Good thing turning record surpluses into a trillion dollar deficit had no impact at all on the US. Thanks, Republicans! We should keep listening to you!

No, no, no. It's a direct result of the stimulus policy--the calculation is based on the increment to the debt, not the debt as a whole. If we raise taxes to pay for the stimulus (not the debt as a whole) there's the same crowding out effect.

1. Do you have any sources for your conclusion that the CBO's conclusion is based solely on the assumption that we don't pay back our debt? How can you be so sure that GDP would be higher in 10 years if we first incur massive debt and then pay it off, rather than not incurring the debt in the first place?

2. Aren't the stimulus package and reform of Medicare separable? That is, wouldn't reforming Medicare reduce debt and increase growth without the stimulus bill? If so, we get that bang both with and without the stimulus and you cannot include it on the stimulus side of the ledger.

Ezra, beyond raising taxes and reforming health care, both of which I endorse as deficit reduction measures, don't you think your ignoring the elephant in the room--cutting spending? Obama has certainly signaled he's willing to look into entitlement reform and cutting the federal budget.

I hope liberals don't get into a reflexive habit of denying that any spending cuts should be made. They just have to be smart cuts, while we spend more in other areas like green energy and health care.

This post had the ring of Dean Baker to it, though I'm unsure if Ezra gets the economic details on as sure footing...but the real point here is, we really shouldn't be worrying about marginal effects on private investment 10 years down the line. Right now, we're sliding into a deflationary trap. Deflationary traps are very painful and very difficult to get out of and the Fed has already exhausted monetary policy. The only option we have left is the federal government acting as a the "buyer of last resort." Any slight damage to private investment that would take effect ten years from now is easily outweighed by the need to avert the likelihood of ending up like Japan in the 90s or us in the 30s.

yo ezra, isn't our current situation depressing enough without you saying that we have to read the wash. times ed page for yrs to come.

Less than 3 weeks into this farce, more and more of us are realizing that Emperor O and his leftist courtiers have no clothes. What an ugly, pathetic sight it is. Too many stumbles, too many bumbles, too many tax cheats, too many inflexible leftwing ideologues. And they’re trying to cram down our throats this non-stimulus mega-boondoggle that’s all about social engineering and paying off corrupt special interests without enough jobs being generated.

Surprise, surprise. Having some diplomas from good schools and being cool and black and handsome just ain’t enough, Your Imperial Highness. It just ain’t enough. And your pathetic jeremiads are already sounding like a cross between a hapless Jimmy Carter caught in the headlights and a smirking W trying to sell his Social Security privatization scam to a skeptical America. No way, man, no way.

Thank you for addressing this, Ezra. I've been waiting for someone who knows something about the subject to post on this subject. But next time, please use 0.! rather than .1, to make it a little clearer to see that we are talking percentages of 1%.

The CBO Report includes only one of many scenarios. If we do nothing to jump start the economy or straighten out the financial mess, chances are 10 years down the road, our GDP will be much lower than it is today. That would be much worse.

The CBO leans to the left. This CBO report shows one thing clearly: They don't have a clue. LOL. Such a wide range of outcomes -- where even the best cases don't look good. Remember it's projections are only % increases in output and not the actual output. This spendulus will make things worse. Just for fun, it'll be interesting to compare the state of the State of Alaska to the State of the Union after 2-3 years.

Interesting indeed - Alaska will be a cold turd of a state; the rest of the country, save the south and the Oklahoma and Texas-like states, will be happy that Democratic policymaking has restored metropolitan infrastructure and revived the middle class economy. Tired of Obi and get what you deserve will make themselves miserable hating his success.

dear get what you deserve,

I'll take a left-leaning CBO office that doesn't claim to know the future over a Republican congress who can't seem to wrap their heads around the fact that their ideology is DEAD.

Tried, failed; past tense.

And please give back the federal dollars we've been pouring into your @#$%hole state since Steward bought it and get a real job you leeching, useless dumb@#$%. We'd give it back but we lost the receipt.

I'm sure Alaska's crab catch will make a huge dent in the GDP once oil exports become moot. Or does your state contribute ANYTHING else to the union? Didn't think so.

"Less than 3 weeks into this farce, more and more of us are realizing that Emperor O and his leftist courtiers have no clothes."

Which is why over 60% approve and only 15% disapprove of the job he is doing.

http://www.cbsnews.com/blogs/2009/02/05/politics/politicalhotsheet/entry4778267.shtml

The Washington Times piece seriously mischaracterizes the tone of the CBO Report. CBO wasn't issuing a call of alarm, it was simply pointing out that other things being equal having to borrow money to service debt will theoretically crowd out an equivalent amount of private investment in any given year. Which is true but trivial. The Times language suggested that the effect in 2019 would somehow be major. Instead CBO calculates that the direct impact on the deficit in 2019 would be $3.4 billion with an additional $53.6 billion in debt service that year on the entire cost of the bill.
http://angrybear.blogspot.com/2009/01/cbo-letter-to-rep-ryan-re-stimulus-debt.html
Against which you would have to calculate whatever utility we gained from that spending in the mean time (including the fact that it supported subsistence directly. My starving or not maybe doesn't have much net effect on GDP, but I have a strong policy preference here.)

I think the CBO calculation really boils down to "If you grow to your ultimate height at age 15 you will have a slower growth rate after than if you had just grown steadily to that height." As a former short kid I would have been happy to trade current growth for later growth. The Times is trying to turn a mathematical truism into some big deal. And it is a talking point. Because one of the local trolls at our site was running with it a couple of days ago. Clearly the word went out to wingnuttia by whatever mysterious channels it does.

I think well-spent taxes are a bargain! But before we raise taxes: 1)Form an independent commission to identify (then eliminate) the waste in the military budget and use the money saved to pay for the stimulus, 2)Hire additional IRS agents to target political-corporate-lobbyists types who have not paid their taxes and 3) Pass a retroactive 100% tax on corporate compensation that exceeds $400,000 and return the money collected to the pensions, 401Ks, IRAs, etc. to the people who worked very hard to earn that money.