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Home Publications Blogs Beat the Press Can Anyone Tame the Washington Post's Deficit Hysteria?

Can Anyone Tame the Washington Post's Deficit Hysteria?

Monday, 10 December 2012 07:56

That seems unlikely as it ran another shrill front page piece warning about the need to "tame" the national debt. Newspapers would ordinarily use a word like "reduce" in their news section, saving phrases like "tame the national debt" for the opinion pages.

The piece is also highly misleading by insisting there is an urgency to arriving at a deal before the end of the year. There is no obvious reason that it is important to have a deal by December 31 rather than the first or second week in January. While the Post includes the comments from politicians who say a deal is "vital" and even asserts this as a fact in the headline to the jump page, it excludes the views of members of Congress who think it would be perfectly reasonable to allow the deadline to pass and put together a deal with the new Congress.

It is worth noting in this context that President Obama's bargaining position would be substantially improved after January 1. For this reason it is understandable that Republicans and people who want to see large cuts to Social Security and Medicare would want to force a deal before the end of the year.

Comments (23)Add Comment
written by Jennifer, December 10, 2012 8:13
After somebody settles down the Washington Post they should work on Cokie Roberts--she almost sounded hysterical this morning when discussing the "fiscal cliff". If anybody should be hysterical it should be the sixty-three to sixty-four population expecting to get Medicare in the near future. From what is sounds like their health care is about to be bargined off in order to make the Very Serious People happy--even though this makes NO fiscal sense whatsoever.
my bet still on extension of the status quo
written by pete, December 10, 2012 8:47
2 years ago Obama said call my bluff...he was called and had nothing.
He indicated last week that maybe by September they could come up with spending decreases and could lower the top rate down again. This up and down is silly and unnerving. This should have been jumped on and put a different way...If he believes a spending deal can be had by September, then extend the status quo till September....or, give him the raise on incomes but have it expire in January 2014...a one year bump. Silly politics. As has been pointed out many places...everyone is gonna have to pay more...there just ain't enough from the top 2%.
the fiscal cliff *does* reduce the debt, doesn't it?
written by kishin, December 10, 2012 8:57
I'm confused. If the debt is the big worry, shouldn't those in favor of it advocate doing nothing and letting the big cuts (sequestration) and tax increases take place? Yea, it'll wreck the economy, but it'll reduce the debt real fast (at least until the unemployment rate soars again and the government has to step in and help out).
fiscal cliff *does* reduce the debt
written by Jennifer, December 10, 2012 9:12
Of course it does. That's how you know the whole thing is bs. The people freaking out about the fiscal cliff SAY it is about the debt but of course they don't care about the debt, that is a cover for cuts to the programs they want to see--as the Chicago Tribune calls them "runaway" entitlement programs. (Just where do Social Security, Medicare and Medicaid programs run to anyway?) This is opposed to cuts they do not want to see, say the defense department. As Dean as other progressive commentators point out the best outcome would be to wait until Jan 1st, and start from ground zero.
Why has there been so little talk of honoring the original agreement?
written by John Wright, December 10, 2012 9:51
As I remember from GWB's treasury secretray Paul O'Neill's book, originally O'Neill and Greenspan wanted fiscal triggers to increase taxes if the Bush tax cuts led to deficits.

But the triggers were never put in the legislation.

But, when the tax cuts were passed, they had an expiration date at the end of 2010. And if the tax cuts had worked so well, their obvious beneficial effects, such as low deficits and a low unemployment rate, would argue for an extension.

In my view, the primary reason we had a lower unemployment rate during any of this period was due to the foolish housing bubble.

So, I hoped, but didn't expect, in 2010, the Republicans would announce the Bush tax cut experiment failed and they would let them expire as originally agreed.

Why not go over the fiscal cliff and see if it is nearly as dire as the talking heads suggest?

But I fear "no drama Obama" will snatch defeat from the jaws of victory.

Cliff Diving is Anti-Keynesian
written by Paul Mathis, December 10, 2012 9:56
Slashing federal spending, massively raising taxes on the middle class, and ending unemployment benefits for the long-term jobless are exactly the wrong things to do under Keynesian theory. Combined with the next debt ceiling crisis in February, which the GOPers have promised, the economy itself could go over the cliff as Ben Bernanke has warned.

Playing with austerity fire is dangerous especially with all the wack jobs in Congress. If the economy tanks, the debt will increase by trillions of dollars.
Scaring Citizens
written by Bart, December 10, 2012 10:01

Dean's reference to another 'shrill' piece at the Post was once again by Lori M., who on TV seems very laid-back; almost sleepy. How do they get her up to shrill, I wonder?
Remember "Make me do it"?
written by somethingblue, December 10, 2012 10:32
"President Obama's bargaining position would be substantially improved after January 1. For this reason it is understandable that Republicans and people who want to see large cuts to Social Security and Medicare would want to force a deal before the end of the year."

