPI numbers) have crushed this fallacy over the last year and a half.

So now you're claiming that deficits don't matter at all? In that case, why don't we just borrow 100 Trillion dollars and distribute them equally to all US citizens? No one will ever have to work again, right?

Paul Krugman: Master of the strawman and mischaracterizing the opposition's arguments.

See previous post, re: question marks imply a question.But, to get to my point...

Desert_Power: People have claimed deficits are a concern. The bond market clearly proves that is a fallacy.

Rich Conway: So you're saying deficits aren't a concern?

Desert_Power: You mischaracterized my position.

Rich Conway: So what about your position is mischaracterized?

 

[pantagrapher]

Krugman is dead on about this issue. People have been claiming that inflation and deficits are the concern, and the bond market(and CPI numbers) have crushed this fallacy over the last year and a half.

So now you're claiming that deficits don't matter at all? In that case, why don't we just borrow 100 Trillion dollars and distribute them equally to all US citizens? No one will ever have to work again, right?

Paul Krugman: Master of the strawman and mischaracterizing the opposition's arguments.

See previous post, re: question marks imply a question.But, to get to my point...

Desert_Power: People have claimed deficits are a the concern. The bond market clearly proves that is a fallacy.

Rich Conway: So you're saying deficits aren't a concern don't matter at all?

Desert_Power: You mischaracterized my position.

Rich Conway: So what about your position is mischaracterized?

Fixed. Nice try.

 

[Desert_Power]

Krugman is dead on about this issue. People have been claiming that inflation and deficits are the concern, and the bond market(and CPI numbers) have crushed this fallacy over the last year and a half.

So now you're claiming that deficits don't matter at all? In that case, why don't we just borrow 100 Trillion dollars and distribute them equally to all US citizens? No one will ever have to work again, right?

Paul Krugman: Master of the strawman and mischaracterizing the opposition's arguments.

See previous post, re: question marks imply a question.But, to get to my point...

Desert_Power: People have claimed deficits are a concern. The bond market clearly proves that is a fallacy.

Rich Conway: So you're saying deficits aren't a concern?

Desert_Power: You mischaracterized my position.

Rich Conway: So what about your position is mischaracterized?

I don't think deficits don't matter at all, I was saying that the markets are worrying about the threat of deflation and the aneimic growth not by fears of the short run deficit and inflation. To put it differently, the market is concerned that aggregate demand is still very low, not that a marginal 100 billion dollars of stimulus to aggregate demand will suddenly plunge the country into a debt crisis. Therefore argueing that we are on the presipice of a debt crisis and therefore cannot afford to try to stimulate aggregate demand is wrong as Krugman has stated for over a year. Over that year, LT bond yields have come down and now are at their lowest levels since March 2009 out of fears that growth is stagnating. If the market was concerned about potential future debt/GDP levels, then cutting deficit now now has a lot less impact than continued depressed below potential GDP output that results from fiscal contraction will. See the market's reaction to austerity in Greece and Ireland as evidence on what happens when you fight the wrong battle.

 

[guderian]

I don't think deficits don't matter at all, I was saying that the markets are worrying about the threat of deflation and the aneimic growth not by fears of the short run deficit and inflation. To put it differently, the market is concerned that aggregate demand is still very low, not that a marginal 100 billion dollars of stimulus to aggregate demand will suddenly plunge the country into a debt crisis. Therefore argueing that we are on the presipice of a debt crisis and therefore cannot afford to try to stimulate aggregate demand is wrong as Krugman has stated for over a year. Over that year, LT bond yields have come down and now are at their lowest levels since March 2009 out of fears that growth is stagnating. If the market was concerned about potential future debt/GDP levels, then cutting deficit now now has a lot less impact than continued depressed below potential GDP output that results from fiscal contraction will. See the market's reaction to austerity in Greece and Ireland as evidence on what happens when you fight the wrong battle.

Bond rates are low because the Federal Reserve is buying up most of the treasuries...and they are going to get killed when rates move higher. You can't read market expectations into bond yields when you have a majority buyer who's driving their purchases out of policy and not economics.

 

[RCon]

I don't think deficits don't matter at all, I was saying that the markets are worrying about the threat of deflation and the aneimic growth not by fears of the short run deficit and inflation. To put it differently, the market is concerned that aggregate demand is still very low, not that a marginal 100 billion dollars of stimulus to aggregate demand will suddenly plunge the country into a debt crisis. Therefore argueing that we are on the presipice of a debt crisis and therefore cannot afford to try to stimulate aggregate demand is wrong as Krugman has stated for over a year.

Over that year, LT bond yields have come down and now are at their lowest levels since March 2009 out of fears that growth is stagnating. If the market was concerned about potential future debt/GDP levels, then cutting deficit now now has a lot less impact than continued depressed below potential GDP output that results from fiscal contraction will. See the market's reaction to austerity in Greece and Ireland as evidence on what happens when you fight the wrong battle.

I honestly don't think anyone is arguing that another 100B will be the straw that breaks the camel's back. The problem is that no one believes that the government only needs another 100B in stimulus spending to fix everything and that after that it will suddenly become fiscally sane. What people like me are arguing is that we've already spent so much, and committed ourselves to so much future spending (e.g. SS, Medicare, defense, etc.) that politicians likely won't have the balls to undo, that we've already entered a long term debt crisis. While adding another 100B onto the pile won't massively tip the crisis, the problem is that adding another 100B does nothing to rectify the situation that's already been created. Basically, I'm not worried about bond prices today or tomorrow, and don't care one bit whether 100B raises or lowers bond prices by a couple percentage points over the next year. What I do care about is that continuing to spend when what we should be doing, for the country's long term health, is the exact opposite. Krugman is taking a statement along the lines of "we need to get a handle on our overspending, sooner rather than later, in order to avoid massive problems 10, 20, and 50 years down the road" and arguing it's the same as "the whole world will explode if we spend another dollar right this minute". No one is arguing the latter, and that's why I say he's built a strawman argument.

