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Home Publications Blogs Beat the Press The New York Time Starts Making Things Up to Push Deficit Reduction

The New York Time Starts Making Things Up to Push Deficit Reduction

Thursday, 20 January 2011 21:44

The NYT adopted Washington insider standards today. In order to push a deficit reduction agenda, it told readers that the United States has: "an accumulated debt that is starting to weigh on the economy."

The article presents absolutely no evidence (literally) to support this assertion. The way an economist would look for evidence that the debt is weighing on the economy is by examining interest rates. The current interest rate on 10-year Treasury bonds is 3.44 percent. This is far lower in both nominal and real terms than it has been (except for the last two years) for most of the last three decades.

In other words, the standard way to measure whether the debt is imposing a burden on the economy is showing clearly that it is not. The NYT's assertion is just a complete fabrication that has no place in a news article.

Comments (7)Add Comment
Are you serious?, Low-rated comment [Show]
Starvation Calorie Deficit Alert Issued by Deficit-Debt Fearmongers
written by izzatzo, January 21, 2011 5:23
After conducting a study on eating disorders, deficit-debt fearmongers determined that when more calories are being consumed than taken in between meals, it results in running up a deficit of calories to create an unsustainable debt of uneaten borrowed calories for future meals.

The only solution is to eat small amounts constantly on a pay-go plan to offset the exploding calorie deficit or stop moving altogether under a strict austerity diet.

An emergency calorie alert was issued that unless these solutions are undertaken, we're all gonna die since the deficit and debt have now replaced terrorism and a gun shortage as the number one national security threat.

When asked why the alert was issued by those who don't know the difference between the deficit and a banana, the response was neither do those who educate themselves on the deficit with talk radio because they can't read.
written by DLS, January 21, 2011 9:51
There is an underlying assumption across the spectrum of economists that "eventually" something must be done about the deficit. Even progressive economists state that the deficit must be addressed in the long term. However, I have not read a cogent discussion of exactly why it must be addressed, i.e, what would happen if we just go on as is and don't address it? Just for educational purposes, I would appreciate if Dr. Baker could explain what eventually would happen in the long term if we do not lower the deficit - what dire effects would occur?
written by fuller schmidt, January 21, 2011 11:25
@What? In reality, economics have to be based on market outcomes.

@DLS Rolling over debt indefinitely eventually shrinks cash flow enough that commerce contracts, prices are bid up, Treasury prices go down, and you wind up with a caste system plus inflation. Fortunately we're not dumb enough yet to let that occur.
written by What?, January 21, 2011 7:18
@fuller schmidt, so you are of the mind that economists should simply follow the historical school and should not try to use what they know to give possible outcomes for current actions?

Also, what market outcome are you referring to in this case?
written by PeakVT, January 22, 2011 11:58
what would happen if we just go on as is and don't address it?

What do you mean by go on here? The deficit can't go on growing as a percentage of GDP forever, as eventually it will crowd out useful spending. OTOH, it could stay at roughly the same percentage of GDP forever - as long as interest rates stay about the same, too.
written by PeakVT, January 22, 2011 12:45
Substitute debt for deficit in my previous comment.

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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.