February 14, 2011
Do people who write on the budget have any understanding of the topic? The answer seems to be “no,” since we have an obsession with the size of the budget deficit when the economy has 9.0 percent unemployment.
If budget reporters understood their topic, then they would be asking politicians like President Obama and the Republican congressional leaders why they are not doing more to create jobs. The reason that we have 9.0 percent unemployment is that private sector demand plummeted in the wake of the collapse of the housing bubble. In the short-term, the only way this demand can be replaced is by increased demand from the government.
This is why reporters should be pressing politicians as to why they are not supporting larger deficits in order to get people back to work. Tens of millions of workers are suffering from unemployment or under-employment not because they lack the skills or desire to work, but because people like Alan Greenspan and Ben Bernanke failed disastrously in their roles as managers of the economy. This amount of needless suffering should be unacceptable in the United States.
There is also no reason that deficits run up in the middle of a downturn need create any long-term burden on the country. They are not crowding out private investment as is easy to show by the near-record low interest rates. And these deficits need not impose an interest burden on future taxpayers. The Federal Reserve can just buy and hold this debt, which means that the interest payments will be refunded to the Treasury each year. The media should be explaining these simple facts to the public rather than trying to scare them with talk of “trillion” dollar deficits.
Finally, it would be nice if the media pointed out what everyone knows to be true: The long-term budget problem is entirely the result of our broken private health care system. If our per-person health care costs were the same as what people paid in Canada, Germany or any other wealthy country, we would be looking at enormous budget surpluses (in the “trillions”), not deficits. Of course, this would mean going after the drug companies, the insurance industry, the doctors’ lobbies and other health industry groups. Unfortunately, both the politicians and budget reporters are scared to cross these powerful interest groups.
This article originally appeared on POLITICO’s blog, The Arena.
