Thursday, August 4, 2011

Three more on the debt ceiling "solution"

Thoughts from Tyler Cowen at Marginal Revolution, Larry Summers in a Financial Times op-ed, and the Economist's Buttonwood columnist.

All three have wise things to say. Larry seems to forget that tax increases are the negative of spending and so is in the odd position of simultaneously calling for both fiscal expansion and fiscal restraint. I think what he really wants is net fiscal stimulus plus redistribution. Why not just say that? It's not like he is shy.

I also think both Larry and Buttonwood neglect the potentially important role of the deal in extending the duration of policy uncertainty.

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