Consequences of budget deficits

This is Joseph

Paul Krugman via Mark Thoma:

For budget deficits are going to soar thanks to Republican legislation — probably by even more than the official scorekeepers say, because the legislation creates so many new loopholes. And offsetting those deficits will require going after the true big-ticket programs, namely Medicare and Social Security.

Oh, they’ll find euphemisms to describe what they’re doing, talking solemnly about the need for “entitlement reform” as an act of fiscal responsibility — while their huge budget-busting tax cut for the rich gets shoved down the memory hole. But whatever words they use to cloak the reality of the situation, Republicans have given their donors what they wanted — and now they’re coming for your benefits.

I am actually a big opponent of "deficits don't matter", even when spouted by the left.  I totally understand the need to invest and that low interest rates that right now is a fine time to run deficits if there is a good reason.  But, in the long run, deficits either need to be paid or are going to act in an inflationary way.  What is saving us, for now, is that the rich are so rich that there are a shortage of secure investment opportunities so rates are low. 

But, in the long run, to spend is to tax.  All that reducing taxes now is doing is moving this taxing off into the future.  Or shifting the tax burden around, by future defaults on bonds (for example), which might target specific segments of the population. 

What I find hard to swallow is how the deficit language is swallowed by the media as if they are not able to follow the basics of the structure of the arguments.  If we use the (imperfect) household analogy, we are saying that we should reduce our income (taxes) and then discover that we need to reduce expenses, in world where there is plenty of income available. 

Now you could make a first principles argument for why social security and medicare are bad ideas (or perhaps defense, the other large item).  But that should be done in parallel with the cuts in income and not afterwards because of the cuts.  If a family decides that they no longer need a car, and thus can work less, the correct order is deciding to ditch the car and then deciding to cut back on work.  Not waiting for a crisis. 

I really wish that the reporting on this issue was more explicit.