This should have been the headline of a front page Washington Post piece on the likely failure of the supercommittee. At one point the piece quotes Hensarling:
“It wasn’t so much of a failure as it was a failure to seize an opportunity. . . . This nation better seize another one or we will be in big economic trouble.”
This comment seems to imply that Mr. Hensarling does not realize that we are already in big economic trouble. The unemployment rate has been above 9 percent for most of the last two and a half years and there are no projections showing it coming down any time soon. Tens of million of baby boomers have seen most of their life savings disappear with the collapse of the housing bubble and are reaching retirement with little other than their Social Security and Medicare to support them. Millions of people are underwater in their mortgage and are likely to lose their homes in the next few years.
This is big economic trouble. Apparently, Mr. Hensarling has not noticed these economic developments. This is newsworthy.
This piece is written largely like an editorial. It misrepresents recent events to imply that there was a great urgency for the supercommittee to reach an agreement. For example, it asserts:
"The trigger of automatic cuts should assuage jittery financial markets, which have been on a roller-coaster ride since the summer’s debt standoff in the United States and the struggle to tame even greater fiscal quagmires in Europe. But lawmakers fear that the sentiment of a dysfunctional federal government could solidify and prompt new fear in the global markets."
Actually, there is little evidence that financial markets were jittery because of concerns about the deficit. The asset most immediately affected by concerns about U.S. government debt is U.S. government bonds (i.e. U.S. government debt). Bond prices have been very high through the last five months, with interest rates hovering near post-depression lows. Stocks have taken a hit, but this is most likely from concerns about a double dip recession in the United States caused by weak demand and the risk of a meltdown in the euro zone. In other words, the markets have acted in exactly the opposite way as would be predicted by deficit hawks.
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