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Home Publications Blogs Beat the Press How Does the Post Know that Both Democrats and Republicans Ignore Financial Markets?

How Does the Post Know that Both Democrats and Republicans Ignore Financial Markets?

Saturday, 08 December 2012 23:30

The fact that the United States can borrow long-term at very low interest rates indicates that actors in financial markets are not concerned about large U.S. budget deficits. Odds are that these people recognize that the large current deficits are the result of the economic collapse that followed in the wake of the bursting of the housing bubble. They probably also know that if the deficit were smaller it would just mean slower growth and higher unemployment.

Given this reality, it is interesting how the Post could know that:

"$4 trillion in deficit reduction over the next decade [is what] both sides believe is necessary."

We all know what the politicians in both parties are saying, but of course politicians often do not say what they actually believe. It would be interesting to know how the Post has determined what the leadership of the two parties actually believe about the economy.

Comments (1)Add Comment
written by Jack, December 09, 2012 9:55
Here is Reuters on Christine Lagarde:

"The U.S. needs a balanced, comprehensive approach to tackle its fiscal woes that should include a mix of spending cuts and revenue increases, the head of the International Monetary Fund said on Sunday. 'My view, personally, is that the best way to go forward is to have a balanced approach that takes into account both increasing the revenue, which means, you know, either raising taxes or creating new sources of revenue, and cutting spending,' IMF Managing Director Christine Lagarde said in a pre-taped interview on CNN's State of the Nation, which aired on Sunday. Lagarde discussed her views about Washington's impending 'fiscal cliff,' a combination of automatic spending cuts and tax increases that will simultaneously take effect in early 2013 if lawmakers cannot arrive at a deal. President Barack Obama's administration and congressional leaders are still trying to negotiate a way to avoid the "cliff" of $600 billion in tax hikes and federal spending. Failure to do so could likely tip the U.S. economy back into a recession. In her interview on CNN, Lagarde cited the 'fiscal cliff' as the biggest threat to the U.S. economy."

In other words (actually, not really), she thinks the fiscal cliff is a threat because it includes a combination of spending cuts and tax increases and she thinks the way to avoid this threat is with a balanced and comprehensive approach that is a combination of spending cuts and tax increases. You don't have to be a logician to see that all these sushi-eating elitists inside the Beltway have their own agenda.

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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.