tially, is, ‘Here are the new things that I want to do,’” said Douglas Holtz-Eakin, a GOP economist and president of the American Action Forum think tank. “What that’s really saying is: ‘I have no play to fix the existing problem. None.’ So they have
If Clinton wins, many Washington observers believe the chronically gridlocked capital city will remain unable to act on major issues such as the deficit, taxes or weaknesses in Obama’s 2010 health care law.
“We just have big philosophical differences,” Ryan told a home-state group of college Republicans on Friday, adding
that a Clinton victory would mean “having more of the same stalemate.”
The deficit issue has largely fallen in prominence in Washington in recent years, due in large part to its fall from record highs and a sense of resignation that Obama and congressional Republicans simply can’t agree on ways to cut it after some failed attempts in recent years. Most economists
don’t believe the deficit is very worrisome in the short term.
“It’s totally manageable. There’s literally nothing there to worry about,” said left-leaning economist Dean Baker of the Center for Economic and Policy Research. “What’s the interest rate on 10year bonds or the 30-year bond? If actors in the financial markets thought there was any plausible
probability of this sort of fiscal crisis ... we’d be looking at 10-year rates of maybe 5, 6, 7 (percent).”
But the picture over the long run is more problematic, at least under a conventional view that if deficits continue to rise the national debt grows, government borrowing would “crowd out” private lending and force up interest rates. And if interest rates go up, the government
would have to pay much more to finance the more than $14 trillion in Treasury debt held by investors.
“We’re going into a debt spiral and, depending how far down you get in that spiral you have a sovereign debt crisis,” said Holtz-Eakin, a former GOP-appointed CBO director. “That’s just running a big risk for the budget and the economy.”