Arnold Kling    Bond Bubble Watch  Ozimek's Reductios... Russ
Roberts and Dan Pink...  Nobel Laureate Gary Becker comments on
the possibility of a debt crisis.  Morgan Stanley's report
argues debt/GDP is not a good measure of default risk, and
suggests instead the ratio of debt to government revenues. On
this measure, the US looks terrible, with a ratio of 3.58. This
ratio is much higher than that of the eight European nations
because they tax a much larger fraction of GDP than the federal
government of the US does. Yet it is not obvious to me that
using tax revenue rather than GDP in the denominator is a better
measure of solvency risk. Countries that already collect a
sizeable fraction of GDP as tax revenue have less room to raise
taxes than do countries like the US that tax a much smaller
fraction.  I wonder how the state and local sector plays into
this. If we add in state and local taxes, then the ratio of
taxes to GDP in the U.S. is not so much lower than that in
European countries (although it is still