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Home Publications Blogs Beat the Press CNN Money Wants You to Be Scared About the Deficit

CNN Money Wants You to Be Scared About the Deficit

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Wednesday, 25 August 2010 14:13

How else can we explain the fact that in a country suffering from the worst unemployment crisis in 70 years, CNN Money headlines a piece: "America's Debt Crisis"? CNN Money probably does not have access to financial market information. Otherwise it would know that the interest rate on U.S. government bonds are near 60-year lows.

This suggests that financial markets are not at all worried about U.S. government debt. The debt crisis exists only in the heads of people who are either unaware of financial markets or who are trying to spread fear in order to get political support for things like cutting Social Security.

The piece notes the opposition of many groups to cuts to Social Security, but then tells readers that: "nonpartisan deficit experts say the debt trajectory for the country is so worrisome that nothing in the federal budget can be off the table. That includes Social Security, which will only be able to pay out roughly three-quarters of promised benefits to future retirees by 2037."

This might be true, but nonpartisan deficit experts also point out that if the United States fixed its health care system then it would have massive budget surpluses as far as the eye can see. Nonpartisan deficit experts also point out that Social Security payments are already relatively meager compared to what most other countries pay their retirees. Nonpartisan deficit experts also point out that most retirees have very little other than Social Security to support themselves. And, they point out that Social Security's shortfall can be relatively easily made up with revenue increases that are comparable to those put in place in the decades of each the 1950s, the 1960s, the 1970s, and the 1980s.

It appears as though CNN Money only spoke to nonpartisan deficit experts who wanted to cut Social Security.

 

Comments (4)Add Comment
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written by Alex Sinclair, August 26, 2010 10:28
The handwriting is on the wall. We are in the early stages of the sovereign debt crisis. The United States has benefited from a "flight to safety". Our numbers are not much better than Greece when you include state and local debt. The unfunded liability for Social Security is around $13 Trillion, Drug Benefit for seniors $13 T, Medical promises w/o Obama Care $50 T. Add on our $13 T of bonds and bills and we would absorb all Federal revenues to pay 3% on the total. If we wait to find out what # triggers our crisis; it will be too late to solve the crisis.
Head in Sand
written by MJ, August 26, 2010 1:51
Sticking your head in the sand and ignoring (and distorting) reality for political gain does nothing to change the unavoidable truth that the U.S. is effectively bankrupt. To suggest that simply because (1) interest rates are CURRENTLY low and (2) government credit is easy to obtain, there is no debt crisis is monumentally naive and demonstrates a fundamental misunderstanding of the actual issues facing the U.S. economy and citizenry. At present, publicly held debt as a percentage of REVENUES (the ultimate source of repayment) is 360% -- compared to Greece at 312%. What's more, when you add intragovernmental debt (the stuff that was supposedly set aside for social security, etc, but that has already been spent in other areas) the total public debt as a percentage of REVENUES is a mind-blowing 600%. To be sure, and as already noted by Alex above, if we wait to see how far we can push our debt limits and rely solely on or status as the global resreve currency, it will be far too late to fix, the damage will be far greater, and the solutions will be more onerous and less tolerable. One thing is certain. The combination of tax increases (and not just on the wealthy) benefit cuts, and broken promises that will be necessary to restore fiscal discipline will cripple growth for years to come. Wait until the U.S. loses its AAA credit rating (which everyone knows is a joke anyway) and see if the 10-year Treasury still yields 2.50%.
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written by fuller schmidt, August 26, 2010 1:55
To whom shall we listen: Alex Sinclair or Dean Baker? Do we rein in our medical costs , or shall we have retirees and the unemployed living in poverty? Do we rein in the military-industrial-complex or do we have people living in poverty? Join the Anti-Patronage And Anti-Lobbyist Party that's just getting going.
Tiffany Jewelry
written by Tiffany Jewelry, October 23, 2010 5:01
It is a good news that no need to go at the match place, because we can see that game live on our T.V. Really a blatant post tiffany jewelry

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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.

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