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James Pethokoukis | The Worst Economic Idea of 2012: Debt Denialism





Federal debt held by the public, as a share of GDP, has doubled since 2006 and now stands at 73%. President Obama’s most recent budget would merely stabilize the debt at around 76%. Beyond that, the president has no plan as Treasury Secretary Timothy Geithner has admitted and this White House chart shows:

And during the fiscal cliff negotiations, Obama has been pushing for a tax hike-heavy solution even though spending, particularly, entitlements, are the big problem. The Obama plan seems more like an ideological indulgence than a real fix.

But why should Team Obama be concerned when liberal economists are now arguing that Medicare, the big long-term debt driver, is just fine? They argue that the Congressional Budget Office is wildly overestimating future health care cost inflation. And their response to Republicans who say that Democrats have abandoned Bill Clinton’s hawkish budgetary legacy?  Clintonomics was nothing but a fairly tale:

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