Deficit Fever: Loon Tune Time Among the Elite

Published on Real-World Economics Review Blog, by Dean Baker, April 28, 2011.

We already knew that the folks involved in debating and designing economic policy in the USA had a weak understanding of economics, that is why they couldn’t see the $8 trillion housing bubble that wrecked the economy, but now it seems that they are breaking their ties to reality altogether. The country is still smoldering in the wreckage of the collapsed housing bubble, but the victims have left the policy debate altogether.

Twenty-five million people are unemployed, underemployed or out of the workforce altogether, but that’s not on anyone’s agenda. Millions of homeowners are underwater in their mortgage and facing the loss of their homes, that’s also not on anyone’s agenda. Tens of millions of baby boomers are at the edge of retirement and have just lost their life savings. This also is not on anyone’s agenda.

Deficit-cutting fever is the current craze in the nation’s capital. But even here there is little tie to reality. House budget committee chairman Paul Ryan put out a budget that proposes that in 2050 we will be spending less on defense, domestic discretionary and various non-medical entitlements together than we spend on defense today. And most of the punditry praise its seriousness. Meanwhile, the Progressive Caucus, the largest single bloc in Congress, proposes a way to get to a balanced budget by 2021, and it is virtually ignored … //

… All of these proposals pass the laugh test in terms of being practical and politically feasible in the sense that the public would support them. These proposals may not be politically feasible in the sense that the people who pay for political campaigns and own major news outlets do not like them.

But this is still helpful. The Progressive Caucus has done the country an enormous service in producing its budget. They have helped to show as clearly as possible that the deficit hawks do not give a damn about reducing deficits and balancing the budget. They want to cut the programs that the poor and middle class depend upon — programs like Social Security, Medicare, and Medicaid — so that the rich can have more money in their pockets.

Deficit reduction as it is usually discussed is a give to the rich agenda. The fact that the Progressive Caucus budget was so universally ignored drives this point home very well. (full text).

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