Unfortunately, the second group appears to include President Obama.
Wa Po, or Lori M
written by Ryan, December 10, 2012 10:49
Bart, great observation, I went back and found nearly all recent WaPo pieces that freak out are by her.
Re: "Cliff-diving is anti-Keynesian"
written by A Populist, December 10, 2012 11:15
Yes, there are anti-Keynesian effects of "cliff-diving".

However, sending the message to those approaching retirement that we are just at the beginning of a long series of cuts to Medicare and SS, is going to be EXTREMELY anti-Keynesian - they will be retrenching their spending any way they can, with the new knowledge that Obama and the Democrats will NOT be protecting their interests.

Further, any chance of growing a filibuster-proof Democratic Senate, or taking the house in the next 4 years, will be out the window - especially if Obama signs on to raising the Medicare age or cutting SS.

And the current VSP "consensus" that everything is about "deficits" and "workers-to-retirees" will be intact.

We need a game-changer - something to wake people up, and let them know we have a new sheriff in town. That we need higher wages, and the added Demand that will bring. That NOBODY is going to touch SS, because the PEOPLE said so.

On the flip side - What if we go over the cliff?

It is a golden opportunity to cut Defense, and re-allocate our resources to infrastructure, or other purposes. This chance may not come again. Same with the top rates. Further, just as cutting SS or Medicare starts changing expectations in a bad way - raising top rates and cutting Defense makes an excellent start to changing expectations, and setting trends. As the military is forced to adjust - those adjustments are seen as concretely possible, rather than politically impossible.

Now look at the politics.

Will Republicans dare vote down UI post-cliff? Will they dare vote down a middle class tax cut? Will THEY dare propose specific cuts to the mortgage deduction? Or the charitable deduction?

Republicans for decades have been bold, and successful in their boldness. They need to be handed a clear defeat. America likes a winner. The Republicans have had policy victory after policy victory for decades, and the middle class has been taking loss after loss. The middle class needs a victory - and the Democrats need to be seen as having some power.

We need to think of the long view - getting boxed in to a long term standoff will lead to more of the same, and a failed economy.

If we DO go off the cliff, Obama will be seen as a hero - not a villain - for standing strong with the middle class.

The Republicans will see their popularity shrinking. They can then either compete be MORE of economic populists than the Democrats, or see their party lose terribly, as the economy tanks because they are protecting the 1%.

Or, Obama can cave, and let the public know that we have TWO parties which are weak puppets for the 1%, as our economy goes down the tubes.

But since Obama spends most of his time talking to (and being influenced by) shills for the 1%, I am not holding my breath.
Can anyone tame the Washington Post's deficit hysteria?
written by Lex, December 10, 2012 11:37
No. #satsq
Perspective from Galbraith
written by Mcwop, December 10, 2012 12:07
This is another excellent piece/interview with James Galbraith on SS and Medicare.

My favorite part:

"Galbraith also has a great rebuttal to those scary CBO charts showing entitlement costs surging, and swamping GDP, putting the US on a Greece-like debt-to-GDP ratio. Bunk says Galbraith. Those aren't macroeconomic forecasts, but just "CBO baselines" that are used for scoring laws. The reality, he says, is that there's no way for healthcare costs to surge and get so big while not also boosting nominal GDP significantly, meaning that the ratios can't actually get that bad."

Wa Po Hysteria
written by Jeff Zi, December 10, 2012 1:16
About the only thing that will calm the Washington Post is a dose of Bankruptcy Depressant. Since the first step to treatment is admitting that you have a problem, this is not going to happen in the near future.
The fiscal cliff might also get the USA to reassess economic growth.
written by John Wright, December 10, 2012 2:10
It is not clear to me that encouraging economic growth in the USA is really a worthy goal given the USA's carbon dioxide production that accompanies a high levels of economic activity.

Perhaps a re-assessment of our economic priorities is important as growing the pie may not be the best choice for the USA.

A smaller USA economic pie, with more equitable slices, may be a better long term approach that should be advocated by politicians and economists.

But that never seems to be an option in the media or political/economic sphere.

Perhaps the fiscal cliff is a good event to encourage such thinking.
Galbraith interview
written by David, December 10, 2012 2:19
Thanks, mcwop, that's a nice find. Here's my favorite quote by Jamie:

The whole notion that there's this great deficit crisis which can only be dealt with by cutting SS, Medicare, and Medicaid, that's just - it's a relative recent front in a very old propaganda war. People who have been, for decades, blathering on about the disaster in SS, Medicare, and Medicaid. I highly recommend the back issues of the New York Review Of Books, which lists Peter G. Peterson, who prowled on about this.

