Jeffrey Speakes Downgrade On Friday, August 5 after the market close, Standard and Poor’s (S&P) announced a downgrade of U.S. Treasury debt from AAA to AA+. This announcement followed Congressional approval of a debt limit increase and ten year plan to cut projected deficit relative to baseline by $2.1 trillion. Evidently, the debt deal was… Read more

Things don’t look so good for Harrisburg PA.  Here’s what CNN has to say: The capital city Pennsylvania is broke and will be skipping this month’s multi-million dollar bond payment.On Sept. 15, Harrisburg, Pa., was scheduled to make a $3.29 million payment on the bonds it issued to build a trash plant. But, the cash-strapped… Read more

Our governor is trying to cut public employees wages to the minimum wage, and that is wrong.  What he’s doing is essentially holding the public employees hostage to try to leverage the legislature to act.  It’s not very different from holding a bank teller hostage to get the manager to hand over cash. I have… Read more

Alan Auerbach and William Gale have a paper on future deficits coming out in the National Tax Journal September issue.  They start with the Congressional Budget Office (CBO) projections, but point out that the CBO projections require that Congress does something it doesn’t do, nothing.  In the current context, this means letting the Bush tax… Read more

Kurgman has had several recent blog entries and an op-ed ( http://tiny.cc/7S3of ) on the virtues of government debt. He compares the current stimulus to that of the 1930’s, WWII, and the Cold War. He provides the “comforting” statistic that we had government debt of 109% of GDP at the end of WWII. He argues… Read more