Tags: Epstein | Krugman | budget | outlook

Barron's Epstein: Krugman Is Wrong on Budget Outlook

By    |   Monday, 28 July 2014 01:55 PM

Barron's columnist Gene Epstein takes Nobel laureate economist Paul Krugman to task for his interpretation of the long-term budget outlook recently released by the Congressional Budget Office (CBO).

While Epstein has said the report warns that "the fiscal ship of state is in danger of hitting an iceberg," Krugman called the report's estimates "distinctly non-alarming."

So what's going on?

Editor's Note:
Seniors Scoop Up Unclaimed $20,500 Checks? (See if You qualify)

"Krugman reported only one of the estimates from the CBO for the possible trajectory of the debt-to-gross-domestic-product ratio between now and the late-2030s," Epstein writes.

"He cited only the agency's extended baseline scenario, which put the ratio above 100 percent by the late 2030s from the current 74 percent."

But Krugman failed to mention the CBO's extended alternative fiscal scenario, which estimated that the debt-to-GDP ratio would surpass 180 percent by the late 2030s, Epstein says.

The baseline scenario itself "can hardly be characterized as 'distinctly non-alarming,'" Epstein says. "It shows, for example, that if current laws aren't changed, the debt-to-GDP ratio will continue to climb . . . to 147 percent by 2060."

The CBO itself seems to be concerned about the numbers.

"Federal debt held by the public is projected to grow faster than the economy starting a few years from now, and because debt is already unusually high relative to GDP, further increases could be especially harmful," the report states.

"To put the federal budget on a sustainable path for the long term," Congress must cut entitlement, raise taxes or choose "some combination of those approaches."

Editor's Note: Seniors Scoop Up Unclaimed $20,500 Checks? (See if You qualify)

© 2019 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
StreetTalk
Barron's columnist Gene Epstein takes Nobel laureate economist Paul Krugman to task for his interpretation of the long-term budget outlook recently released by the Congressional Budget Office (CBO).
Epstein, Krugman, budget, outlook
272
2014-55-28
Monday, 28 July 2014 01:55 PM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved