The main obstacle to sound fiscal policy debate is a widespread, quasi-religious belief that public debt is inherently bad.

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Where this collides

• In tension with

  America borrowed cheaply from the world and spent it on consumption rather than investment, exactly as Greece did.

  Blanchard names a quasi-religious belief that public debt is inherently bad as the main obstacle to sound fiscal debate. Cochrane makes the case against this particular debt at length and on the merits — consumption rather than investment, foreign rather than domestic, a trillion a year. Whether that is the belief Blanchard is describing or the argument it is being mistaken for is the whole question.

• In tension with

  Germany's constitutional debt brake will not be reformed.

  Blanchard names a quasi-religious belief that public debt is inherently bad as the main obstacle to sound fiscal debate. Germany wrote that belief into its constitution, and Merz said a week before reversing himself that reforming the debt brake was out of the question for the foreseeable future. Merz has since turned, which is the outcome Blanchard’s claim would predict and does not by itself vindicate his diagnosis of why the rule was there.

Shared subject first, then similar wording. They may agree or disagree.

• During post-2008 fiscal consolidation, the costs of high public debt were overestimated and fiscal multipliers were underestimated, understating the output costs of austerity. OBOlivier Blanchard1 Jun 2022public debtfiscal policy
• Automatic fiscal stabilizers give fiscal policy an advantage over monetary policy in stabilizing output because they act faster. OBOlivier Blanchard1 Jun 2022fiscal policy
• Fiscal multipliers vary across time and place but are generally nonzero, positive for spending, negative for taxes, and larger when monetary policy cannot offset them. OBOlivier Blanchard1 Jun 2022fiscal policy
• The lower a country's neutral interest rate, the smaller the fiscal and welfare costs of public debt and the larger its welfare benefits. OBOlivier Blanchard1 Jun 2022public debt
• When safe interest rates are expected to remain below growth rates for a long time, rolling over public debt without later tax increases is feasible and public debt may carry no fiscal cost. OBOlivier Blanchard11 Feb 2019public debt

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