Fiscal Cliff

Tyler Cowen with some thoughts on the pending “fiscal cliff“.

As I’ve said before I understand the whole “stimulate now, cut later” concept. I get it, fiscal smoothing, etc., etc. My only issue is I just want someone to give me a credible plan for the contraction phase. We have the largest generation in American history moving from the productive class to the dependent class. I’m no economist but I don’t see how that is positive for the economy. Ok, for argument’s sake let’s say that a miracle happens and he have robust growth while all of the Boomers exit the work force. Where are we going to find excess but to cut? The budget demands are going to balloon to pay for the entitlements of all of these retiring Boomers. Even if we radically slash all the other budget line items there is not enough remaining budget to pay for the entitlements. So, what then? I can only assume that those who aren’t advocating radical steps now to try curbing the looming catastrophe are resigned to their fate. I have to assume that they accept that tragedy is coming and there is nothing we can do about it so we might as well forestall it as long as possible. Because if you have any hope that we are going to get through this looming catastrophe you know that the only hope is to act now. Only hopeless people should be advocating for burning what excess we have now so that we can go down in a blaze of glory. I guess they believe as Kurt Cobain did, “it’s better to burn out than to fade away.”

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