 

[Desert_Power]

I don't think deficits don't matter at all, I was saying that the markets are worrying about the threat of deflation and the aneimic growth not by fears of the short run deficit and inflation. To put it differently, the market is concerned that aggregate demand is still very low, not that a marginal 100 billion dollars of stimulus to aggregate demand will suddenly plunge the country into a debt crisis. Therefore argueing that we are on the presipice of a debt crisis and therefore cannot afford to try to stimulate aggregate demand is wrong as Krugman has stated for over a year. Over that year, LT bond yields have come down and now are at their lowest levels since March 2009 out of fears that growth is stagnating. If the market was concerned about potential future debt/GDP levels, then cutting deficit now now has a lot less impact than continued depressed below potential GDP output that results from fiscal contraction will. See the market's reaction to austerity in Greece and Ireland as evidence on what happens when you fight the wrong battle.

Bond rates are low because the Federal Reserve is buying up most of the treasuries...and they are going to get killed when rates move higher. You can't read market expectations into bond yields when you have a majority buyer who's driving their purchases out of policy and not economics.

The Fed holds a lot of treasury securities(almost 800 billion), however there is almost 13 billion dollars of debt out there, so they certainly don't own anywhere close to most,or even as much as China.

 

[pantagrapher]

The Power Of Error

So policy makers live in awe of savage priests, who demand that we sacrifice virgins to the invisible gods of the bond market. But what puzzles me is this: why do the priests have such influence? Never mind the victims (we never do); anyone who listened to the priests has lost a lot of money.

A case in point:

Morgan Stanley, the most bearish among the 18 primary dealers that trade government securities with the Federal Reserve, acknowledged that its forecast that Treasury yields would rise this year was misguided.

…

Morgan Stanley had forecast that a strengthening U.S. economy would lead to private credit demand, higher stock prices and diminish the refuge appeal of Treasuries, pushing yields higher. David Greenlaw, chief fixed-income economist at Morgan Stanley, said in December that yields on benchmark 10-year notes would climb about 40 percent to 5.5 percent, the biggest annual increase since 1999. The firm reduced its forecast to 4.5 percent in May and to 3.5 percent last week.

The 10-year note yield fell as much as 4 basis points to 2.53 percent today, the lowest level since March 2009. Yields have declined 10 basis points in the last five days and about 46 basis points in four weeks.

I wrote about this forecast in November 2009, because I believed that such predictions were having a big impact on the Obama administration. And I tried to point out then that the same people confidently declaring that there was a bubble in the bond market completely missed the housing bubble.

And yet these people continue to influence policy.

 

[fightingduck]

I don't think deficits don't matter at all, I was saying that the markets are worrying about the threat of deflation and the aneimic growth not by fears of the short run deficit and inflation. To put it differently, the market is concerned that aggregate demand is still very low, not that a marginal 100 billion dollars of stimulus to aggregate demand will suddenly plunge the country into a debt crisis. Therefore argueing that we are on the presipice of a debt crisis and therefore cannot afford to try to stimulate aggregate demand is wrong as Krugman has stated for over a year.

Over that year, LT bond yields have come down and now are at their lowest levels since March 2009 out of fears that growth is stagnating. If the market was concerned about potential future debt/GDP levels, then cutting deficit now now has a lot less impact than continued depressed below potential GDP output that results from fiscal contraction will. See the market's reaction to austerity in Greece and Ireland as evidence on what happens when you fight the wrong battle.

Bond rates are low because the Federal Reserve is buying up most of the treasuries...and they are going to get killed when rates move higher. You can't read market expectations into bond yields when you have a majority buyer who's driving their purchases out of policy and not economics.

The Fed holds a lot of treasury securities(almost 800 billion), however there is almost 13 billion dollars of debt out there, so they certainly don't own anywhere close to most,or even as much as China.

I think the Fed's number 2. VERY close to China. Link

 

[fightingduck]

I don't think deficits don't matter at all, I was saying that the markets are worrying about the threat of deflation and the aneimic growth not by fears of the short run deficit and inflation. To put it differently, the market is concerned that aggregate demand is still very low, not that a marginal 100 billion dollars of stimulus to aggregate demand will suddenly plunge the country into a debt crisis. Therefore argueing that we are on the presipice of a debt crisis and therefore cannot afford to try to stimulate aggregate demand is wrong as Krugman has stated for over a year.

Over that year, LT bond yields have come down and now are at their lowest levels since March 2009 out of fears that growth is stagnating. If the market was concerned about potential future debt/GDP levels, then cutting deficit now now has a lot less impact than continued depressed below potential GDP output that results from fiscal contraction will. See the market's reaction to austerity in Greece and Ireland as evidence on what happens when you fight the wrong battle.

Bond rates are low because the Federal Reserve is buying up most of the treasuries...and they are going to get killed when rates move higher. You can't read market expectations into bond yields when you have a majority buyer who's driving their purchases out of policy and not economics.

The Fed holds a lot of treasury securities(almost 800 billion), however there is almost 13 billion dollars of debt out there, so they certainly don't own anywhere close to most,or even as much as China.

I think the Fed's number 2. VERY close to China. Link

Also, note China selling.

(in case you were wondering, the Fed's still buying)