I don't know how David Walker keeps going. I've been following this son of a gun for about a decade and while spreading the same gospel - first within the government itself as comptroller, then in the Peterson Foundation, and now in a new organization - he has been talking to the wind. Not sure how he doesn't bash his head into the wall each evening. Anyhow, Mr. Walker returned to CNBC this morning and was particularly fired up, speaking similar songs to what this writer has said - only in America can you have a deficit commission on a Friday and then a plan to spent $900B the following Monday. I wrote my Week Ahead piece independent of this interview, but apparently have been spending far too much time listening to Walker since we both used the credit card analogy.
I did not watch the Sunday morning political shows (I prefer to keep my breakfast down most weeks) - but apparently the mantra by the fiscal conservatives is rather than make any decisions that will actually cost them a vote, we will fall back to the easy ethereal solution: growth will take care of our debts. Since that policy worked so well in the '00s.....
In fact per Moody's (hat tip ZeroHedge)
Higher economic growth should have a positive effect on government revenues and reduce payments related to unemployment. However, the magnitude of this positive effect will be considerably less than the foregone revenue and increased benefit expenditure, resulting in substantially higher budget deficits than would have otherwise been the case.
But but but.... we're going to grow our way out of the problem Moody's!
Of course there is the elephant in the room... we've kicked the can 2 more years and you can be SURE in 2012 we'll either say we can't stop these expenditures or increase taxes because it will threaten the recovery and/or worsen the slowdown..... I can already write the talking points.
Somehow I expect I'll be posting the same Walker videos in 2015.