"This is not class warfare -- It's math"

In my yesterday post I noted together the two facts that Reuters preferred to publish on separate days: the size of the planned US budget deficit for the fiscal year 2012 (about $1 trillion), and the amount of revenue that is expected from the "Buffet tax" on the millionaires:
"Revenue generated from the tax has yet to be officially calculated, but Whitehouse said it could raise $40 billion to $50 billion a year." 

                                                                   
"This is not class warfare -- It's math" - Barack Obama

Krugman about US debt

Paul Krugman on the US national debt: 
"And you don’t have to be a right-winger to acknowledge that yes, very high marginal tax rates act as a disincentive to productive activity. So real GDP may well fall significantly.

This is what I mean when I say that the burden of debt is about incentives, not about having to deliver resources to other people.

Private debt, by the way, creates a different kind of problem: again, it doesn’t directly make us poorer, but it increases our macroeconomic vulnerability.

The general point is that the analogy with a family that owes too much is all wrong. Unfortunately, this dumb analogy dominates our national discourse."

Economics Nobel lectures

This year Economy Nobel prize lectures (action begins at about 10:00)
The lecture by Thomas Sargent is particularly interesting in connection to the sovereign debt crisis and the analogy between the European Union today and the United States in its beginning. Nicely, Sargent goes into great pains in order to distance himself from either Republican or Democrat ideology when discussing the role of the government debt and the bailouts of states and companies by the Federal government.

The lecture by Christopher Sims is more technical, but will probably ring a few bells with those who are familiar with statistics or Monte-Carlo methods.

Why Europe matters for America

Interestingly, the economic developments in Europe might have serious consequences for the American politics:
"If I understand the news coming out of Europe correctly, the new head of the European Central Bank is offering a simple deal: If fiscal policy becomes hawkish, monetary policy will be dovish.  In other words, as government spending is cut to put European governments on a sounder financial footing, monetary policy will do its best to ensure that any adverse impact on aggregate demand is kept to a minimum."

In simpler American English: Europe votes Republican. If this European policy succeeds, the American voters will have a reasonable question to Obama, as to why he advocates more stimulus spending. If, however, the policy fails - Obama's insistence on more spending will be effectively vindicated.