As you probably know, one of the favorite arguments of conservatives these days is that the United States is on the very precipice of becoming Greece or Spain–a basket-case nation so swaddled by the debt created by its entitlement-demanding “takers” that it’s on the very edge of insolvency.
Ezra Klein offers this rather emphatic empirical counter-argument:
The Financial Times reports that there was record demand for 10-year Treasurys this week. “The $21 [billion] sale of 10-year paper sold at a yield of 1.459 per cent, the lowest ever in an auction.” William O’Donnell, a strategist at RBS Securities, told the FT that “we were expecting good auction results but this one has left me speechless.”
Remember: Low yields means we’re getting the money for a cheap. It means the market thinks we’re a safe bet. And it means we have the opportunity to get capital for almost nothing and invest it productively.
This capital inflow provides quite an opportunity:
The market will literally pay us a small premium to take their money and keep it safe for them for five, seven or 10 years. We could use that money to rebuild our roads and water filtration systems. We could use that money to cut taxes for any business that adds to its payrolls. We could use that to hire back the 600,000 state and local workers we’ve laid off in the last few years.
Or, as Larry Summers has written, we could simply accelerate payments we know we’ll need to make anyway. We could move up maintenance projects, replace our military equipment or buy space we’re currently leasing. All of that would leave the government in a better fiscal position going forward, not to mention help the economy.
The fact that we’re not doing any of this isn’t just a lost opportunity. It’s financial mismanagement on an epic scale.
“Financial mismanagement on an epic scale.” That’s now. The kind of financial mismanagement we’d see in a Romney administration implementing a Ryan Budget is kind of shocking, given the circumstances. It’s another illustration of how the supposedly economy-focused GOP is simply exploiting conditions to pursue an ideological agenda remote from any strategy to improve the economy.
