The Nobel laureate economist is a great economic theorist – and a great
polemicist. But he should replace his polemical hat with his analytical one and
reflect more deeply on recent experience: rather than throwing the US back into
recession, deficit reduction has been accompanied by recovery, job creation, and
... estimates suggest that fiscal policy at all levels of government lowered
real GDP growth by almost 1 percentage point, on average, over 2011 to 2013, but
is likely to be a roughly neutral factor going forward.
Under current projections, the debt-GDP ratio will rise, not fall; the only question is how fast. Moreover, even if seemingly everything goes right – with respect to the economy and keeping the fiscal house in order – deficits and debt will rise, not fall, and we still face the prospect of a high and rising debt-GDP ratio by the end of the next decade.
The more numerous and healthier men and women currently who reach age 65 should be encouraged to continue working for at least several more years- probably to age 70- instead of being encouraged to retire to collect social security benefits and Medicare payments. Those between ages 65-70 would remain in employer’s health insurance plans or buy individual insurance. In either case, they would have greater incentive to economize on their health spending.