Dear media: we do not have a deficit/debt crisis.
The debt is not a pressing concern at the moment. In the short term, unemployment is a much bigger problem. In the long term, global warming is a much bigger problem. And yet we hardly ever hear about the need for more short-term stimulus, or the need to reduce carbon emissions. Instead, it's always all about spending and the deficit.
Right now, the interest rate is close to zero, and unemployment is high. We shouldn't even consider spending cuts until the economy is at full employment.
The GOP is constantly pushing their "we have a spending problem", and the media is aiding and abetting by constantly obsessing about the debt and the deficit. The Dems need to push back on this.
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I wish the media and more importantly democrats would do more to explain this.
You might like this:
http://backtofullemployment.org/2013/01/15/a-modest-proposal-for-jacob-lew-acknowledge-three-simple-facts-about-u-s-fiscal-reality/
A Modest Proposal for Jacob Lew: Acknowledge Three Simple Facts about U.S. Fiscal Reality
(snip)
It is clear that debate over the fiscal deficit and austerity will dominate Lew’s confirmation hearings and at least his initial period in office, if he ends up getting confirmed. But without pursuing any deep explorations about who should be taxed more or less, or whether 47 percent of U.S. citizens are indeed freeloaders, I would just propose that Lew be willing to recognize three sets of very simple, irrefutable facts about the current U.S. fiscal condition. Here they are:
Fact #1: The U.S. government is not facing a fiscal crisis.
In any common sense meaning of the term “fiscal crisis,” we would be referring to the government’s inability to make its forthcoming payments to its creditors. By that common sense definition, the U.S. federal government is in just about the best shape it has ever been. Figure 1 below tells the story.
(snip)
Fact #2: Interest rates on government bonds are at historic lows.
Figure 2 tells this story, which is well-known, but is not being given proper recognition in the deficit debates. As the figure shows, at the end of 2012, the U.S. government was borrowing at 0.7 percent on its 5-year Treasury Bonds.
It is precisely because the federal government can borrow so cheaply that our interest payments are corresponding low. Deficit hawks—economists and politicians alike—have been insisting for years that the rates are about to spike back up. Of course, interest rates will rise back up, at some point. We need to be vigilant about that. But this hasn’t happened over the full four year period since the onset of the Great Recession. This enables the U.S. government to maintain stimulus levels of spending, to get the economy onto a healthy growth trajectory. In other words, we have no reason to submit to an austerity agenda now. We should expect Jacob Lew to at least state the obvious here: that the deficit hawks have been wrong about an impending interest rate spike for four years running.
Fact #3: Current large government deficits are due to the recession, not out-of-control spending.
(more goodness at link)
Enjoy!
