Deficit Fever

by digby

Suddenly, you can't turn around without getting a panicked lecture about the deficit. But in all the discussions about the horrifying, worse-than-terrorism, scarier-than-nuclear-war threat to everything we hold near and dear, nobody ever seems to discuss the fact that much of the deficit is due to unemployment. (Gosh, it turns out that if everyone were working, they'd be paying more taxes and the government would have more money!) We are supposed to believe that the deficit stems from profligate spending on old people and undeserving little dark children who refuse to get a job.

The Pete Peterson crew have been poised for some time to make this move. They are very slick and they are sending out massive amounts of scare literature to everyone in the chattering and ruling classes. And they are working overtime to convince the American people that fixing the deficit is imperative if they want the economy to improve. And it's working. Not the economy --- the propaganda.

Sadly, part of the reason it's working is because the president and his people keep saying that the federal budget is just like the family budget and you have to pull in your belt at times like these, when the opposite is true. It's a terrible way to discuss this issue --- unless you really do want to hamstring your administration and keep it from being able to do the things it needs to do to bring employment back.

I appreciate the administration's desire to bring the Republicans' "plans" into the light, particularly those that want to privatize social security for people under 55 and give them "vouchers" for health care to keep costs down. (Out of vouchers? No dialysis for you!)If they do a good job of exposing the Republicans' true intentions, it could reap partisan loyalty from many, many millions of people. I sincerely hope that's what they plan to do.

But in the meantime, you have Tim Geithner begging the Republicans to help with deficit reduction in a bipartisan way. Here's what I would love to know: what does the administration think a reasonable bipartisan compromise on deficit reduction would look like?

If the Democrats could do one simple thing, it would be to repeatedly explain that deficits will never go down unless we put everyone in this country back to work --- it would go a long way to evening the Peterson Playing Field. As it stands, the alleged reason for the deficit is the "entitlements" which the conservative owners of America have been itching to eliminate from the moment they were conceived. If they manage to get it done at this moment of extreme insecurity, it will be one of the great propaganda and Shock Doctrine achievements of all time.

If ever people need the security of an old age pension and guaranteed medical care in their unhealthy golden years its now. It would be too ironic (and sad)if they were manipulated into giving that up under the misapprehension that the country's current woes can be fixed if they do.

(And the kids had better get that extra room ready because mom and dad are going to be moving in.)

If you want to hear a smart discussion of the deficit from an actual liberal, here's James Galbraith on the Jim Bohannon show.


The Vice President actually came to the set to be grilled by Mrs Alan Greenspan.

Here's her first question:

First of all the budget ... and these deficits.. Deficits, red ink as far as the eye can see! Even if you can achieve your very optimistic goal,s and that is to bring down some of these deficits by 2015, they go back up again by 2019 and 2020! beyond the level that is considered sustainable. Larry Summers, long before he was in the Obama White House has said,"how long can the world's greatest borrower remain the world's greatest power?"

Have we reached a point where our deficits have become a national security issue?

Joe Biden said no, but it could happen if we don't bring down spending.

You know, when I wrote at the beginning of this post that deficits were worse than terrorists, I was exaggerating. Now, I realize they are actually going to go there. Oh boy.