Fed chairmen aren't allowed to speculate about disaster scenarios, so let me do it for you. If the administration gets what it wants, within a decade — or perhaps sooner — the United States will have budget fundamentals comparable to Brazil's a year ago. The ratios of debt and deficits to G.D.P. won't be all that high by historical standards, but the bond market will look ahead and see that things don't add up: the rich have been promised low tax rates, middle-class baby boomers have been promised pensions and medical care, and the government can't meet all those promises while paying interest on its debt. Fears that the government will solve its problem by inflating away its debt will drive up interest rates, worsening the deficit, and things will spiral out of control.Brazil? Brazil? This can't be real. It makes sense, and certainly fits the Bush administration's line of behavior, but it seems incredible that what was once the soundest economy in the world could go south so quickly.
(So much for the unimportance of the state, huh?)
Plus, Krugman voices something that has been bugging me for a while:
No doubt you're under intense pressure to be a team player. But these guys are users: they persuade other people to squander their hard-won credibility on behalf of bad policies, then discard those people once they are no longer useful. Think of John DiIulio, or your friend Paul O'Neill. It's happening to Colin Powell right now. (A digression: The U.S. media are soft-pedaling it as usual, but the business of the Osama tape has destroyed Mr. Powell's credibility in much of the world. The tape calls Saddam Hussein an "infidel" whose "jurisdiction . . . has fallen," but says that it's still O.K. to fight the "Crusaders" — and Mr. Powell claims that it ties Saddam to Al Qaeda. Huh? All it shows is that Al Qaeda views a U.S. invasion of Iraq as an excellent recruiting opportunity.)The way that the Bin Laden tape is being played in the U.S. media and by the current administration is shocking; if anything the tape shows that Saddam and Bin Laden both share enmity to the U.S., but is nowhere near proof of any real link, no more than anything in Powell's presentation. More importantly- as Krugman points out- the rest of the world simply isn't going to buy it, and the wedge being driven in between the United States and everybody else goes that much farther.
Heck, the spectacle of Powell trying to say that this is proof might discredit the earlier testimony, even if it were correct.
Well, at least this shows one thing: the next time someone tells you they don't vote because "it doesn't matter", you can point at the mess that the American executive branch made and tell them that if they and a few hundred thousand like them had actually voted against the guy, he wouldn't be in there right now. And tell those that voted for Bush because they wanted lower taxes that, yes, this is indeed *their* fault. Nobody else's.