The inestimable Scarecrow kicks out the jams on poor deluded Carl Hulse of the NYT:
Hulse manages both to describe and legitimize Congress’ growing hysteria about the size of US deficits/debts. But he doesn’t bother to ask or quote a single economist, let alone the many who have been explaining for months, now screaming, that deficit spending now is not only not a serious problem but absolutely necessary to deal with lingering effects of the Great Recession.
All Hulse had to do was check with the Times Nobel economist or any of the Times’ stable of economic/business writers. Paul Krugman, along with Brad DeLong, Joe Stiglitz, Jaime Galbraith, Dean Baker, or if you prefer, Mark Zandi and many, many other serious economists, have been calling out the fraudulent arguments of the Pete Peterson deficit hawks for months and telling us we need more, not less spending to help the economy.
Every one of these reputable economists refutes the assumed premises of Hulse’ article and the prevailing ignorant mindset of too many in Congress that our debt/deficits are too high for the conditions we’re in. Instead, Hulse just takes for granted the false view, spread by deficit hawks, that deficit spending is irresponsible, an unfair burden on our children and a risk of inflation. No, it’s not.
Furthermore, Jamie Galbraith argues that we need big deficits — now and later:
The public deficit is just the obverse of net private savings. That is, when private credit is booming, investment exceeds saving and deficits tend to disappear. That’s what happened in the 1990s. When credit collapses, deficits return. That’s what’s happening now. Large long-term deficits will occur, or not, depending only on whether we succeed in generating a new growth cycle, financed by the expansion of private credit. Policies to cut spending or raise taxes — now or for that matter in the future — contribute nothing to this goal.
Financial reform and debt relief are therefore the only paths to public deficit reduction.; It would be nice to have them, for the economy works better and people are happier when they can borrow and invest privately. But if we don’t get them, the alternative isn’t a “return to fiscal responsibility.” It’s a choice between large public budget deficits that fund important and useful activities and tax relief, or large deficits because the recession, housing slump and high unemployment drag on and on, all made worse by cuts in Social Security, Medicare and other public spending.
Yes, we must defend Social Security and Medicare from Wall Street and its political agents — which now, sadly, include the Obama White House. But we’ll lose on that — and everything else — if we start by giving up the fight for an aggressive, effective, sustained and long-range economic recovery program, deficits and all.