Read more: http://www.businessinsider.com...z2EgKvpZUh
ABC This Week Roundtable
written by Eclectic Obsvr, December 10, 2012 2:19
Always like your view even if I don't agree. Perhaps you should venture into somethink like Paul Krugman when he endures insults and snide comments when he does the This Week Roundtable and gives his view of what data and facts really say and are.
What is a decent consistent news source?
written by Chris, December 10, 2012 3:08
Aside from going over the Reuters/AP newswires, what do you guys recommend as a source of decent consistent neutral fact-based news?

How can we avoid getting "duped by the press" by having a good primary news source?
written by liberal, December 10, 2012 7:43
Ryan wrote,
Bart, great observation, I went back and found nearly all recent WaPo pieces that freak out are by [Lori M.]

I read the dead tree edition of the WP, and my impression is that she's the reporter tasked to get stuff from Rethuglican sources. So it's not surprising. ("Not that there's not something not wrong with that"---apologies to Seinfeld.)
Environmentalists against economic growth?
written by Emersberger, December 11, 2012 6:55
John Wright

Norway has had better productivity growth than the USA with less than half the per capita CO2 emissions. Cuba has had ecnomic growth - despite very harsh sanctions - with about 1/10 the CO2 emmisons per capita of the USA.

Economic growth is a measure of the VALUE of output in an economy. The implications for the environment can be drastically different depending on the policy mix used to achieve it. Environmentalists are shooting themselves in the foot if they embrace a facile "no growth" stance.
Re environmentalists against economic growth
written by John Wright, December 11, 2012 7:41
I am not opposed to economic growth if it is properly accounted for. The current world economic "balance sheet" may be using Enron style "off balance sheet" accounting with a large and growing liability for climate change impairment.

Quite possibly much of the heralded economic growth represents digging a deeper hole to be extracted from after accounting for climate change.

While I appreciate your examples of Cuba and Norway, given that they represent about 16.129 million of the world's 6.973 billion or 0.2%, a skeptic could suggest these examples will not quickly scale up to have a large effect. And in the case of Cuba, the USA 50+ year embargo may have a large effect on their emissions and the operation of their economy.

However, the Cuban example suggests the world might want to embargo the USA for climate change reasons.

Interesting consideration.
written by Emersberger, December 11, 2012 9:09

While I appreciate your examples of Cuba and Norway, given that they represent about 16.129 million of the world's 6.973 billion or 0.2%, a skeptic could suggest these examples will not quickly scale up to have a large effect.

The numbers I gave were for PER CAPITA CO2 emissions, so I don’t understand dismissing their relevance by citing Cuba and Norway’s population size. The USA is both a very large ABSOLUTE CO2 polluter and a very large per capita polluter. It is also a very wealthy country which means that, given the political will, can make changes very quickly.

And in the case of Cuba, the USA 50+ year embargo may have a large effect on their emissions and the operation of their economy.

Yes of course. For example, unlike numerous US backed despots in the region, the Cuban leadership could not afford to ignore the basic needs of its people. Unlike the Soviet Union, it could never afford to engage in a ruinous arms race with the USA. The embargo has imposed significant hardships but also forced the leadership to adopt some very rational policies from which much of the word can learn. The USA could, for example, implement a labor intensive, disease prevention focused heath care system. Morally, environmentally, economically it would make tremendous sense.
the financial cliff
written by mel in oregon, December 11, 2012 2:24
it isn't the deficit which while important shouldn't be a concern until america rights its financial ship which would mean ending inequality. the "real financial cliff" is being produced by ben bernanke through his incredibly stupid quantative easing. as more capital is put into the financial system who does this benefit? well it doesn't benefit the poor, working americans, or the lower middle class, as the price of food, gas & lodging continues to go up. it benefits investors who see their investments rocking upward. their bottom line is vastly increased. does the increased capital cause banks to lend more, & thus businesses to hire more? nope, silly question, deposits in banks are almost $2 trillion more than loans. anyone else not benefitting by bernanke's & obama's stupidity? well yes, our foreign friends who hold our loans such as china & japan. they are going to abandon the dollar as world currency. so are russia, india, brazil & south africa. when this happens, america will be like germany just before hitler became dictator. a loaf of bread cost a wheelbarrow full of marks. don't say i didn't warn you, although i like y'all don't have enough wheelbarrows.
Tame the debt? Stop electing Republicans
written by Matt, December 11, 2012 9:17
Judging from the last thirty years or so, the best way to "tame the debt" would be to stop electing Republicans to Congress. Something tells me that's not what the WaPo is thinking, though...

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.