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NPR Missed the Recession

Monday, 27 June 2011 05:13

In a segment of Morning Edition where Scott Horsley discussed the budget negotiations, he told listeners that we face a large debt because Congress likes to spend money. This is like saying that firefighters spray water on buildings because they like to spray water from hoses.

The proximate cause of the large budget deficit, as every budget analyst knows, is the economic downturn caused by the collapse of the housing bubble. If Congress opted not to spend money, then the economy would have sunk further and the unemployment rate would be considerably higher today. 

There are many people who make up stories about out of control government spending. This is not true and NPR's reporters should know this fact.

Comments (7)Add Comment
written by izzatzo, June 27, 2011 6:48
... we face a large debt because Congress likes to spend money.

NPR also reported on recent cutting edge research showing that those who face more darkness use more electric lighting because they like it.
Some Members Say
written by Union Member, June 27, 2011 7:01
Could Congress pass a resolution regarding the quality of Scott Horsley's journalism?
written by dellis, June 27, 2011 7:05
NPR is taking more corporate money and has dropped Public from their name and target audience, because they like it.
written by Tom Allen, June 27, 2011 9:44
I thought the immense amount of revenue lost due to the Bush tax cuts also had a great deal to do with it.
written by skeptonomist, June 27, 2011 10:17
There were large deficits before the crash, even during the Bush "boom". The ultimate cause of deficits is the liking of politicians for tax cuts.
written by ChrisW, June 27, 2011 2:47
People will always like low taxes and high spending, and this seems like it works for everyone, but in reality it's not sustainable. It's true that it was very beneficial for the government to spend more and tax less during the crisis, but a reduction in spending and an increase in revenues for balancing the budget is always the part that is the hardest for politicians to do.
Response to ChrisW.
written by Ralph Musgrave, June 28, 2011 12:47

ChrisW, You are right. Under current arrangements, politicians are faced with an impossible moral hazard choice: be financially irresponsible and get re-elected, or be responsible and get chucked out of office. The solution is to prevent politicians voting for a deficit. That is, let them decide the obviously political things like the proportion of GDP going to the public sector, and how that money is spent. But gauging the size of the deficit (or surplus) is a technical matter determined by what threat is imposed by inflation. That decision should be entirely in the hands of the central bank, or any committee of independent economists.

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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.