There’s a very interesting article by Veronique de Rugy over at National Review. It’s about a conference called “The Debt Ceiling, Fiscal Plans, and Market Jitters: Where Do We Go From Here?”
The conference had a long list of impressive speakers and panelists, including Alan Simpson and Congressman Paul Ryan.
But the one speaker who stood out was Lawrence Lindsay. He was director of the National Economic Council (2001–2002) and played a leading role in formulating President Bush’s $1.35 trillion tax cut. He left the White House in December 2002 (that’s a polite way of saying he got bounced by Bush) after insisting that a war in Iraq would prove to be unaffordable. History has shown that his estimates of $200 billion were remarkably low, but let’s give him the benefit of the doubt because he was, at least, on the right side of the argument.
Lindsey now says the Obama administration is waaaaay off on its deficit projections for three reasons – three reasons that seem to be ignored despite being obvious to any casual observer:
National Review spells them out:
1. Interest-rate payments and underestimated: They will cost $5.4 trillion more than the current estimate over ten years.
2. Future economic growth rates are overestimated: The president’s budget predicts a growth rate of over 4 percent, which is unlikely. Every administration does it, but right now the gap between projected growth and what is likely to happen is wide.
3. The cost of the health-care law is grossly underestimated, by $1 trillion according to a McKinsey report. I haven’t read the report and can’t vouch for its accuracy (it wouldn’t be crazy to think that this law will end up costing taxpayers a lot, considering how the law expands the demand for health care); however, we know that it’s extremely unlikely that the cost savings in the health-care law will be implemented.
To paraphrase Lindsay, we’re screwed.
We’re like the audience at a magic act. The magician distracts us by doing something with his left hand (a new war in Libya, for example) to keep us from noticing what he’s doing with his right hand (#1, 2 and 3 above).
Get your gun. Get your gold and silver. Get your supply of food and water. You’re going to need them all.
Source: National Review