Tuesday, July 26, 2011

Holtz-Eakin makes the Lord Byron Point

In discussing the various debt ceiling plans Douglas Holtz-Eakin makes the key point:

"Size. I have never been a member of the “size matters” club. Instead, I think that markets are more interested in the quality of the policy addressing the debt problem. The projected debt explosion is fundamentally a spending explosion, so policies that address growth will be more convincing to markets than a “large” deal that is dominated by a futile attempt to tax away the problem."

Exactly.  The markets know we can raise taxes (whether those increases result in more revenue is another question) but what hasn't been demonstrated is the ability to meaningfully cut spending.  http://www.nationalreview.com/corner/272793/grading-plans-douglas-holtz-eakin

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