This is the vision of the republicans. The just do not understand the debt problem.

<nyt_headline version="1.0" type=" ">Nobody Understands Debt <nyt_byline> By  PAUL KRUGMAN Published: January 1, 2012  712 Comments

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In 2011, as in 2010, America was in a technical recovery but continued to suffer from disastrously high unemployment. And through most of 2011, as in 2010, almost all the conversation in Washington was about something else: the allegedly urgent issue of reducing the budget deficit.

Fred R. Conrad/The New York Times

Paul Krugman

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This misplaced focus said a lot about our political culture, in particular about how disconnected Congress is from the suffering of ordinary Americans. But it also revealed something else: when people in D.C. talk about deficits and debt, by and large they have no idea what they’re talking about — and the people who talk the most understand the least.

Perhaps most obviously, the economic “experts” on whom much of Congress relies have been repeatedly, utterly wrong about the short-run effects of budget deficits. People who get their economic analysis from the likes of the Heritage Foundation have been waiting ever since President Obama took office for budget deficits to send interest rates soaring. Any day now!

And while they’ve been waiting, those rates have dropped to historical lows. You might think that this would make politicians question their choice of experts — that is, you might think that if you didn’t know anything about our postmodern, fact-free politics.

But Washington isn’t just confused about the short run; it’s also confused about the long run. For while debt can be a problem, the way our politicians and pundits think about debt is all wrong, and exaggerates the problem’s size.

Deficit-worriers portray a future in which we’re impoverished by the need to pay back money we’ve been borrowing. They see America as being like a family that took out too large a mortgage, and will have a hard time making the monthly payments.

This is, however, a really bad analogy in at least two ways.

First, families have to pay back their debt. Governments don’t — all they need to do is ensure that debt grows more slowly than their tax base. The debt from World War II was never repaid; it just became increasingly irrelevant as the U.S. economy grew, and with it the income subject to taxation.

Second — and this is the point almost nobody seems to get — an over-borrowed family owes money to someone else; U.S. debt is, to a large extent, money we owe to ourselves.

This was clearly true of the debt incurred to win World War II. Taxpayers were on the hook for a debt that was significantly bigger, as a percentage of G.D.P., than debt today; but that debt was also owned by taxpayers, such as all the people who bought savings bonds. So the debt didn’t make postwar America poorer. In particular, the debt didn’t prevent the postwar generation from experiencing the biggest rise in incomes and living standards in our nation’s history.

But isn’t this time different? Not as much as you think.

It’s true that foreigners now hold large claims on the United States, including a fair amount of government debt. But every dollar’s worth of foreign claims on America is matched by 89 cents’ worth of U.S. claims on foreigners. And because foreigners tend to put their U.S. investments into safe, low-yield assets, America actually earns more from its assets abroad than it pays to foreign investors. If your image is of a nation that’s already deep in hock to the Chinese, you’ve been misinformed. Nor are we heading rapidly in that direction.

Now, the fact that federal debt isn’t at all like a mortgage on America’s future doesn’t mean that the debt is harmless. Taxes must be levied to pay the interest, and you don’t have to be a right-wing ideologue to concede that taxes impose some cost on the economy, if nothing else by causing a diversion of resources away from productive activities into tax avoidance and evasion. But these costs are a lot less dramatic than the analogy with an overindebted family might suggest.

And that’s why nations with stable, responsible governments — that is, governments that are willing to impose modestly higher taxes when the situation warrants it — have historically been able to live with much higher levels of debt than today’s conventional wisdom would lead you to believe. Britain, in particular, has had debt exceeding 100 percent of G.D.P. for 81 of the last 170 years. When Keynes was writing about the need to spend your way out of a depression, Britain was deeper in debt than any advanced nation today, with the exception of Japan.

Of course, America, with its rabidly antitax conservative movement, may not have a government that is responsible in this sense. But in that case the fault lies not in our debt, but in ourselves.

So yes, debt matters. But right now, other things matter more. We need more, not less, government spending to get us out of our unemployment trap. And the wrongheaded, ill-informed obsession with debt is standing in the way.

<nyt_correction_bottom>   <nyt_update_bottom> A version of this op-ed appeared in print on January 2, 2012, on page  A 21 of the  New York edition with the headline: Nobody Understands Debt.

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DeWitt, Really?  Republicans do not understand the debt problem?

You can paste some long winded tax and spend argument to bolster your pathetic argument all you want.

But, what part of $16T do you not understand?  That pitiful article wrote about a time when we were the dominate manufacturing country in the world.  Not anymore.  What are we going to export?  Liberal theories on how to tax and spend?  They already have excelled at that in Europe.

You might say the U.S. is going into "retirement", time to cut the spending.

DeWitt, that whole article sidesteps what it is like to LIVE in those countries. Britian is no paradise by far.  People do without as a matter of course.

Next, we will hear from the likes of you that doing without an automobile is good for our health.  Great idea, if you live on a small island.

Here is a FACT: with the cuts in place, the budget will be $15B MORE than it was last year.

This another BG article trying to bolster Obama's scare tactics.  Oooo, the BIRD EGGS!  THE SEQUOIA's (translation:  get the nature lovers on the warpath).  How transparent.  Gag me with a spoon.

All of this 'the trees won't be protected, birds' eggs will die on the beaches yada yada yada'  really galls me. The NPS in Boston leads walking tours in the city just about every day, several times a day, and what do they charge? Nothing, nada, zilch. Rather than charge a nominal fee, say $5 for adults, $2 for kids, will they now threaten to close the whole program down? Let's get sensible here. The touring public should pay for tours; the taxpayers should not have to bear the whole burden. Another point: there are a lot of walking tours conducted by private operators in Boston. The NPS tours given free have a huge impact on these small businesses, and the business owners are subsidizing, actually fully funding their own competiton through taxes. Not fair. The NPS needs to come up with a fair payment structure, high enough to make a dent in funding some of their own programs, low enough to encourage families to participate. But not free.

Idiots-