New York Times columnist Paul Krugman says we shouldn’t obsess about the federal debt. If his is the best case for not worrying, perhaps we really should panic.
1) We really ought to be discussing deficits not "debt" And we really ought be discussing specific tax and spending changes, not the "deficit."
2) We ought to be discussing what is best, not what is "sustainable." There must be a near infinite number of ways for tax and spending decisions to be "sustainable, some of them pretty dystopian.
My rules of thumb (violating # 1 above :)) would be
a) deficits should be =< sum of expenditures with NPV>0 [Borrow only for investment.]
b) taxes to finance expenditures with NPV<0 should be on consumption (not income).
I do not have a rule of thumb for how much NPV <0 expenditure there should be.
Two objections to this line of argument.
1) We really ought to be discussing deficits not "debt" And we really ought be discussing specific tax and spending changes, not the "deficit."
2) We ought to be discussing what is best, not what is "sustainable." There must be a near infinite number of ways for tax and spending decisions to be "sustainable, some of them pretty dystopian.
My rules of thumb (violating # 1 above :)) would be
a) deficits should be =< sum of expenditures with NPV>0 [Borrow only for investment.]
b) taxes to finance expenditures with NPV<0 should be on consumption (not income).
I do not have a rule of thumb for how much NPV <0 expenditure there should be.
https://thomaslhutcheson.substack.com/p/fiscal-policy-and-everything-else
https://thomaslhutcheson.substack.com/p/debtpocalypse